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Indian markets remained choppy in a narrow range for the better part of the day as two central banks on either sides of the pacific kept equity markets on tenterhooks here.
After both retail and wholesale inflation numbers for the month of November alongwith industrial activity figures for October, announced recently, blew the 'green shoots of economic recovery' theory into smithereens, investors are now on the edge of their seats to see whether US Federeal Reserve decides to scale back its bond-buying program earlier than scheduled, which could lead to a significant correction in emerging markets, including India, in the short-term and dampen the festive spirit too.
Key benchmark indices ended lower dragged down by heavyweights. Oil & gas pack on the BSE sectoral indices tracking stocks of various sectors, ended down 1.6% lower followed by Auto, FMCG and banks. IT, Consumer Durables, TECk and healthcare indices gained as investors looked for security amid confusion.
The 30-share Sensex ended 56 points lower at at 20660 levels and the 50-share Nifty scrapped 14 points at 6155 levels.
At 1640 hrs, the partially convertible rupee was seen trading at 61.86-a-dollar, currently at it's day's peak.
Among heavyweights, HDFC twins, Sun Pharma, ITC and Bharti Airtel, were down between 0.6-2.2%, and also the top Sensex losers but gains in Infosys, ICICI Bank, Sesa Sterlite, TCS and L&T capped the losses.
Japan's Nikkei share average fell 1.6% to a 3-1/2-week closing low on Monday, hit by selling in futures and index-heavyweight stocks as investors positioned for a probable tapering in monetary stimulus by the Fed.
The Nikkei shed 250.20 points to end at 15,152.91, the lowest closing level since November 20. The Topix shed 1.3% to 1,222.95, with all of its 33 sub-sectors in negative territory.
Back home, market participants said expectations of a rise in interest rates by the Reserve Bank of India (RBI) and US Federal Reserve's comments on its stimulus programme are likely to keep the market nervous in the week ahead.
Foreign investors have pressed the panic button in the run up to Fed meeting have turned net sellers of Indian shares on Friday. Foreign institutional investors (FIIs) sold shares worth a net Rs 432.02 crore on Friday, 13 December 2013, as per provisional data from the stock exchanges.
The Fed will hold its two-day Federal Open Market Committee (FOMC) meeting on Tuesday and Wednesday, followed by a press conference by Fed Chairman Ben Bernanke.
But a bigger behemoth back home that threatens to beat the bulls back into their corrals is the RBI's mid quarter monetary policy review on December 18. Market is most likely to ignore a 25bps rate hike which is largely expected after november inflation figures dissapointed but a steeper rise could be hazardous in the short-term.
The Wholesale Price Index (WPI), a measure of inflation at wholesaler's level, rose to 7.52% in November from 7% a month ago mainly due to continued rise in vegetable prices. This takes the wholesale price inflation to a 14 month high. Markets were expecting inflation to be around 7%.
The prices of vegetables went up by 95.25% in November against a price rise by 78.38% in the previous month, marked by a rise in the prices of potato this time.
Consumer price index (CPI) for the month of November too rose 11.24% in November 2013 as compared to 10.17% (final) in October 2013.
In the broader market, the BSE Mid-cap index and Small-cap index ended 0.3% higher.
Market breadth was weak with 1,326 losers and 1105 gainers on the BSE.
Other shares
Shares of GlaxoSmithKline Pharmaceuticals shot up by 18.6% to at Rs 2,927.40 on the BSE after its parent company GlaxoSmithKline plc announced a voluntary open offer to increase its stake in its Indian arm, from 50.7% to up to 75% at a price of Rs 3,100 per share.
Shares in Elder Pharmaceuticals tanked 8.6% to Rs 272.70, extending its Friday’s 9% fall, after the company sold its domestic formulations business in India and Nepal, to Torrent Pharmaceuticals for Rs 2,004 crore.
Aurobindo Pharma jumped 12.6% at Rs 348.95, extending its Friday’s 4% rally, after said it has received the final approval from the U.S. health regulator to manufacture and market Duloxetine Hydrochloride Delayed-Release capsules, an anti-depressant drug, in the American market.
Sesa Sterlite has surged nearly 4.5% to Rs 200.50 on hopes of the restarting its iron ore mines in the state of Karnataka.
