Closing Bell...Market Review

Late hour sell-off drag benchmarks below psychological levels

Indian benchmarks extended their southbound journey for sixth day in a row, hitting its lowest level in more than 9 weeks, with both the gauges snapping the Friday’s session with a brutal cut of over a percent as investors booked profits on the back of weak cues from European markets.

 Market participants also remained caution ahead of next week’s resumption of parliament weighed heavily with investors also factoring in the worsening global risk environment. The frontline equity indices traded on a sanguine note for most part of the day after Finance Minister urged RBI to start working on issuing final guidelines for granting licenses to new banks and receiving applications from the interested entities in anticipation of Banking Regulation Act (BRA) being amended. The frontline gauges even looked set to breach the psychological 18,600 (Sensex) and 5,650 (Nifty) levels in the session as investors continued to show across the board buying interest.

However, the domestic markets took a turn for the worse in late hours of trade as investors started to square off hefty positions across the board after rate sensitive realty, auto and bankex hammered badly in the late trade on Subbarao’s comments that India’s inflation rate is still high suggesting that the bank is unlikely to loosen monetary conditions anytime soon. Meanwhile, the traders shrugged off comments from Finance Minister P Chidambaram that the economy is likely to pick up in third and fourth quarters of the financial year. The minister also said that India can still meet the fiscal deficit target of 5.3 per cent of gross domestic product (GDP) for the current financial year.

Sentiments also remain dampened after oil marketing companies (OMCs) IOC, BPCL and HPCL tumbled over half a percent after OMCs slashed petrol prices by Rs 0.95 per litre (excluding of local levies) from Nov 15 midnight after the oil ministry pushed them to pass on the benefit of softening of international rates without further delay. Petrol prices were last revised on October 27, 2012 when they were raised by 29 paise after the government increased the commission paid to petrol pump dealers.

The sentiments were further weighed down by the concerns over global growth recovery amid concerns about the looming US ‘fiscal cliff’. The European markets opened in the red as sentiment turned bearish after euro-zone slipped back into recession for the first time in three years. While, most of the Asian equity indices ended the session in the red as euro-zone and US fiscal woes continued to dent confidence. However, Japanese Nikkei edged higher on Friday as investors bet Japan’s main opposition party to win next month’s election and put more pressure on the central bank to stimulate the ailing economy.

Back home, some amount of pressure also came in from telecom space after Kapil Sibal, Telecommunications Minister reported that 2G spectrum story needs to be taken forward with government intending to hold an auction of mobile phone airwaves that were left unsold at a sale this week before March 31, 2012. Even sugar stocks ended sour in wake of the reports suggesting that Centre seeking state governments’ views on the Rangarajan report on sugar decontrol. On the positive front, software and technology stocks held their head above water as rupee dropped against the dollar today on uncertainty over the US fiscal cliff.

The NSE’s 50-share broadly followed index Nifty declined by over fifty five points to end below its psychological 5,600 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped by over two hundred points to finish below the psychological 18,300 mark. Moreover, broader markets too were traded in-line with benchmarks and snapped the session with a brutal cut of over a percentage point.

The overall volumes stood above Rs 1.60 lakh crore, which remained on the higher side as compared to that on Thursday. The market breadth remained in favor of declines as there were 1,099 shares on the gaining side against 1,749 shares on the losing side while 115 shares remain unchanged.

Finally, the BSE Sensex lost 162.00 points or 0.88% to settle at 18,309.37, while the S&P CNX Nifty declined by 56.95 points or 1.01% to end at 5,574.05.

The BSE Sensex touched a high and a low of 18,563.32 and 18,266.76, respectively. The BSE Mid-cap index was down by 0.89% and Small-cap index was down by 1.13%.

Bharti Airtel up 3.47%, Infosys up 2.08%, Dr Reddys Lab up 1.83%, Coal India up 0.85% and ONGC up by 0.77% were the major gainers on the Sensex. On the flip side, ICICI Bank down 2.65%, Tata Motors down 2.64%, Cipla down 2.33%, Hindustan Unilever down 2.27% and SBI down by 2.13% were the major losers on the index.

The few gainers on the BSE sectoral space were TECk up 0.46% and IT up 0.43%. While, Realty down 3.36%, Bankex down 1.61%, Auto down 1.50%, Capital Goods down 1.44% and FMCG down 1.36% were major losers on the BSE sectoral space.

Meanwhile, Finance Minister P Chidambaram has asked the Reserve Bank of India (RBI) to finalise guidelines for new bank licences and start accepting applications for the same in anticipation of the amendment in the Banking Regulation Act. The draft norms have pegged the minimum required capital for promoting bank at Rs 500 crore and limit foreign shareholding at 49% for the first 5 years.

As per the RBI's draft norms released in August 2011, private sector firms or groups owned and controlled by Indian promoters, with diversified ownership, sound credentials and integrity, and having successful track record of at least 10 years, would be eligible to promote banks.

The Minister further said the power or the authority which the RBI wants is already available in the other provisions of the law and with the central bank's own regulations and guidelines for new banking licenses.

Further, if RBI proceeds to receive application and process them, even then the first banking licence is not likely to be issued in the next six or eight months. Hence, with the time the licence is issued and the banks come to existence and the banks begin to function, the banks regulation act would have been amended, the Minister added.

The S&P CNX Nifty touched a high and a low of 5,650.15 and 5,559.80 respectively.

The top gainers on the Nifty were Bharti Airtel up 3.08%, Dr Reddy up 1.88%, Infosys up 1.77%, ONGC up 1.20% and Jindal Steel up by 0.52%.

The top losers on the index were IDFC down 3.61%, Reliance Infra down 3.53%, Tata Motors down 3.29%, DLF down 3.27% and Kotak Bank down by 3.19%.

European markets were trading in red. France’s CAC 40 down 0.61%, Germany’s DAX down 0.58% and Britain’s FTSE 100 down by 0.62%.

Asian markets ended mixed on Friday amid continued worries about eurozone and US fiscal crisis which dented investor’s sentiments. However, Nikkei ended with smart gains of 2.2% on hopes of further monetary easing measures by the Bank of Japan ahead of elections in December. Meanwhile, Chinese shares witnessed fifth loss in seven days on Friday, following other underperforming Asian peers as traders slashed risk exposure on uncertainty about the policies of the country's new leadership team.

Asian Indices	Last Trade	Change in Points	Change in %
Shanghai Composite	2,014.72	-15.57	-0.77
Hang Seng	21,159.01	50.08	0.24
Jakarta Composite	-	-	-
KLSE Composite	1,629.28	-2.40	-0.15
Nikkei 225	9,024.16	194.44	2.20
Straits Times	2,945.63	-0.29	-0.01
KOSPI Composite	1,860.83	-9.89	-0.53
Taiwan Weighted	7,130.07	-13.77	-0.19