Benchmarks end lower for third straight day ahead of IIP, CPI data

Thursday turned out to be another disappointing session for the Indian equity indices which got pounded by over one percentage point. Indian barometer gauges, prolonging their southward journey for the third consecutive session, witnessed blood bath and closed near their intraday low, breaching major crucial support levels 21,000 (Sensex) and 6,250 (Nifty) as investors remained on sidelines ahead of October IIP, November CPI data which could provide clues on RBI’s stance in its upcoming monetary policy meet in the coming week. On the macro-front, the IIP is estimated to fall to 1.2% from 2% in the previous month, while CPI is expected to remain in double digits, at 10%. Selling was both brutal and wide-based as, barring power; none of sectoral indices on BSE could manage a green close. Counters, which featured in the list of worst performers, auto, banking and metal.

Investors also remained concerned with Standard & Poor’s (S&P) statement that India’s sovereign rating could come under threat if the general election due next year threw up a hung Parliament or the government was unable to push through reforms. Also, India’s export growth slipped to a five-month low of 5.86 percent in November as shipments of petro-goods, pharma, automobile and gems and jewellery fell.

Selling got intensified as European markets made a poor start, as investors trod cautiously on fears that the US Federal Reserve could unwind its monetary stimulus programme sooner than expected. Moreover, all the Asian equity markets shut shop in the red amid expectations the Federal Reserve may act sooner than later to unwind its stimulus after a provisional budget deal in Washington eased some of the fiscal drag on the US economy.

Back home, some pessimism also came in from the currency front, the rupee was at 61.68 per dollar at the time of equity markets closing versus its previous close of 61.25 on Wednesday. Selling in banking stocks too dampened the sentiments with scrips like ICICI Bank, SBI, PNB, HDFC Bank etc. edged lower on fears of another rate hike being in store in the upcoming RBI’s monetary policy meet. Additionally, auto stocks too ran out of the steam for third consecutive session. The stocks took a hit after data from Society of Indian Automobile Manufacturers (Siam) showed that domestic passenger car sales declined 8.15% to 142,849 units in November this year compared with 155,535 units sold in the same month last year. Besides, sugar stocks, viz, Shree Renuka Sugars, Balrampur Chini and Dhampur Sugar Mills, soured on concerns over surplus sugar production and bumper cane crop this year.

The NSE’s 50-share broadly followed index Nifty declined by over seventy points, to end below psychological 6,250 level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped by around two hundred and fifty points, to end below the psychological 21,000 mark.

Moreover, broader markets too struggled for traction through the day and ended the session in the red. The market breadth remained in favor of decliners, as there were 1,040 shares on the gaining side against 1,429 shares on the losing side, while 173 shares remained unchanged.

Finally, the BSE Sensex plunged by 245.80 points or 1.16%, to settle at 20925.61, while the CNX Nifty lost 70.85 points or 1.12% to settle at 6,237.05.

The BSE Sensex touched a high and a low of 21103.80 and 20901.47, respectively. The BSE Mid cap index was down by 0.21%, while the Small cap index lost 0.32%.

The top gainers on the Sensex were Tata Power up 3.84%, HDFC up 1.15%, Gail India up 0.42%, and NTPC up 0.36%, on the flip side Tata Motors down 4.55%, ONGC down 2.71%, Coal India down 2.49%, ICICI Bank down 2.36%, and Bajaj Auto down 2.15%, were the top losers on the index.

On the BSE Sectoral front, Power up by 0.41%, was the only gainer, while, Auto down by 2.20%, Bankex down by 1.42%, Metal down by 1.37%, Oil & Gas down by 1.30%, and PSU down by 1.29%, were the top losers on the sectoral front.

Meanwhile, to rein in the growing menace of insider trading activities in the stock market, Securities and Exchange Board of India (SEBI) panel, headed by former chief justice of India N. K. Sodhi, has proposed tougher law. The panel has recommended widening the definition of 'insider trading', with plans to include company employees, directors, their immediate relatives and public servants handling market sensitive information, as the securities regulator moves to crack down on offenders.

The 19-member committee headed by former presiding officer of the Securities Appellate Tribunal proposed that public servants and persons holding statutory positions be banned from trading, while in possession of unpublished price-sensitive information (UPSI). Under the proposals, trades by stakeholders, employees, directors and their immediate relatives would also need to be disclosed internally to the company.

The proposal makes it compulsory for every listed company and market intermediary to formulate a code of conduct to regulate, monitor and report trading in securities by its employees or connected persons. The new norms, once implemented, would also apply to mutual funds and trusts issuing securities, or schemes that get listed on stock exchanges.

Further, the panel on insider trading also recommended that trades within a calendar quarter of a value beyond Rs 10 lakh (or such other amount as the capital market regulator may specify) would be required to be disclosed to the stock exchanges. It also has suggested that each regulatory provision may be backed by a note on legislative intent.

The CNX Nifty touched a high and low of 6,286.85 and 6,230.55 respectively.

The top gainers on the Nifty were Tata Power Company up by 4.07%, Ranbaxy Laboratories up by 1.47%, HDFC up by 0.95%, Jaiprakash Associates up by 0.84%, and Lupin up by 0.51%, On the other hand, Tata Motors down by 4.69%, IndusInd Bank down by 3.52%, Ambuja Cements down by 3.43%, ONGC down by 2.95%, and Coal India down by 2.79%, were the top losers.

The European markets were trading in red, France's CAC 40 was down by 0.13%, Germany's DAX was down by 0.44%, and United Kingdom's FTSE 100 was down by 0.59%.

The Asian markets concluded Thursday’s trade in red as fears that the US Federal Reserve could soon start to cut its bond-buying program weighed further on regional sentiment. According to an assessment by the Asian Development Bank (ADB), economic growth among five Southeast Asian nations, known as Asean-5, is forecast to slow this year and in 2014 due in part to the impact of the recent natural disaster in the Philippines. The ADB did not give any revisions on economic growth for individual countries within the Asean-5, which includes Indonesia, Thailand, Malaysia, the Philippines and Vietnam. ADB stated that the Southeast Asia sub-region is expected to post growth of 4.8% this year and 5.2% next year. Both forecasts were revised down by 0.1% points from October.

South Korea’s central bank kept its benchmark interest rate steady at 2.5%, standing pat for a seventh straight month amid a tentative economic recovery. Latest data shows that South Korea’s exports grew just 0.2% in November in a sign of uncertainty about the recovery for a country that is home to big-name auto makers, cell phone manufacturers and shipbuilders. South Korea’s headline inflation rate stayed below 1% in November--far below the BOK’s target band of 2.5%-3.5%. But the government predicts inflation will rise to 2%-2.5% in 2014, arguing for a rate increase or other policy tightening.

Bank Indonesia held the reference rate at 7.5% and has also kept the deposit facility rate at 5.75%. Southeast Asia’s largest economy had a record current-account deficit of 4.4% of gross domestic product in the second quarter and the gap in the broadest measure of trade narrowed to 3.8% in the following three months. Bank Indonesia is targeting a shortfall of less than 3% in 2014.