Stocks from IT and auto sector, oil exploration and production companies' shares and index heavyweights ITC and L&T led losses for key benchmark indices. The barometer index, the S&P BSE Sensex, lost 250.37 points or 0.97% at 25,616.58, as per the provisional closing data. The losses for the Sensex were higher in percentage terms than those for the Nifty 50 index. The Nifty lost 62.75 points or 0.8% at 7,762.25, as per the provisional closing data. Data showing acceleration of consumer price inflation in October 2015, deceleration in industrial production growth in September 2015 and weakness in global stocks hit sentiment on the domestic bourses adversely.
After a weak opening, the Sensex and the Nifty remained in negative zone throughout the day's trading session. The Sensex slumped 326.22 points or 1.26% at the day's low of 25,540.73 in mid-morning trade. The barometer index lost 142.86 points or 0.55% at the day's high of 25,724.09 in opening trade. The Nifty slumped 94.10 points or 1.2% at the day's low of 7,730.90 in early afternoon trade. The index lost 49.90 points or 0.63% at the day's high of 7,775.10 in mid-afternoon trade.
The market breadth indicating the overall health of the market was weak. On BSE, 1,649 shares declined and 936 shares advanced. A total of 159 shares were unchanged. The BSE Mid-Cap index was provisionally down 1.37%. The decline in this index was higher than the Sensex's decline in percentage terms. The BSE Small-Cap index was provisionally down 0.76%. The decline in this index was lower than Sensex's decline in percentage terms.
On the macro front, the latest data showed that inflation based on the consumer price index (CPI) accelerated to four-month high of 5% in October 2015, compared with 4.4% reading in September 2015. Among the CPI components, inflation of food and beverages increased to 5.3% in October 2015 from 4.3% in September 2015 mainly contributing to the rise in CPI inflation. The increase in prices of pulses was the key driver of food price inflation.
Another data showed that growth in industrial production moderated to 3.6% in September 2015 from a revised growth of 6.3% in August 2015. Industrial production growth for August 2015 was scaled down to 6.3% in the first revision compared with 6.4% reported provisionally. Meanwhile, the growth for June 2015 was reduced to 4.2% at the final revision against the first revision from 4.4%, while it remained above 3.8% reported provisionally.
Overseas cues were negative. In Europe, key benchmark indices in Germany, France and UK hovered in red after the latest data showed that GDP growth in Germany, Europe's largest economy, decelerated to 0.3% in the third quarter from 0.4% in the second quarter. In Asia, Chinese stocks led decline in Asian equities as a slump in commodities markets deterred investors from riskier assets and as investors took the latest remarks from various US Federal Reserve officials as fresh a signal that the Fed is coming close to committing to an interest-rate increase in December 2015. US stocks dropped sharply yesterday, 12 November 2015, as a sharp slide in commodities triggered sell-off in shares of energy and raw-material providers.
The Fed-funds futures market is currently pricing in 70% probability of an increase in US benchmark interest rate in December 2015. 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. The next monetary policy review from the Fed is scheduled on 15-16 December 2015.
Index heavyweight and cigarette major ITC dropped 1.69% to Rs 329.35. The stock hit a high of Rs 333.80 and low of Rs 327.10 in intraday trade.
Index heavyweight and software major Infosys declined 1.28% to Rs 1,095. The stock hit high of Rs 1,107 and low of Rs 1,090 in intraday trade.
Auto stocks dropped. Tata Motors (down 2.25%), Mahindra & Mahindra (M&M) (down 1.16%), Eicher Motors (down 2.8%), Bajaj Auto (down 3.31%), Hero MotoCorp (down 1.45%) and TVS Motor Company (down 0.22%) declined.
Maruti Suzuki India fell 2.45%. Ashok Leyland shed 0.22%. These are two among the total of four additions made in the MSCI India index. MSCI said that the changes will be effective from the close of trading on 30 November 2015.
Capital goods stocks edged lower. Bharat Heavy Electricals (Bhel) (down 1.88%), ABB India (down 0.81%), BEML (down 2.17%), Bharat Electronics (down 2.17%), Siemens (down 0.23%) and Thermax (down 2.74%) declined. Crompton Greaves rose 0.44%.
Index heavyweight and engineering and construction major L&T fell 2.46% to Rs 1,332.90. The stock hit high of Rs 1,362 and low of Rs 1,330 in intraday trade.
Shares of Axis Bank and Kotak Mahindra Bank extended gains registered during the previous trading session triggered by the government's announcement that it has decided to introduce full fungibility of foreign investment in private sector banks. Axis Bank rose 0.79%. Foreign institutional investors can now invest up to sectoral limit of 74% in private sector banks, provided that there is no change of control and management of the concerned bank.
The decision to introduce full fungibility of foreign investment in private sector banks is among a slew of reforms and liberalisation announced by the government early this week for attracting foreign direct investment in the country.
Kotak Mahindra Bank gained 1.98%. The aggregate foreign shareholding in Kotak Mahindra Bank has reached the threshold limit and therefore currently no further purchase of shares is allowed by foreign institutional investors in Kotak Mahindra Bank.
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