Post Session: Quick Review

Indian equity markets witnessed consolidation in the highly range-bound session of trade, whereby investors preferred staying light ahead of Fed’s two-day meeting, which commencing on Tuesday i.e. December 17, could spell the end for US economic stimulus. The losses in markets albeit slender, were disappointing as benchmarks once giving an impression of a green close, shifted gears to end in negative territory yet again. By the close, losing ground for fifth straight session, with Sensex ending below the crucial 20,700 and Nifty just above the crucial 6,150 mark, lost over quarter of a percent.

The downtrend of local equity markets was mainly on account of 14-month high inflation data, which cemented hopes of a 25 basis point rate hike in RBI’s upcoming mid-quarterly monetary policy on December 18 that also dragged the banking pivotal lower by the close of trade. In a knee-jerk reaction to this, both benchmark indices slipped to day’s low only to recover little later as markets had already factored in the rate hike. However, the bout of selling pressure that was witnessed in the last hour of trade dragged the benchmarks lower. Meanwhile, on the macro-front, India's main inflation gauge, based on monthly WPI, accelerated to highest level since September 2012 at 7.52% for the month of November as against eight month high figure of 7.00% (Provisional) for the previous month of October and 7.24% during the corresponding month in the previous year, mainly driven by food price inflation which rose at the fastest clip since June 2010.

Besides, the negative domestic triggers, mixed global set-up also deterred sentiment at Dalal Street. In the global markets, most of the Asian pacific shares ended lower as slowing manufacturing growth weighed on China while a stronger yen hit Japanese stocks. HSBC's preliminary December manufacturing data for China fell to 50.5 in December compared with a final reading of 50.8 in November, barely above the watershed ‘50'that seperates expansion from contraction. On the flip side, European shares rose on Monday, led by Aggreko after a bullish trading update, although concern the U.S. Federal Reserve will start scaling back its stimulus at this week's policy meeting floated around the market.

Closer home, depreciation of Indian currency, in the intra-day trade, mainly augured well for Information Technology stocks, which were the shining stars of the session, followed by Consumer durable and defensive Health Care and technology counters. However, Oil & Gas, Auto and Fast Moving Consumer Goods counters witnessed maximum selling pressure and emerged as top laggards. Additionally, metal and mining stocks extended their recent losses as latest economic data showed that growth in China’s manufacturing-sector activity slowed to three-month low.

Furthermore, telecom stocks rang off after COAI unveiled monthly addition data. Market leader Bharti Airtel added the maximum 17.22 lakh new users during the month to take its base to 19.65 crore at the end of November and Idea Cellular added 15.4 lakh new users to take its subscriber base to 6.52 crore at the end of the reported month. The market breadth on the BSE weighed more on the negative side; advances and declines were in a ratio of 1108: 1320, while 184 scrips remained unchanged. (Provisional)

The BSE Sensex lost 50.14 points or 0.24% to settle at 20665.44.The index touched a high and a low of 20764.52 and 20637.77 respectively. Among the 30-share Sensex, 14 stocks gained, while 16 stocks declined. (Provisional)

The BSE Mid cap and Small cap indices ended higher by 0.29% and 0.40% respectively. (Provisional)

On the BSE Sectoral front, IT up by 1.56%, Consumer Durables up by 1.23%, Healthcare up by 1.10%, Teck up by 1.03% and Capital Goods up by 0.37%, were the top gainers, while Oil & Gas down by 1.59%, Auto down by 0.73%, FMCG down by 0.42%, PSU down by 0.30% and Realty down by 0.10% were the top losers in the space. (Provisional)

The top gainers on the Sensex were SSLT up by 4.12%, Infosys up by 2.17%, Tata Power up by 1.78%, Wipro up by 1.17% and Coal India up by 1.01%, while, Jindal Steel down by 2.95%, Sun Pharma down by 2.41%, Mahindra & Mahindra down by 2.32%, RIL down by 2.25% and Bharti Airtel down by 2.07% were the top losers in the index. (Provisional)

Meanwhile, cementing the case for a 25 basis point rate hike in RBI’s upcoming mid-quarterly policy review, India's main inflation gauge, based on monthly WPI, accelerated to highest level since September 2012 at 7.52% for the month of November as against eight month high figure of 7.00% (Provisional) for the previous month of October and 7.24% during the corresponding month in the previous year, mainly driven by food price inflation which rose at the fastest clip since June 2010. Food prices rose 19.93% year-on-year in November, faster than an annual rise of 18.19% in October.

In another worrying trend, the inflation number for September was revised sharply upwards to 7.05% from earlier estimate of 6.46%. Meanwhile, build up inflation rate in the financial year so far was 6.70% compared to a build up rate of 4.84% in the corresponding period of the previous year.

