Market ends lower amid volatility

Market recouped some of its losses in closing deals after hitting a bottom when a Reserve Bank of India (RBI) report flagged inflation and asset quality issues as key risks to financial stability.

It was a volatile session that saw key indices move in narrow range for the better part of the day. Market touched its day's low in afternoon deals a Financial Stability Report by the Reserve Bank of India (RBI) flagged concerns over continuing high inflation amid slowdown in growth. The report also raised a red flag on asset quality of commercial banks sending banking stocks tumbling.

All heavyweight banking stocks ended the day in red with ICICI Bank leading the fall; it was down 1.7%, Axis Bank ended 0.5% lower while state lender SBI was down 0.3%.

The 30-share Sensex ended 50 points lower at 21,143 and the 50-unit Nifty was down 23 points at 6,291.

Top Sensex gainers were BHEL and Coal India which ended 2.6-3.5% higher, HDFC and Tata Motors which 0.9-1.2% higher and RIL ended at 0.7%. While top laggards were Infosys down 1.7%, Bajaj Auto down 1.7%, M&M down 1.7% and Cipla down 1.4%.

Broader markets remained mixed as BSE mid-cap closed 0.10% lower while small-cap index was up 0.22%. Gitanjali Gems fell over 9.5% and was the top loser in BSE mid-cap index.

BSE Metal, oil & gas, and FMCG indices were the only gainers on the BSE indices tracking sectors.

 
BSE realty index ended 1.7% lower, banking index was down 0.8%, IT index tanked 0.8% and were the top laggards among BSE sectoral indices.

Fall in domestic savings and high fiscal deficit are other major concerns for India, said RBI in the financial stability report. Inadequate social security coverage in India against a backdrop of changing demographics will pose challenges for expanding the pension system given the fiscal constraints, said the report. RBI also raised concerns on asset quality of banks. Five sectors, namely, Infrastructure, Iron & Steel, Textiles, Aviation and Mining together contribute 24 percent of total advances of Scheduled Commercial Banks (SCBs), and account for around 53 per cent of their total stressed advances.

Investors will now wait for April-November fiscal deficit data, due on Tuesday, and the manufacturing PMI (Purchasing Managers' Index) for December, due on Thursday, which will help them gain insights into the extent of the economic slowdown.

The Indian rupee remained weak due to dollar demand by oil importers. The rupee was trading at Rs 61.99 compared to previous close of Rs 61.85 per dollar. Currency dealers see the rupee trading in the range of Rs 61.80 to Rs 62.20 during the day.

In Asia, Japan's benchmark stock index, the Nikkei, surged to a fresh six-year high on Monday. The benchmark index is likely to register a rise of over 55% to record its biggest annual gain since 1972. Nikkei gained 0.69%, while China's Shanghai Composite was off 0.18%. Shares in Hong Kong were unchanged with the Hang Seng at 23,244.87.

Index heavyweight Infosys was down 1.66% amid profit taking after the stock hit new all-time highs last week.

Among other shares, Gati Limited is locked in upper circuit of 20% at Rs 43.95, extending its previous day’s rally, on back of heavy volumes on the bourses. In past two trading sessions, the stock has surged 30% from Rs 33.80 after the lender IL&FS Financial Services sold 1.5 million shares of the company for Rs 5.33 crore through open market. The name of the buyers is not immediately known.

JSW Steel has moved higher by 1.30% at Rs 1,020, after touching its highest level since January 2011during the day, after the company said one of its promoters has acquired around 300,000 equity shares of the company through open market transaction.

TVS Motor Company closed 15.65% higher at Rs 79.45, its highest level since December 2010, on back of heavy volumes on the National Stock Exchange (NSE).

Market breadth was positive with 1368 gainers and 1145 losers on the BSE.