Indian benchmarks declines again; slips back to Friday’s level

Indian frontline equity indices witnessed severe pounding a day ahead of December series futures and options expiry, leading the key indices to undo all the good work done in Monday’s session and slip back to the important psychological 4,700 (Nifty) and 15,700 (Sensex) levels. Selling pressure intensified across the board since late morning trades and the benchmarks got battered by close to percentage point in the session. The Asian peers too exhibited gloomy trends after disappointing Japanese industrial production and South Korean manufacturers’ confidence data underscored the fact that the global economic recovery still remains uncertain and fragile. Local market participants also overlooked the optimistic trends that European counterparts displayed. Economic reports from the US remained mixed as on one hand, home prices declined in most major US cities for the second straight month in October while on the other, US Consumer Confidence Index climbed almost 10 points from November, to 64.5, the highest level since April. On the domestic front, reports showed that consistent with the stance of monetary policy and based on the current assessment of prevailing and evolving liquidity conditions, the RBI has decided to purchase government securities worth Rs 12,000 crore in order to inject liquidity in the economy. However, the reports failed to give any kind of support to domestic sentiments. Meanwhile, stocks from the Power and Capital Goods counters bucked the pessimistic trend and climbed higher, thanks to the gains in NTPC, BHEL and Tata Power, which helped in mild short covering in late moments and also in preventing the key gauges from slipping below the crucial levels.

Earlier on Dalal Street, the benchmark got off to a soft opening as cues from the Asian markets weren’t inspiring amid a slew of economic data announcements which only underscored uncertainties over the global outlook. Thereafter, the bourses treaded on a southbound journey and kept declining through the morning trades. There was some recovery seen in the markets after the frontline indices hit the lowest levels in early afternoon trades but profit booking at higher levels pulled them back around the day’s lows.  However, some short covering in the last leg of trade ensured that the bourses settle off the day’s lows. Moreover, the broader markets too settled with large cuts of over a percent in the session and performed in tandem with their larger peers. On the BSE sectoral space, barring the Power and Capital Goods counter which ended in green, all other indices went home with losses. The metal pocket got severely punished in the session while rate sensitive counters like Banking index along with the Oil & Gas pocket too were not spared by investors. The markets declined on strong volumes of over Rs 1.63 lakh crore while the turnover for NSE F&O segment too remained on the higher side as compared to Tuesday at over 1.52 lakh core. However, the turnover remained disappointing, considering the fact that it was the penultimate day of December series F&O contract expiry. The market breadth was pessimistic as there were 1055 shares on the gaining side against 1667 shares on the losing side while 123 shares remained unchanged.

Finally, the BSE Sensex lost 146.10 points or 0.92% to settle at 15,727.85, while the S&P CNX Nifty declined by 44.70 points or 0.94% to close at 4,705.80.

The BSE Sensex touched a high and a low of 15,887.80 and 15,666.46 respectively. The BSE Mid cap and Small cap indices were down by 1.06% and 1.12% respectively.

The major gainers on the Sensex were NTPC up 2.68%, BHEL up 2.26%, Tata Power up 1.61%, Cipla up 1.20% and DLF up 0.71%. While, Jindal Steel down 7.07%, ICICI Bank down 3.88%, Hindalco Industries down 2.51%, Mahindra & Mahindra down 2.39% and Wipro down 2.27%, were the major loser on the index.

On the BSE sectoral space, Power up 0.78%, Capital Goods (CG) up 0.32% were the top gainers while Metal down 2.05%, Bankex down 1.98%, Oil & Gas down 1.63%, Auto down 1.09% and FMCG down 0.97% were the top losers on the BSE sectoral space.

Meanwhile, in its bid to inject liquidity in the economy, the Reserve Bank of India (RBI) has decided to purchase government securities worth Rs 12,000 crore on December 29, 2011. The central bank will conduct open market operations (OMO) for purchasing the securities through multi-security auction using the multiple price method, the apex bank said in a statement.

The move by RBI is consistent with the stance of monetary policy and based on the current assessment of prevailing and evolving liquidity conditions. The apex bank, in its mid quarter monetary policy review on December 16, 2011, had stated that OMOs would be conducted as and when considered appropriate.

The RBI statement opined that auction will be in four price methods, government security (G-Sec) maturing 2017 with a coupon of 7.49%, G-Sec maturing 2018 with a coupon of 7.83%, G-Sec maturing 2021 with 7.80% and G-Sec 2022 with 8.08%. While there is an overall aggregate ceiling of Rs 12,000 crore for all the securities in the basket put together, there is also no security-wise notified amount.

In the past month, the central bank has also purchased government securities of over Rs 24,311 crore from the money markets in three installments as part of its efforts to infuse liquidity into the system.

The S&P CNX Nifty touched a high and low of 4,756.20 and 4,685.65, respectively.

The top gainers on the Nifty were BHEL up 2.93%, NTPC up 2.87%, Tata Power up 1.44%, Powergrid up 1.36% and Cipla up 1.19%. On the flip side, Jindal Steel down 7.15%, PNB down 4.49%, ICICI Bank down 4.08%, Cairn down 3.03% and Reliance Infra down 2.96% were the top losers on the index.

The European markets were trading on a positive note. France's CAC 40 surged 0.79%, Britain’s FTSE 100 up by 0.63% and Germany's DAX gained by 0.03%.

Asian markets continued their downtrend for third consecutive day on Wednesday as unease over the eurozone debt crisis overshadowed a strong rise in consumer confidence in the United States. On the first full day of trade after Christmas holiday, eyes were on Italy, which will hold a debt auction later amid weakened confidence after lenders in Europe deposited a record amount with the central bank.

Meanwhile, Seoul shares closed with a cut of about a percentage point as profit-taking weighed on the market on ex-dividend day, with high-yield shares bearing the brunt. Moreover, Taiwan stocks fell 0.4 percent, but Evergreen Marine led shipping shares higher on news that it will strengthen cooperation with an international shipping alliance to boost business in Asia-Europe trade routes. However, China’s Shanghai Composite ended virtually flat on Wednesday, with strength in energy and securities shares helped the index to reverse early losses, but turnover remained low in holiday-thinned trade.