Benchmarks end in red on profit booking ahead of WPI data

Tuesday’s trading session turned out to be a disappointing one for the Indian equity markets, as market participants booked profit after last session’s rally amid weak global cues. Frontline gauges traded in the red throughout the session and settled below their psychological 6,250 (Nifty) and 21,100 (Sensex) levels as investors remained on sidelines ahead of December’s wholesale price index-based inflation data, slated to be released on January 15, 2014. The WPI, India’s benchmark inflation, is expected to edged down to 7.00 percent from a 14-month high of 7.52 percent in November.

Global cues too remained sluggish after Atlanta Federal Reserve President Dennis Lockhart said the US economy is on solid footing and he supports similar tapering steps as the one taken to reduce bond-market purchases by $10 billion by the Federal Reserve last month. Selling got intensified in Indian markets after European markets opened in red after data showed consumer price inflation rose last month in France. Separately, data showed the nation’s current account deficit narrowed to $1.90 billion from $2 billion, better than expectations for a $2.3 billion deficit. Asian markets too ended mostly in the red tracking feeble Japanese macro economic data.

Back home, selling was wide based as, barring healthcare and oil and gas, none of sectoral indices on the BSE were spared. Shares of organised retailers declined on reports that the Aam Aadmi Party-headed Delhi government has written to the department of industrial policy and promotion (DIPP) seeking to withdraw its permission to allow FDI in multi-brand retail in the state. Additionally, shares of Aviation counter viz. Spicejet and Jet Air India too edged lower despite report that India’s domestic air traffic grew 3.4 percent in November last year, in spite of significant volatility in the market.

However, losses remained capped to some extent with support coming from international credit rating agency Fitch Ratings, saying that Government efforts to achieve the fiscal deficit target of 4.8 percent of the GDP in 2013-14, are supportive for the country’s credit rating. Moreover, the Consumer Price Inflation for December felling sharply to 9.87% compared with 11.16% in November on account of decline in vegetable prices too helped the markets from falling further. Food inflation decreased to 12.16% compared with 14.72 in November.

The NSE’s 50-share broadly followed index Nifty slipped by over thirty points to end below its psychological 6,250 level, while Bombay Stock Exchange’s sensitive Index -- Sensex dropped over one hundred points to end below the psychological 21,100 mark.

Moreover, the broader markets struggled to get any traction and ended the session in the red with a cut of around quarter a percent. The market breadth remained in favour of decliners, as there were 1,211 shares on the gaining side against 1,485 shares on the losing side, while 129 shares remained unchanged.

Finally, the BSE Sensex plunged by 101.33 points or 0.48%, to settle at 21032.88, while the CNX Nifty lost 30.90 points or 0.49% to settle at 6,241.85.

The BSE Sensex touched a high and a low of 21154.76 and 21009.05, respectively. The BSE Mid cap index was down by 0.32%, while the Small cap index lost 0.20%.

The top gainers on the Sensex were Cipla up 2.09%, Dr Reddys Lab up 1.21%, Infosys up 0.63%, HDFC up 0.61%, and RIL up 0.24%, on the flip side Tata Steel down 2.91%, SSLT down 1.79%, TCS down 1.78%, ICICI Bank down 1.77%, and Wipro down by 1.56%,were the top losers on the index.

On the BSE Sectoral front Healthcare up by 0.66% and Oil & Gas up by 0.08%, were the only gainers, while Metal down by 1.41%, Realty down by 1.40%, IT down by 0.67%, PSU down by 0.67%, Bankex down by 0.66%, were the top losers on the sectoral front.

Meanwhile, in a big positive development to Indian MRO industry, the government has accorded infrastructure status to boost India's fledgling industry for maintenance, repair and overhaul (MRO) of aircraft and engines. As per the RBI’s latest policy change, the MRO industry will be treated as a part of airport infrastructure and would also be considered part of the sub-sector of airport in the transport sector infrastructure for the purpose of external commercial borrowings (ECBs).

Policy changes to classify the capital-intensive industry as transport infrastructure is quite timely as the MRO industry has long gestation period and access to foreign debt is vitally important and critical for sector. Industry players are now able to avail ECBs for long tenure and cheaper debts from international markets, helping to boost the industry’s growth.

The Indian MRO industry currently has an annual turnover of about $800 million. The industry is expected to grow at annual growth rate of 10 percent over the next decade on the back of growing aviation businesses in the country with the expanding fleet size of Indian carriers and the entry of more players.

The CNX Nifty touched a high and low of 6,280.35 and 6,234.15 respectively.

The top gainers on the Nifty were Cipla up by 2.05%, Lupin up by 1.86%, Cairn India up by 1.82%, IndusInd Bank up by 1.67%, and Dr. Reddy's Laboratories up by 0.79%, On the other hand, Tata Steel down by 3.03%, DLF down by 2.51%, NMDC down by 2.51%, Jindal Steel & Power down by 2.34%, and Ranbaxy Laboratories down by 2.14%, were the top losers.

The European markets were trading in red, France's CAC 40 was down by 0.44%, Germany's DAX was down by 0.66%, and United Kingdom's FTSE 100 was down by 0.34%.

Pressurized by weak cues from US markets, most of the Asian equity indices shut shop in the red on Tuesday. Feeble Japanese macro economic data and concerns that the Federal Reserve will move forward with its decision to trim its stimulus efforts starting in January, too dampened the sentiments across the Asian region. Japanese shares tumbled to a one-month low as stronger yen weighed on exporters. On the economic front, Japanese current account deficit widened more than forecast in November, despite efforts undertaken by the Prime Minister Shinzo Abe to rejuvenate the economy.

Japan posted a current account deficit of 592.8 billion yen in November, slipping into the red for the second straight month amid the yen’s fall and growing demand for energy. The deficit grew 230.1 per cent from a year earlier, and represented the biggest deficit for November for 30 years. The current account shortfall was largely blamed on a trade deficit of 1.25 trillion yen as Japan imported more petroleum and liquefied natural gas after the nation’s worst nuclear disaster in 2011. Meanwhile, Seoul Composite too ended in the negative terrain, led by construction and solar energy shares. South Korea’s benchmarks also drifted lower on institutional selling. Domestic financial institutions offloaded shares worth a net 61.1 billion won, while overseas investors sold shares to the extent of 30.8 billion won.

Equity markets in Indonesia and Malaysia remained shut on account of public holiday.