Indian equities fail to hold gains; Sensex below 16,000 mark

Indian equities failed to hold gains and drifted lower below neutral line in red as investor turned cautious and started booking profit at every rise. In the fights between bulls and bears to gain control over the market, bulls started off its rally but failed to keep the pace with bears pouncing on it and taking control of the market. Traders were seen piling up the position in HealthCare, FMCG and Auto sector stocks while selling was witnessed in Realty, Oil & Gas and TECk sectors. Hero MotoCorp, Bajaj Auto, M&M and Maruti from Auto pack were seen trading in green pulling the markets up. HUL and ITC from FMCG sector was firm in green giving the much needed support to the market. DLF from Realty counter is in red with cut off around more than three percent exerting pressure on the market. Index heavyweight RIL is seen trading weak in red with cut of around two and half percent making markets trade lower. Also, ONGC and Cairn from Oil & Gas sector were trading in red pulling the markets lower. PNB, Kotak Bank, ICICI Bank, SBI, Axis Bank and HDFC Bank were seen trading on a weak note putting pressure on the markets.

In the scrip specific development, Gitanjali Gems slipped in red on reports that the income tax department has raided the company's office and residential premise. Shares of organised retailers Pantaloon Retail India, Provogue (India), Trent, Koutons Retail, Shoppers Stop and Vishal Retail were trading weak in red extending Monday's fall, as all opposition parties opposed the government's decision to bring foreign direct investment in the retail sector. Shares of PSU oil marketing companies HPCL, BPCL and IOC were down on reports that petrol prices may be cut by Rs 1-1.5 a litre on Wednesday, November 30, 2011, the second reduction this month, on falling global oil rates. Assam Company India edged higher after the company stated that it expects to make funds available for redemption of foreign currency convertible bonds due for redemption on November 30, 2011 by December 15, 2011. Tata Global Beverage rose after the company increased price of 1 kg Tata Tea Premium by Rs 11. GTL and GTL Infrastructure surged ahead of CDR meet, which is been scheduled today.

On the global front, all Asian markets were seen trading in green while the European markets were trading in red on pessimistic note. Also, yesterday Moody’s lowered the credit rating of Belgium by one notch and last Portugal and Hungary suffered credit downgrades as well. The OECD lowered global growth outlook and warned EU leader to take decisive actions. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 4,850 and 16,000 levels, respectively. The market breadth on BSE was in favor of declines in the ratio of 1151:1403 while 114 scrips remained unchanged.

The BSE Sensex is currently trading at 15,992.97 down by 174.16 points or 1.08% after trading as high as and 16,210.37 as low as 15,976.71. There were 8 stocks advancing against 22 declines on the index.

The broader indices were trading on a weak note; the BSE Mid cap index drifted lower 0.44% while Small cap was down by 0.12%.

On the BSE sectoral space, HealthCare up 0.28%, FMCG up 0.07% and Auto up 0.01% were the only gainers while Realty down 1.99%, Oil & Gas down 1.80%, TECk down 1.58%, Bankex down 1.27% and IT down 1.17% were the top losers in the space.

Hero MotoCorp up 1.38%, Bajaj Auto up 1.32%, M&M up 1.03%, HUL up 0.98% and Cipla up 0.88% were the major gainers on the Sensex, while Bharti Airtel down 4.64%, DLF down 3.06%, RIL down 2.49%, Tata Motors down 2.21% and Tata Power down 2.07% were the major losers in the index.

Meanwhile, petrol prices are likely to be reduced by another up to Re 1 per litre this week, on the back of declining trend seen in the global prices. The Oil marketing companies (OMCs), which are free to decide petrol prices, had announced a cut of Rs 2.22 a litre earlier this month, the first reduction in retail prices in nearly three years and the first since prices were decontrolled in June 2010.

Nevertheless, the price of aviation turbine fuel (ATF) is expected to rise by around 3% from the existing Rs 62,310 per kilolitre in Delhi, putting further pressure on loss-making airlines. On diesel too, the losses of companies are expected to increase by another Rs 2 a litre from the current Rs 10.17 a litre. Internationally, both ATF and diesel are having a price trend different to petrol.

According to industry expert, the international petrol price trend for this fortnight can allow the OMCs to make a cut of up to Re 1 a litre, inclusive of taxes. This is despite a further weakening of the rupee against the dollar in the current fortnight. Compared to an average Rs 49.6 against the dollar in first fortnight of the month, the rupee has averaged Rs 51.6 this fortnight. However, the international price drop is steeper, making a price cut possible.

Normally the OMCs monitor petrol prices on a fortnightly basis. They work out the prices based on their trade parity (80 per cent import price weight and 20 per cent export price weight) for the previous fortnight. Ever since the decontrol, petrol prices have risen nearly 39% to Rs 66.42 a litre in Delhi. In the same period, diesel, which is still regulated, saw prices increase by 7.4% to Rs 40.9 a litre. The gap between petrol and diesel prices, which used to be 25.8% before the decontrol, has now extended to 66.42%.

The widening price gap between petrol and diesel has slowed the growth of petrol consumption, which has recently fallen behind that of diesel. Compared to double-digit growth in recent years, consumption of petrol has been growing at 4.8%, while that of diesel has been growing at 5.9%.

The S&P CNX Nifty is currently trading at 4,800.20, lower by 51.10 points or 1.05% after trading as high as 4,866.10 and as low as 4,795.05. There were 15 stocks advancing against 35 declines on the index.

The top gainers on the Nifty were Dr Reddy up 2.08%, Hero MotoCorp up 1.61%, Ranbaxy up 1.35%, HUL up 1.34% and M&M up 1.00%.

Bharti Airtel down 4.54%, PNB down 3.38%, DLF down 3.36%, SAIL down 2.87% and Tata Motors down 2.78% were the major losers on the index.

Asian markets traded on an encouraging note, Shanghai Composite surged 1.23%, Hang Seng soared 1.21%, Jakarta Composite jumped 1.39%, KLSE Composite ascended 1.13%, Nikkei 225 spurted 2.30%, Straits Times gained 0.08%, Seoul Composite rallied 2.27% and Taiwan Weighted garnered 1.30%.

The European markets were trading in red with, France’s CAC 40 down 0.56% and Britain’s FTSE 100 inched lower 0.02%.