The Indian equity market further cracked on Wednesday as the S&P BSE Sensex closed below the 19000 mark and the NSE Nifty ended below the 5700 level. Today’s decline was seen despite a recovery in the European markets.
Market opened with a gap down in early trades owing to negative cues from the US and the Asian markets. Benchmark indices did manage to stage a quick recovery however it was very short lived as selling pressure resumed after five DMK ministers submitted their resignations to the Prime Minister Manmohan Singh.
MK Alagiri, S S Palanimanickam, D Napoloean, S Jagatrakshakan and S Gandhiselvan resigned after the party declared its exit from the UPA government owing to the soft stand of government on alleged Sri Lanka genocide.
Speaking on DMK pullout, Finance Minister, P. Chidambaram said that the Government has begun to formulate amendments to UNHRC draft on Sri-Lanka. He also said that India wants a strong message to be sent out to Sri-Lanka. He said that government will continue to consult political parties on the issue. He said that a consensus is expected by the end of the say on UNHRC issue.
“Markets have slumped on concern that the withdrawal of the UPA’s biggest ally may jeopardize economic reforms. Further, bleak outlook on future rate cuts by the Reserve Bank of India also has dampened the sentiment. The uncertainty continues to prevail and traders and investors are advised to remain cautious. Although a short bounce cannot be ruled out after such a sharp sell-off. The near term support for Nifty is at the 5,605 level which is the 200 DMA,” says Amar Ambani, Head of Research, IIFL.
The BSE Realty index was the top laggards the index lost ~5% in a single day. Shares of HDIL plummeted by 21% to close at Rs47.85 after reports stated that rating agency CARE has revised rating of the company’s Non Convertible Debentures to ‘default’.
S&P BSE Power, Banking, PSU and Capital Goods index all fell more than 2% each.
The Mid-Cap and the Small-Cap index stocks were further torn apart as both the index closed lower by 2% and 2.3% respectively.
On the other hand, S&P BSE FMCG, IT and Auto index all ended in the positive terrain.
Finally, S&P BSE Sensex closed at 18,884, down 124 points over the previous close. It had earlier touched a day’s high of 19028 and a day’s low of 18836. It opened at 19026.
The NSE Nifty closed at 5,694, down 39 points over the previous close. It earlier touched a day’s high of 5,745 and a day’s low of 5,682. It opened at 5,740.
HUL, Asian Paints, Cipla, Tata Motors, Grasim, Lupin, TCS and Infosys were major gainers in Sensex and Nifty.
Reliance Infra, DLF, JP Associates, SBI, IDFC, ACC, NTPC, PNB and Bharti Airtel were among losers in Sensex and Nifty.
The advance decline ratio was in favour of bears. 2126 stocks declined against 761 advancing stocks, while 118 stocks remained unchanged.
The INDIA VIX was down 0.30% to close at 16.66. It hit a day’s high of 17.44 and day’s low of 16.17.
Stocks which hit 52-week high during the week were Vapi Paper, Rutron Intl, Sam Leaseco, Grandma Trad and Turbotech Engr.
Stocks which hit 52-week low during the week were ABB, Andhra Petro, Chambal Fert, BEML and BHEL.
Shares of Mannapuram Finance plummeted over 12% after the company said that weakening prices of gold might increase default on loans. The company said in an exchange filing “We expect an under-recovery of revenue on certain gold loan portfolios due to correction in gold price. This may result in reduction in profit numbers for the fourth quarter ending March 31, 2013”.
Shares of Steel Authority of India Ltd (SAIL) hit a 52 week low on Wednesday in the intra-day trade. The stock ended marginally higher to close at 65.70. According to reports, an inter-ministerial panel cleared 10.82% stake sale in SAIL. Reports stated that the issue will hit the market on Friday March 22, 2013. The Empowered Group of Ministers on Disinvestment, headed by Finance Minister P Chidambaram, met and decided on the pricing of the share sale.
Bharti Airtel dropped for fifth consecutive session. It touched a four month low of Rs275.60. The share ended lower by 3% after a court summoned Bharti Chief Sunil Mittal in the alleged connection to the 2G scam.
Other telecom stocks witnessed heavy selling pressure too. Reliance communications ended lower by 7%, Idea Cellular lost 1.5% while Tata Communications was down by 2.2%.
Shares of 3M India gained 1.02% on Wednesday. 3M Company, proposes to sell 113,198 equity shares of the face value of Rs. 10 each of the Company on March 21, 2013 through a sale on the separate windows provided by BSE and NSE respectively
After falling for past three straight trading sessions, the European markets bounced back on Wednesday. The Cyprus parliament announced that it has rejected bank deposit levy. The FTSE index in UK was up 0.2%, the DAX index in Germany was up 0.44% and the CAC index in France was up 0.6%.
Most Asian markets ended higher on Wednesday, The Shanghai Composite index in China gained 2.7%, and the Hang Seng index in Hong Kong was up 1%. However the Kospi index was down 1%. The Nikkei index in Japan was closed on Wednesday.