Benchmarks extend early losses on hectic selling in heavyweight

The Indian equity markets extended early losses and currently trading near the low point of the day amid profit booking on some blue chip counters. Investors were trading cautious as government is likely to put on hold the proposal to allow foreign direct investment in organized retail sector. Even markets were not getting any clear trigger from global markets. However, Nifty was slipping towards the 5,000 level, while Sensex lost 131 points. On sectoral front, bank and metal stocks, which had some very good spells last week, were among the notable losers in opening trades this morning. FMCG, oil, information technology and capital goods stocks were also trading weak, while only power and capital goods stocks were showing some support.  On the global front, markets in the Asia-Pacific region were trading mixed. Back home, the market breadth favoring the positive trend; there were 1,135 shares on the gaining side against 1,109 shares on the losing side while 117 shares remained unchanged.

The BSE Sensex is currently trading at 16,715.04, down by 131.79 points or 0.78%. The index has touched a high and low of 16,845.87 and 16,691.21 respectively. There were 5 stocks advancing against 25 declines on the index.

The broader indices after commencing the session on a flat note currently trading mixed; the BSE Mid cap index was down by 0.02% and Small cap index up by 0.04%.

The top gaining sectoral indices on the BSE were, Power up by 0.41% and CG up by 0.19%. While, Metal down by 1.14%, FMCG down by 0.88%, CD down by 0.86%, Oil & Gas down by 0.82% and Bankex down by 0.73% were the top losers on the index.

The top gainers on the Sensex were BHEL up by 1.75%, Jaiprakash Associate up by 0.67%, NTPC up by 0.55%, Maruti Suzuki up by 0.44% and DLF up by 0.27%.

On the flip side, Tata Steel down by 2.05%, Hindalco down by 1.63%, Sterlite Industries down by 1.51%, Sun Pharma down by 1.49% and ICICI bank down by 1.48% were the top losers on the Sensex.

Meanwhile, the Reserve Bank of India (RBI) has indicated that it may intervene the currency market to stop the decline of Indian rupee. The RBI deputy governor Subir Gokarn said, India's central bank will use all available tools to stem a fall in the rupee if the currency's downward spiral escalates and will take steps to keep liquidity in the country's markets at comfortable levels.

Since July 2011, the partially-convertible rupee has decline around 16.5% as risk-averse investors flee emerging markets, increasing concerns for the government hit by high inflation, slowdown growth and increasing trade deficit.

Subir Gokarn said, 'we do have the instruments and the capacity to enhance the supply of foreign exchange into the markets, and as demonstrated by the recent actions, will use them as appropriate. If we do see the short-term risk of a downward spiral escalating, we will not hesitate to use all available instruments.'

Rupee fell snapped a four week falling trend on December 02 after weakening by 6.7% in November, which is its biggest fall since January 1995.

Gokarn further indicated that the RBI will also continue to inject liquidity into Indian markets to make sure smooth functioning of the financial markets given the bank’s forecast for tight conditions in the near future.

'Currently, the Indian banking system holds government securities to the tune of 29% of net demand and time liability (NDTL), which is above the statutory requirement of 24%. Gokarn said, ‘this reflects a relatively large capacity for liquidity infusion as and when the need arises'. By adding further he said, ‘we have been injecting liquidity into the market through the liquidity adjustment facility and open-market operations, and we will continue to do so as conditions warrant.’

Last week, the RBI bought Rs 57.83 billion worth of bonds via open market operations (OMO), just after a week, buying Rs 94.35 billion through the same process. The OMO is a tool by which central bank control the short term interest rate and the supply of base money in economy, thus indirectly controlling the total money supply. 

The S&P CNX Nifty is currently trading at 5,005.45, down by 44.70 points or 0.89%. The index has touched a high and low of 5,049.70 and 5,002.55 respectively. There were 10 stocks advancing against 40 declines on the index.

The top gainers of the Nifty were BHEL up by 1.79%, Cairn up by 1.29%, RCOM up by 1.29%, Axis Bank up by 1.20% and JP Associate up by 0.89%.

On the flip side, Tata Steel down by 2.20%, IDFC down by 1.91%, Sun Pharma down by 1.87%, Sesa Goa down by 1.79% and Sterlite Industries down by 1.69%, were the major losers on the index.

Asian markets were trading mixed; Hang Seng gained 0.20%, Jakarta Composite inched up 0.13%, Nikkei 225 added 0.59% and Seoul Composite rose by 0.19%.

On the flip side, Shanghai Composite declined 0.87%, KLSE Composite inched lower 0.01%, Straits Times slid 0.39% and Taiwan Weighted descended 0.60%.