Selling pressure intensifies at Dalal Street; Sensex slips below the crucial 20,500 level

Selling pressure at Dalal Street has intensified, with benchmark equity indices nose-diving in the sea of red after a gap-down start. Feeble global cues on F&O expiry session are spelling disaster of Indian equity markets, which is currently trading with a cut of over a percent, below the psychological 20,500 (Sensex) and little above the crucial 6050 level (Nifty). US Federal Reserve’s decision to scale back stimulus amid emerging market turmoil, mainly promoted mayhem for all the emerging markets, including Asia’s. After a two-day meeting, the last to be headed by outgoing chairman Ben Bernanke – the Fed announced a $10bn cut to its $75bn-a-month bond-buying programme, known as quantitative easing (QE).

Back home, amidst the broad-based selling pressure, none of the sectoral indices were holding up in green, however the top losers were the stocks from Metal, Banking and Fast Moving Consumer Goods counters.  The market breadth on BSE was negative, out of 1843 stocks traded, 496 stocks advanced, while 1257 stocks declined on the BSE. The BSE Sensex is currently trading at 20423.90, down by 223.40 points or 1.08%, after trading in a range of 20501.92 and 20415.02. There were 4 stocks advancing against 26 stocks declining on the index.

The overall market breadth has made a weak start with 27.19% stocks advancing against 68.45% declines. The broader indices too were trading in red; the BSE Mid cap index was down by 1.17% and Small cap was down by 1.14%. 

The top losing sectoral indices on the BSE were, Metal down by 2.09%, Bankex down by 1.91%, FMCG down by 1.80%, Realty down by 1.70% and Capital Goods down by 1.20%, while there were no gainers on the sectoral front.

The top gainers on the Sensex were Bharti Airtel up by 2.50%, Gail India up by 0.97%, Tata Motors up by 0.82% and ONGC up by 0.18%. On the flip side, SSLT  was down by 3.33%, BHEL was down by 2.96%, Hindalco was down by 2.64%, ICICI Bank was down by 2.23% and Tata Steel was down by 2.19% were the top losers on the Sensex.

Meanwhile, a day after hiking the key policy rates by 25 basis points, Reserve Bank of India (RBI)’ governor Raghuram Rajan terming inflation as both monetary and political issue, pressed the need for political establishment understanding the importance of curbing rising prices. However, the governor said that he was not ignorant of the issues arising from low growth that remains to be big area of concern.

Emphasizing the need for greater co-operation, the governor highlighted that in countries across the world, the monetary authority and fiscal authority were co-operative as far as possible and one which adjusted for the other.

Further, the governor pointed that if fiscal policy was expansionary then policies need to be adjusted to meet the overall disinflationary process. Notably, Rajan's predecessor D Subbarao had blamed the fiscal policies of the government for continuous spike in inflation and slow growth during his tenure.  Subbarao also attributed the 'loose fiscal stance of government' for slow growth and high inflation and described inflation as a tax on the poor.

The CNX Nifty is currently trading at 6,053.85, down by 66.40 points or 1.08% after trading in a range of 6,072.95 and 6,048.65. There were 8 stocks advancing against 42 declining on the index.

The top gainers of the Nifty were Bharti Airtel up by 2.37%, Gail up by 1.16%, Tata Motors up by 0.81%, Lupin up by 0.78% and Grasim up by 0.40%. On the flip side, SSLT down by 3.36%, BPCL down by 3.35%, Ranbaxy down by 3.21%, Asian Paint down by 3.02% and BHEL down by 2.99% were the top losers on the index.

Most of the Asian equity indices were trading in red; Shanghai Composite dropped 0.44%, Hang Seng shed 0.48%, Jakarta Composite contracted 0.68%, Nikkei 225 declined 2.81% and Straits Times was down by 0.68%, while KLSE Composite was up by 0.83%.

Markets in South Korea and Taiwan are closed for national holidays.