Benchmarks resume southward journey after a day of halt

Benchmarks resumed their southward journey after a day of pause and snapped the session below their crucial 6,200 (Nifty) and 20,750 (Sensex) levels, with a cut of over 3/4th of a percent. Although, markets made a gap-up opening supported by firm global cues, but soon the sentiments turned cautious and frontline gauges slipped into red amid fears that foreign institutional investor would reduce their allocations to emerging markets including India thereby hurting incremental inflows after the US Federal Reserve Bank announced gradual reduction in its bond-buying program. Depreciation in rupee too weighed-down sentiments. On the currency front, the partially convertible rupee was at 62.16 to the dollar at the time of equity markets closing as against its close of 62.09 on Wednesday.

However, markets witnessed some sort of recovery in afternoon trade on the back of optimistic statements made by Finance Minister, who in an attempt to shore-up investors’ confidence after US Federal Reserve announced to trim down its aggressive bond-buying program by $10 billion a month, reiterated that the government was committed to take all necessary steps to revive growth, boost investments and create conducive business environment.

Some support also came in from positive opening in European markets which extended previous sessions’ gains after the US Fed signalled that low interest rates would prevail even as the US central bank announced reduction in its bond-buying program. Moreover, most of the Asian equity benchmarks ended the session in the green with Japanese market continuing its surge for the second consecutive day as the yen touched a five year-low against the dollar.

Back home, the recovery proved short-lived as markets once again lost momentum in the dying hours of the trade. Selling in public sector undertaking viz. BPCL, HPCL and IOC too dampened the sentiments as Crude oil futures moved higher on Wednesday closing near their one month high on getting a bullish inventory data from the Energy Information Administration (EIA) that showed US crude oil stockpiles to have dropped last week, albeit less than expected. Moreover, banking counter remained the biggest loser on hopes that Reserve Bank of India (RBI) would act in next policy meeting in January, if the expected softening of food inflation does not materialises and translates into a significant reduction in headline inflation in the next round of data.

The NSE’s 50-share broadly followed index Nifty declined by over fifty points, to end below psychological 6,200 level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped by over one hundred and fifty points, to end below the psychological 20,750 mark.

Moreover, broader markets too struggled to get some traction and ended the session in the red. The market breadth remained in favor of decliners, as there were 1,131 shares on the gaining side against 1,287 shares on the losing side, while 157 shares remained unchanged.

Finally, the BSE Sensex plunged by 151.24 points or 0.73%, to settle at 20708.62, while the CNX Nifty declined by 50.50 points or 0.81% to settle at 6,166.65.

The BSE Sensex touched a high and a low of 21017.45 and 20646.03, respectively. The BSE Mid cap index was down by 0.20%, while the Small cap index lost 0.12%.

The top gainers on the Sensex were Maruti Suzuki up 2.97%, SSLT up 1.79%, Sun Pharma up 1.69%, Cipla up 1.65%, and Infosys up 1.64%, on the flip side ICICI Bank down 3.02%, L&T down 2.96%, HDFC down 2.76%, ONGC down 2.63%, and HDFC Bank down 2.16%, were the top losers on the index.

On the BSE Sectoral front, IT up by 1.74 %, Teck up by 1.26 %, Healthcare up by 1.09%, and Metal up by 0.22%, were the only gainers. While, Bankex down by 2.43 %, Capital Goods down by 1.91 %, PSU down by 1.45%, Oil & Gas down by 1.23%, and Power down by 1.02% were the top losers on the sectoral front.

Meanwhile, in a move which would ease the pressure on operators struggling with congested networks and possibly reducing the bidding amounts in the upcoming auctions, the government is set to allow telecom companies to share 2G spectrum with each other as long as their combined holding is not more than 50% of the total airwaves allotted in that region.

Although, the government may allow the operators to share the spectrum between two telcos holding 2G spectrum in the same service area, but will not allow the same between operators holding airwaves in two separate circles. Besides, bandwidth sharing will also not be allowed between operators holding 3G airwaves.

As per the draft note prepared by the department of telecommunications on spectrum sharing, two telephone operators can share 2G telecom spectrum without a one-time usage charge, if they have already paid for more than 4.4 MHz of GSM spectrum, or 2.5 MHz of CDMA spectrum. The sharing would be possible without any alterations in terms and conditions of licence of use of spectrum, including the carrier size indicated therein.

Further, telecom service providers, together, would have to pay spectrum usage charge at slab rates applicable on the combined spectrum holding according to the draft rules being prepared by the DoT. Moreover, while the permission to share will be granted after the payment for the spectrum holding is done based on its reserve or auction price, separate permission will be required to be granted from the DoT. Lastly, the government is expected to finalise spectrum-sharing rules, prior to the start of auctions on January 23.

The CNX Nifty touched a high and low of 6,263.75 and 6,150.70 respectively.

The top gainers on the Nifty were HCL Technologies up by 3.93%, Maruti Suzuki India up by 3.12%, Ranbaxy Laboratories up by 2.38%, Lupin up by 2.30%, and Wipro up by 2.26%, On the other hand, Kotak Mahindra Bank down by 3.63%, ICICI Bank down by 3.04%, ONGC down by 2.86%, Larsen & Toubro down by 2.74%, and HDFC down by 2.54%, were the top losers.

The European markets were trading in green, France's CAC 40 was up by 1.23%, Germany's DAX was up by 1.42%, and United Kingdom's FTSE 100 was up by 0.83%.

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.