Weak global cues weighed heavily on Indian markets

Indian markets slipped ahead of rate decisions from the European Central Bank and the Bank of England later in the day, and on the back of weak global cues. The Sensex closed at 16,225, down 271 points from the previous day’s close while the Nifty declined 87 points to close at 4,845. 

We had said yesterday that Indian markets will check their gains today and they did so. However, bourses are on an edge now. Check out 16,100 for support. If this level is breached, we may see a sharp downfall.

As per reports, the two top stock exchanges, the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE) have decided to hold a special trading session on Saturday, 6 February 2010, as the NSE is testing an upgraded trading system. Trading will begin at 11:00 IST and end at 12:30 IST.

At 11:00 hrs IST the Sensex was trading at 16,378, down 118 points from the previous day’s close. However, at 13:00 hrs IST, the Sensex declined 107 points from the previous day’s close and was trading at 16,389.

At the end of the day, Housing Development Finance Corporation (HDFC) declined 3% after the RBI announced that it would disallow non-banking finance companies (NBFCs) and housing finance companies (HFCs) from resorting to short-term foreign currency borrowings.

The RBI cited prevailing macroeconomic conditions and improvements in domestic credit and liquidity conditions for this move. This is seen as part of the central bank’s efforts to gradually reverse its soft money policy.

Wipro Consumer Care and Lighting, the FMCG arm of Wipro, is reportedly in advanced talks to buy Nigeria-based skincare company Tura International. The stock was down 3%.

Telecom stocks declined on reports that the auction for the much-awaited 3G mobile phone services may not be held by 31 March 2010. Bharti Airtel fell 2% while Reliance Communications declined 4%.

Oil & Natural Gas Corporation rose 1% after a report from an expert group headed by Kirit Parikh on Tuesday suggested freeing petrol and diesel prices as well as raising LPG rates by Rs100 a cylinder and kerosene prices by Rs6 per litre. The Parikh committee’s suggestions, submitted to petroleum minister Murli Deora, would see a hike of Rs3 per litre in petrol and Rs3-Rs4 per litre hike in diesel, if implemented. GAIL India was up 3%.

Aurobindo Pharma has received the final approval for Cetirizine Hydrochloride Solution (1 mg/ml) from the US Food & Drug Administration (FDA). The stock was up 2%.

During trading hours, government data released showed that food inflation rose to 17.56% in the week ended 23 January 2010 from 17.40% in the previous week following rising prices of potato and pulses. The inflation for primary articles, which includes food and non-food items, marginally eased to 14.56% in the reporting week from 14.66% in the previous week. The fuel price index rose 5.88%.

During the day, Asia’s key benchmark indices in Taiwan, Hong Kong, Japan, China and Singapore were down by between 0.08%-1.84% while South Korea’s index rose 0.09%.

As per reports, Australia’s Bureau of Statistics said that retail sales in December 2009 sank 0.7% from November 2009. This was lower than median forecast of economists of a 0.2% gain.

On Wednesday, 3 February 2010, the Dow Jones Industrial Average and the S&P 500 fell 26 points and 6 points respectively on reports that the US president pledged to complete banking and healthcare reform while the Nasdaq Composite index rose 1 point.

As per US reports, the ISM Non-Manufacturing Index rose to 50.5 in January from 49.8 in December, but fell short of economists’ expectations of 51. On the jobs front, ADP reported that 22,000 jobs were lost from private payrolls in January.

However in premarket trading, the Dow was trading 53 points down.