The Indian markets suffered sharp cuts in the final hours of last session, their steepest fall in the last six weeks. There was global risk aversion coupled with weak manufacturing data that once again pulled Sensex below the 21K mark. Today, the start is likely to be in red taking cues from the global markets. Marketmen will be eyeing the press conference of the Prime Minister where he will seek to dispel the perception of policy paralysis and will also highlight the steps taken to boost the economy. Meanwhile, unperturbed by the rise in the fiscal deficit, Finance Minister P Chidambaram has exuded confidence that it would remain within the target of 4.8 per cent of GDP in the current financial year. There will be some buzz in the power sector, as the Cabinet Committee on Economic Affairs cleared the proposal to amend the policy on Mega Power Policy 2009 for provisional Mega Power projects. There will be some negative reaction among the PSU OMCs, as the government has said that it will “look into” a demand to raise the quota of subsidised LPG cylinders to 12 per household in a year from the current limit of nine.
The US markets made a weak start of the New Year, as traders looked cashing in their recent gains coupled with concerns about the outlook for the global economy. The Asian markets have mostly made a soft start; while the Japanese markets remained closed the Chinese market was down over a percent after country’s non-manufacturing gauge fell to a four-month low.
Back home, Thursday’s session turned out to be a horrendous session for the Indian benchmarks which disintegrated like a ‘house of cards’ in last leg of trade and went on to breach various key technical levels in over a percent fall. The domestic benchmarks made a firm opening and traded in fine fettle for most part of morning trades but a sharp wave of selling pressure, which emerged in last leg of trade, dragged the key gauges below their crucial 6,250 (Nifty) and 20,900 (Sensex) levels. There was some support from rally in shares of public sector oil marketing companies (PSU OMCs) as their under-recovery on diesel declined for the first fortnight of January 2014. But, sentiments turned cautious after India’s manufacturing sector decelerated marginally in December as a slowdown in domestic order flows led to slower output growth. The HSBC India Manufacturing Purchasing Managers’ Index (PMI) - a measure of factory production - dropped slightly from 51.3 in November to 50.7 in December. Selling got intensified after European counters reversed their initial gains, while the Asian markets ended mixed on account of weaker-than-expected manufacturing data out of China. Back home, the selling was both brutal and wide based and barring software counter, none of sectoral indices on BSE were spared. Moreover, those counter which featured in the list of worst performers, included Realty, Capital Goods and Power. Moreover, intra-day reversal of Rupee, which pared all its morning gains, too weighed down the sentiment. The rupee was trading at Rs 62.10 per dollar at the time of equity markets closing compared with previous close of Rs 61.90 per dollar. Sentiment also got hurt after shares of public sector oil marketing companies (PSU OMCs) reversed intraday gains as crude oil prices rose. Banking pivotal, which had been one of the top gainers on the BSE, too witnessed sell-off on expectation that weak growth and higher inflation will spur the RBI to keep policy on hold later this month. Additionally, stocks like, Tata Power, Reliance Power and Reliance Infra etc. too edged lower after the Delhi government, rejecting the contention of private power distributors, ordered an audit of their finances by the government's national auditor or Comptroller and Auditor General (CAG). Finally, the BSE Sensex plunged by 252.15 points or 1.19%, to settle at 20888.33, while the CNX Nifty declined by 80.50 points or 1.28% to settle at 6,221.15.
