Benchmarks resume southward journey amid weak global cues

The new week commenced on a scary note for the frontline indices which suffered a brutal laceration of around one and half a percentage points. Indian barometer gauges, resuming their southward journey after a day of halt, witnessed blood bath and closed near their lowest level in more than ten weeks, breaching major crucial support levels 20,250 (Sensex) and 6,050 (Nifty) on feeble global cues. After a negative opening, the domestic bourses never looked in recovery mood and continued sliding till end, closing near the lowest point of the day. Selling was both brutal and wide-based, as barring healthcare none of sectoral indices on the BSE could manage a green close. Counters, which featured in the list of worst performers, include metal, realty and auto. Sentiments also remained somber on report that institutional investors (FIIs) sold shares worth a net Rs 652.97 crore on January 31, 2014.

The market sentiment was hit adversely as the government revised downwards the GDP growth estimates for the year ended March 31, 2013 (FY 2013) to 4.5% from 5% reported earlier. Sentiments also remained down-beat on report that fiscal deficit in the first three quarters of the current fiscal year ending March touched 95.2% of the budgeted target for the whole year at Rs 5.16 lakh crore as compared with 78.8% a year ago. Some pessimism came after CII survey too, showing that India’s economy is likely to grow in the range of 4.5 to 5% during the second half of the current fiscal.

Selling got intensified after European markets made a poor start, resuming their sell-off of the past 10 days, hurt by brewing worries over emerging markets and data showing China’s economy losing momentum. Asian markets too ended lower after Chinese manufacturing data added to fears about a slowdown in the world’s second-largest economy.

Back home, investors shrugged off good factory PMI data, the HSBC Purchasing Managers’ Index (PMI) rose to 51.4 in the month of January, highest since March, from 50.7 in the previous month. Manufacturing increased due to increase in new orders from India’s major export destinations of the United States and the euro zone over the past few months. However, selling aggravated after Oil minister Veerappa Moily said that CNG prices will be cut by about Rs 15 per kg and piped natural gas by about Rs 5 per cubic metres in Delhi.

Selling in auto sector too dampened the sentiments, with stocks like Bajaj Auto, Ashok Leyland, M&M and Maruti Suzuki edging lower on reporting decline in January sales number. Additionally, telecom related stocks viz. Bharti Airtel, Idea Cellular and Reliance Communication all edged lower on worries that aggressive bidding for the 900-MHz bandwidth with the entry of Reliance Jio would lead to higher costs for retaining the spectrum.

The NSE’s 50-share broadly followed index Nifty declined by around ninety points and managed to end just above the psychological 6,000 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex tumbled by over three hundred points to finish below the psychological 20,250 mark. Moreover, broader markets too witnessed blood-bath and ended the session with a cut of around half a percent. The market breadth remained in favor of decliners, as there were 1,097 shares on the gaining side against 1,433 shares on the losing side while 145 shares remain unchanged.

Finally, the BSE Sensex plunged by 304.59 points or 1.48%, to settle at 20209.26, while the CNX Nifty lost 87.70 points or 1.44% to settle at 6,001.80.

The BSE Sensex touched a high and a low of 20480.35 and 20182.20, respectively. The BSE Mid cap index was down by 0.80%, while the Small cap index lost 0.47%.

The top gainers on the Sensex were Gail India up 1.69%, Dr Reddys Lab up 1.27%, Sun Pharma up 1.22%, Cipla up 0.44% and Axis Bank up by 0.31%, on the flip side Hindalco Inds down 5.48%, Tata Motors down 3.79%, Tata Steel down 3.58%, Bajaj Auto down 3.52%, and BHEL down by 3.10% were the top losers on the index.

On the BSE Sectoral front Healthcare up by 1.10% was the only gainer. While, Metal down by 3.06%, Realty down by 2.09%, Auto down by 1.88% Teck down by 1.69% and IT down by 1.64% were the top losers on the sectoral front.

Meanwhile, the inflation based on consumer price index for industrial workers (CPI-IW) in the month of December eased to 9.13 percent on y-o-y basis as compared to 11.47 percent in November and 11.17 in the corresponding month in 2012 on the back of softening of prices of food items.

The food inflation stood at 11.49 percent in December against 16.17 percent in previous month and 13.53 percent during the corresponding month of 2012. Among food items, low prices of sugar, onion, ginger, brinjal, cauliflower, peas and other vegetable items are responsible for the decrease in the index. However, high prices of some food items including fish, eggs, poultry, milk, pure ghee and garlic imparted some stickiness to food inflation.

All India CPI-IW for December 2013 declined by four points and pegged at 239 points from 235 points in November. At the centre level, Giridih recorded maximum decline of 12 points followed by Ahmedabad, Chhindwara, Varanasi, Munger, Jamalpur, Nagpur and Bhavnagar (10 points each), Jamshedpur (9 points) and Rourkela, Ludhiana, Tripura and Angul Talchar (8 points each). On the contrary, Sholapur and Puducherry centres recorded increase of 4 points and 2 points respectively, while the index remained stationary in 37 centres.

The CNX Nifty touched a high and low of 6,074.85 and 5,994.45 respectively.

The top gainers on the Nifty were Lupin up by 4.56%, GAIL (India) up by 2.12%, Dr. Reddy's Laboratories up by 1.16%, Sun Pharmaceuticals Industries up by 0.56%, and Cipla up by 0.55%. On the other hand, Hindalco Industries down by 5.89%, Tata Steel down by 3.90%, BHEL down by 3.88%, Jaiprakash Associates down by 3.85%, and Bajaj Auto down by 3.80% were the top losers.

The European markets were trading in red, France's CAC 40 was down by 0.56%, Germany's DAX was down by 0.65% and United Kingdom's FTSE 100 was down by 0.70%.

The Asian markets concluded Monday’s trade in red extending a global rout on renewed fears about emerging economies after the US Federal Reserve pressed ahead with its stimulus reduction and Turkey and South Africa hiked interest rates. Markets in China, Hong Kong, Taiwan and Malaysia were closed for trading on account of holiday.  Asian manufacturing outside China showed signs of solid expansion in January as order books swelled, but factories in the region’s giant struggled for growth, heightening concerns about an economic slowdown. China’s service-sector growth also slowed down, to a five-year low, in another sign of the stuttering economic momentum that has been a factor behind the emerging markets sell-off of the past two weeks. Purchasing managers indexes (PMIs) showed South Korea expanding at its fastest in eight months. China official nonmanufacturing Purchasing Managers' Index fell to 53.4 in January from 54.6 in December. The services sub-index declined to 51.5 in January from 52.5 in December and construction fell to 61.0 from 62.6. New orders for the entire nonmanufacturing sector dropped to 50.9 from 51.0. The federation’s official manufacturing PMI, a companion index, fell to 50.5 in January compared with 51 in December.

Indonesia posted its third straight monthly trade surplus in December and it’s biggest in two years, an encouraging sign that could give the central bank leeway to keep rates steady next week despite investor anxiety over strains in emerging markets. Indonesia posted a trade surplus of $1.52 billion in December, putting the trade balance in the black for a third straight month and relieving pressure on the ailing rupiah. Indonesia’s inflation rate remained high through January due a weakening rupiah and disruption to the supply chain caused by widespread flooding. The country’s consumer price index increased 8.22% in January from the corresponding period last year. That’s compared to 8.38% year-on-year rise in December. Inflation in 2012 stood at 4.3%.