The Wholesale Price Index for ‘All Commodities’ (Base: 2004-05 = 100) for the month of November, 2013 rose by 0.7% to 181.5 (provisional) from 180.3 (provisional) for the previous month. Out of this, Manufactured Products, the major group with weight of 64.97%, rose by 0.2% to 151.9 (provisional) from 151.6 (provisional) for the previous month.  Within the group, index for Food Products group rose by 0.6% to 170.8 (provisional) from 169.8 (provisional) for the previous month due to higher price of gingelly oil (10%), processed prawn (6%), rice bran oil and wheat flour (atta) (3% each),  sooji (rawa), maida, ghee, oil cakes and palm oil (2% each) and copra oil, tea dust (blended), cotton seed oil, soyabean oil, groundnut oil and mustard & rapeseed oil (1% each).  However, the price of gur (5%), khandsari and tea leaf (unblended) (2% each) and tea dust (unblended), tea leaf (blended), sugar and sunflower oil (1% each) declined.

Meanwhile, Primary Articles, the group having a weightage of 20.12% in overall index, rose by 1.9% to 256.3 (provisional) from 251.6 (provisional) for the previous month. The index for Food Articles group rose by 2.0% to 256.4 (provisional) from 251.4 (provisional) for the previous month due to higher price of egg (8%), condiments & spices (7%), fruits & vegetables (6%), beef & buffalo meat and fish-marine (5% each), pork (4%), urad and jowar (3% each), moong, maize, ragi and wheat (2% each) and arhar, mutton, masur, milk and barley (1% each).  However, the price of fish-inland (10%), tea (5%), gram (2%) and poultry chicken and rice (1% each) declined.

Further, Fuel & Power, having weight of 14.91%, too rose by 0.1% to 209.6 (provisional) from 209.4 (provisional) for the previous month due to higher price of lpg (5%), bitumen (2%) and high speed diesel (1%).  However, the price of aviation turbine fuel (5%), petrol and kerosene (2% each) and furnace oil (1%) declined.

Thus, while, costlier fruits and vegetables such as onions and tomatoes that had pushed retail inflation to a nine-month high of 11.24% in November, sharpened the dilemma for RBI Governor Raghuram Rajan ahead of next week's monetary policy announcement, the latest data confirms the case of RBI hiking key policy rates to rein in the spiraling inflation.

India VIX, a gauge for markets short term expectation of volatility gained 2.91% at 18.36 from its previous close of 17.84 on Friday. (Provisional)

The CNX Nifty lost 14.50 points or 0.24% to settle at 6,153.90. The index touched high and low of 6,183.25 and 6,146.05 respectively. Out of the 50 stocks on the Nifty, 20 ended in the green, while 30 ended in the red.

The major gainers of the Nifty were SSLT up 4.09%, Infosys up by 2.29%, Power Grid up by 1.74%, Tata Power up by 1.61% and Coal India up by 1.38%. The key losers were M&M down by 2.89%, Jindal Steel down by 2.85%, Sun Pharmaceuticals down by 2.48%, Reliance Industries down by 2.28% and Bharti Airtel down by 2.23%. (Provisional)

Most of the European markets were trading in green with, France’s CAC 40 up by 0.86%, the United Kingdom’s FTSE 100 up by 0.27% and Germany’s DAX up by 0.56%.

The Asian markets concluded Monday’s trade in red as slowing manufacturing growth weighed on China, while a stronger yen hit Japanese stocks. The International Monetary Fund stated that Indonesia should continue shoring up its economy to better prepare for when the US Federal Reserve starts reducing monetary stimulus. IMF projected that sluggish investment, weaker external demand and higher interest rates mean Indonesia’s economic growth will slow to between 5% and 5.5% this year and next, compared with 6.2% last year. Growth in China’s manufacturing-sector activity slowed to three-month low, initial results from HSBC’s monthly survey showed. The flash version of the December HSBC/Markit China manufacturing Purchasing Managers’ Index eased to 50.5, down from November’s final reading of 50.8.

Japan’s Tankan manufacturing index rose more-than-expected in the last quarter. The Tankan Manufacturing index rose to a seasonally adjusted 16, from 12 in the preceding quarter. Hong Kong’s gross national income rose 4.6% year-on-year to $550.1 billion in the third quarter, while Gross Domestic Product grew 4.7% to $549.7 billion, the Census & Statistics Department reported. Hong Kong’s GNI was larger than its GDP by $400 million, representing a net external primary income inflow of the same amount, and equivalent to 0.1% of GDP in that quarter.