Market in dark post festival of lights

Sensex ends at fresh one-week low of 20,822.77, down 72 points, falls for 3rd day

It was a volatile session for markets today which saw key benchmark indices moving in a broad range. Even the broader markets which survived the last two days of profit booking were seen coming under selling pressure. Markets erased its early gains after rating agency Standard & Poor's (S&P) on Thursday said it may cut India's sovereign rating to below investment grade should the next government fail to provide a credible plan to reverse the country's low economic growth.

"The outlook remains negative, indicating that we may lower the rating to speculative grade next year if the government that takes office after the general election does not appear capable of reversing India's low economic growth," said the ratings agency in its report on Thursday.

The 30-share BSE Sensex closed at 20,822 down 72 points after touching a high of 21142.85 during the day while the broader 50-share Nifty index closed at 6,187 levels down 27 points; the index touched a high of 6,289.

Broader markets too came under selling pressure today with BSE Small-cap and mid-cap indices slipping over 1% each.

"Markets succumbed to selling pressure on Thursday as mid-caps failed to build on recent gains. CNX Mid-cap index closed lower by ~1.5% as it struggles to cross above its 200-WMA. Nifty had been moving in a rising channel pattern on the daily chart, which was violated on Thursday. So Nifty could attempt recent swing low of 6,079 which is likely to act as a strong support" said Pritesh Mehta, Senior Technical Analyst at India Infoline Ltd.

S&P affirmed their sovereign credit rating on India, adding that the outlook on Asia's third-largest economy remains negative. India's is rated at "BBB- minus" which is the lowest grade investment rating. S&P however said it may revise the country's outlook back to "stable" should a new government have an agenda to restore growth, improve the country's finances, or allow the implementation of an effective monetary policy.

The partially convertible rupee recovered to 62.54-a-doLlar after hitting an intraday low of 62.73 on suspected RBI intervention said reports. It had closed at a five-week low of 62.39/40 on Wednesday. IT stocks were the top gains today due to weakness in Rupee.

The rupee will struggle to gain any ground in the next 12 months due to uncertainty around elections, the external deficit and the impact of a possible tapering in the Federal Reserve's stimulus programme, a Reuters poll showed. The rupee has rebounded a little more than 10% since falling to a record low of 68.8 against the dollar at the end of August, boosted by inflows after the Fed refrained from reducing its $85 billion a month bond purchase programme and as the Reserve Bank of India tightened liquidity. But that rally came after a 20% plunge since mid-May when rising interest rates in the United States and fears of Fed tapering led investors to dump emerging market assets.

Despite a weak closing yesterday, Foreign institutional investors (FIIs) were net buyers of Indian stocks worth Rs 271.70 crore on Wednesday, according to provisional data from the stock exchanges. This shows foreigners continue to remain bullish on Indian stocks.

Top Sensex gainers today were Tata Steel, Infosys, TCS, Hindalco and Bajaj Auto while BHEL, SBI, ICICI Bank, Tata Power and Tata Motors were the top laggards.

Among sectors, IT and Metals were the only major gainers. Realty, consumer durables, banks, power, PSU, capital goods, oil & gas and auto were the major losers.

The overall breath remained weak as 1117 stocks advanced against a decline seen in 1415 stocks.

OTHER STOCKS

The state run capital goods major Bharat Heavy Electrical (BHEL) Ltd tanked after posting weak Q2 numbers yesterday. The profit after tax (PAT) declined by 64% YoY and 2% quarter on quarter (QoQ) to Rs455 crore sales which stood at Rs8,980cr shrunk by 15% yoy and was lower than street expectations. Operating margins sipped by 13.4 yoy due one-offs related to BHPV merger (Rs1.9bn) and provisioning for doubtful debtors worth Rs300cr, for the second quarter ended September 30, 2013. The stock closed at Rs 134.60 over 4% lower than its previous close at the BSE.

Auto major Ashok Leyland which also came out with its results yesterday, reported a net loss of Rs 25.05 crore in the second quarter ended September, with the commercial vehicles segment remaining hit by a demand slump. The stock crashed over 5% today and closed at Rs. 16.85 on the BSE.
 
Tata Coffee has tumbled 10% to Rs 1,020 after reporting a consolidated net loss of Rs 30 crore for the second quarter ended September 30, 2013 (Q2) against profit of Rs 45 .85 crore in the corresponding quarter of previous fiscal.