Market pares losses

Recovery in stocks of private sector banks and index heavyweight Infosys led intraday recovery for key benchmark indices in mid-afternoon trade. At 14:19 IST, the barometer index, the S&P BSE Sensex, was off 96.87 points or 0.34% at 26,028.01. The Nifty 50 index was currently off 25.45 points or 0.32% at 7,905.90. The Sensex was currently trading above the psychological 26,000 mark having alternately moved above and below that level in intraday trade so. The Sensex trimmed losses after hitting its lowest level in almost a week. The Nifty trimmed losses after hitting one-week low.

The market breadth indicating the overall health of the market was positive. On BSE, 1,385 shares rose and 1,238 shares fell. A total of 148 shares were unchanged. The BSE Mid-Cap index was currently up 0.03%. The BSE Small-Cap index was currently up 0.05%. Both these indices outperformed the Sensex.

In overseas stock markets, European stocks edged higher as a lower-than-expected reading on inflation for November 2015 strengthened market expectations that the European Central Bank will announce a round of fresh measures to boost the eurozone economy at its regular monetary policy review scheduled today, 3 December 2015. Asian stocks declined after hawkish comments from Federal Reserve Chairwoman Janet Yellen reinforced the case for an interest rate hike during the middle of this month.

US stocks fell yesterday, 2 December 2015, as Yellen signalled a readiness to hike interest rates and US data indicated a solid labour market. Yellen said she was looking forward to a US rate hike that will be seen as a testament to the economy's recovery from recession, although she did not indicate if she still expected a hike would be warranted at the Fed's last policy meeting of the year on 15-16 December 2015. The Fed-funds futures market is pricing in 75% probability of an increase in US benchmark interest rate in December.

Investors in emerging markets, including India are worried that once the Fed starts raising interest rates, it will drain liquidity from global emerging markets and redirect it to developed economies. The Fed has held its benchmark short-term interest rate near zero since December 2008. The ultra-loose monetary policy in the US has encouraged heavy investment in higher-yielding emerging markets.

Index heavyweight and IT major Infosys erased almost entire intraday losses. The stock was currently off 0.02% at Rs 1,059.95. The stock was volatile. The stock hit high of Rs 1,065.25 and low of Rs 1,050 so far during the day.

Telecom stocks gained. Bharti Airtel (up 0.08%), Tata Teleservices (Maharashtra) (up 12.75%) and Idea Cellular (up 0.18%) gained.

Reliance Communications (RCom) jumped 7.96% after the company said 6 crore shares or 2.41% of Reliance Communications stake pledged by one of its promoter group entities Reliance Communications Enterprises have been released. After the release of 6 crore pledged shares, the percentage of shares pledged by Reliance Communications Enterprises has fallen to 15.34% of RCom's equity. Reliance Communications Enterprises holds 29.05% stake in RCom.

Cement stocks were mixed. ACC (down 0.34%), Shree Cement (down 0.91%) and Ambuja Cements (down 1.05%) declined. UltraTech Cement rose 1.48%.

Grasim Industries gained 0.49%. Grasim has exposure to the cement sector through its holding in UltraTech Cement.

Just Dial (down 3.85%), IIFL Holdings (down 3.32%), JK Tyre & Industries (down 2.9%), Jindal Steel & Power (down 2.44%) and Apollo Tyres (down 2.32%) were the top losers from the BSE A group shares.

Eicher Motors gained 1.61%. The company disclosed that due to heavy rains in Chennai, the company has shut down its manufacturing plants in Thiruvottiyur and Oragadam and its offices in the city since 1 December 2015. The company suffered a production loss of 4,000 motorcycles last month due to heavy rains. The company is monitoring the situation closely and hoping for normalcy to return soon.

Meanwhile, the seasonally adjusted Nikkei Services Business Activity Index fell to 50.1 in November from October's eight-month high reading of 53.2, pointing to slowdown in growth in India's services sector. The reading of 50 separates contraction from expansion. Services companies displayed a lack of optimism with regards to the 12-month outlook for activity, as sentiment dropped to the lowest in the ten-year survey history. Difficult economic conditions and weak demand reportedly hit confidence.

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