Market drops on fiscal deficit concerns

The stock market registered modest losses after previous three sessions of gains. The barometer index, the S&P BSE Sensex, fell 227.80 points or 0.68% at 33,227.99, as per the provisional closing data. The Nifty 50 index declined 84.80 points or 0.82% at 10,237.45, as per the provisional closing data. The Sensex, and the Nifty, almost traded in negative terrain throughout the session after a shaky start. Telecom stocks dropped. Index heavyweights ITC, HDFC Bank and coal mining major Coal India dragged the indices lower.

The stock market dropped on profit booking after previous three sessions of gains. Weakness in Asian stocks and subdued trading on European bourses weighed on sentiment on the domestic bourses. Market sentiment also took a hit amid surging global crude oil prices. Brent crude oil futures mounted past $65 a barrel today, 12 December 2017, stoking India's fiscal deficit concerns. India imports majority of its crude oil requirement and a jump in crude prices badly affects its delicate fiscal position. Lingering non-performing assets (NPA) concerns, looming over India's banking sector also weighed on investor sentiment.

The Sensex lost 276.04 points, or 0.82%, at the day's low of 33,179.75 in mid-afternoon trade, its lowest level since 8 December 2017. The index rose 2.62 points at the day's high of 33,458.41 in early trade. The Nifty lost 92.05 points, or 0.89%, at the day's low of 10,230.20 in mid-afternoon trade, its lowest level since 8 December 2017. The index rose 3.85 points, or 0.03%, at the day's high of 10,326.10 in early trade.

Among secondary indices, the S&P BSE Mid-Cap index provisionally fell 1.01%, underperforming the Sensex. The S&P BSE Small-Cap index provisionally fell 0.68%, matching Sensex's slide in percentage terms.

The breadth, indicating the overall health of the market, was weak. On the BSE, 1,681 shares declined and 999 shares rose. A total of 149 shares were unchanged.

The total turnover on BSE amounted to Rs 4457.61 crore, lower than turnover of Rs 4888.16 crore registered during the previous trading session.

Telecom stocks dropped. Idea Cellular (down 2.45%) and Bharti Airtel (down 1.5%) declined. Reliance Communications (up 0.52%) advanced.

Shares of telecom tower infrastructure provider Bharti Infratel fell 3.37% at Rs 355.55.

Index heavyweight and cigarette major ITC declined 1.73% at Rs 261.

Private sector banking giant HDFC Bank fell 1.39% at Rs 1,824.

State-run coal mining major Coal India dropped 2.37% at Rs 263.45, with the stock being the biggest loser among the 30-share Sensex pack.

Dr Reddy's Laboratories (DRL) advanced 2.74% at Rs 2,253.55 after the company said it has received an Establishment Inspection Report (EIR) from the United States Food and Drug Administration (USFDA) yesterday, 11 December 2017, as closure of audit of the company's formulations manufacturing plant - 3 at Bachupally, Hyderabad. The announcement was made after market hours yesterday, 11 December 2017.

On macro front, the government will announce industrial production data for October today, 12 December 2017. India's industrial production increased by 3.8% year-on-year in September, following an upwardly revised 4.5% gain in the previous month.

The government will announce today, 12 December 2017, inflation data based on consumer price index (CPI) for November. Consumer prices increased 3.58% year-on-year in October, above 3.28% in September.

Overseas, European stocks edged slightly higher as investors look ahead to Fed, ECB meetings. Asian stocks declined as investors turned cautious after several days of advances, erasing early gains. Markets are awaiting the Federal Reserve meeting outcome on Wednesday and the outcome of a major Chinese planning conference.

US equities closed higher yesterday, 11 December 2017, reversing earlier weakness following a terror incident near New York City's Times Square. The Dow Jones Industrial Average and the S&P 500 notched record closing highs.

The US Federal Reserve's Federal Open Market Committee (FOMC) starts its two-day meeting on interest rates later in global day today, 12 December 2017. The US Federal Reserve will announce its interest rate decision tomorrow, 13 December 2017. The Federal Reserve left the target range for its federal funds rate unchanged at 1% to 1.25% during its November 2017 meeting as widely expected.

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