The Indian benchmark indices ended with marginal losses for the first time in eight trading sessions retreating from 14-month high. Markets seem to have taken a breather after participants preferred to book some profits at the 5650 levels.
Frontline Indian indices had a largely rangebound session on Tuesday and ended a tad lower.
Bold policy measures taken by the government regarding FDI in aviation and retail lifted the Nifty to close above the 5600 mark on Monday. The RBI’s move to merely cut CRR by 25bps proved to be a dampener.
The Oil & Gas, IT and the Pharma stocks were among the major laggards today. They seem to be out of fashion anyways as attention shifts to riskier assets. For a change the broader indices were seen playing the catching up game. The BSE Mid-Cap and the Small-Cap indices ended higher by 0.9% and 0.7% respectively outperforming the benchmark Indian indices.
Finally, the BSE Sensex closed at 18,496, down 46 points over the previous close. It had earlier touched a day's high of 18,580 and a day's low of 18,469. It opened at 18,514.
The NSE Nifty ended at 5,600, down almost 10 points over the previous close. It earlier touched a day’s high of 5,620 and a day’s low of 5,586 after opening at 5,602.
“Any further rally in the markets would depend on additional measures to boost economy coming in from the Department of Revenue, Disinvestment and SEBI. Technically, the new pivot for the current up move would be 5550 mark. The momentum would be on the upside unless the Nifty stays above the pivot point of 5550,” says Amar Ambani, Head of Research, IIFL.
Cairn, Wipro, TCS, Hindalco, Reliance Industries, Tata Motors, DLF, Cipla, NTPC and Tata steel were among the major losers in BSE Sensex and Nifty.
While, PNB, BHEL, SBI, Bank of Baroda, Gail, Jindal Steel, JP Associates and Axis Bank were among the major gainers in Sensex and Nifty.
The INDIA VIX on NSE gained 0.3% to end at 17.83. It hit a day’s high of 18.09 and a day’s low of 16.17.
Alstom T&D India advanced 4.6% to close at Rs.189.20 and Schneider Electric Infrastructure ended at a new high of Rs.98.60, up 8.9% after the parent companies of both the firms made a mandatory tender offer to buy up to 26% each of Alstom T&D and Schneider Electric respectively.
As an exception to other IT shares, Infosys gained 1.5% to finish at Rs.2,599.65 after Bank of America Merrill Lynch gave a ‘buy’ rating on the stock.
After rising earlier, Tech Mahindra closed tad lower at Rs.901.05, down 0.3%. The stock earlier rose after it purchased a 51% stake in mobile application company Comviva for Rs.2.6bn.
Deccan Chronicle Holdings extended losses made on Monday and was locked at the 5% lower circuit of Rs.9.85 after its Deccan Chargers cricket team’s contract to play in the IPL was canceled by Board of Control for Cricket in India after owners refused to sell the franchise.
Hindalco Industries extended the previous session’s losses and fell to Rs.114.75, down 2.1%, after SBI Capital Markets said that the company had borrowed Rs.99bn to fund its smelter project in Odisha.
In a span of two days, the Indian government announced much anticipated measures that were aimed at shrugging of its image of policy paralysis.
First, after 15 months, the government hiked the prices of diesel by a little over Rs.5 per litre and reduced the subsidies on LPG. The move was aimed at cutting under recoveries of oil marketing companies and reining in the government’s twin deficits.
Next, on Friday evening, the government approved divestment in four public sector undertakings, and gave a green signal to the much anticipated moves of allowing Foreign Direct Investment in aviation, multi-brand retail, power exchanges and broadcast.
However, the a dampener came in the form of a sharply higher reading of the Wholesale Price Index for August which stood at 7.55% versus 6.87% in July. As a result, the Reserve Bank of India, which has constantly maintained controlling inflation as its priority, left key interest rates unchanged at its monetary policy review on Monday. However, it reduced the Cash Reserve Ratio, the amount of funds that the banks have to keep with the RBI, by 25 basis points, thus injecting some liquidity into the system.
Globally, mid last week at the various meetings of central bankers of the western countries, the European Central Bank announced unlimited bond buying and the US Federal Reserve announced the third round of Quantitative easing. Both announcements had cheered world markets.
In Asia today, Japan’s Nikkei and China’s Shanghai Composite ended down 0.4% and 0.9%, respectively, on growing tensions between the two counties on the disputed islands. Hong Kong’s Hang Seng also closed down 0.3%. South Korea’s Kospi was tad up 0.1% while Taiwan’s Taiex was down 0.4%. Australia’s ASX/200 and the Singapore Straits Times lost 0.2% and 0.4% respectively.
Stocks in Europe were also trading lower amid fresh concerns regarding the regions debt crisis as Spain’s bond yield’s climbed. London’s FTSE was down 0.6% while France’s CAC and Germany’s DAX were trading lower by 1% each.