The market seems to have suffered a long-term damage today, crashing below the crucial 19,000 mark on the Sensex
The market opened lower, tracking the weakness in the global markets and nervousness ahead of the announcement of the wholesale price index-based inflation for December. Selling by institutional investors in banking and realty sectors on fears of a likely rate hike by the Reserve Bank of India, also added to the early losses. However, selective buying led to a gradual bounce-back into the green by noon.
The market touched its intra-day high in noon trade after which the bears tightened their grip, pulling down the indices sharply lower once again in the late session, in a repeat of the trend seen over the past couple of days. The sell-off resulted in the Sensex falling below the 19,000 mark in the last half-hour and the key indices settled near the low point of the day.
The upmove that started on 6 March has been seriously damaged today with the Sensex crashing below 19,000 and the Nifty falling through the 5,900 level, on continuous selling by foreign investors. It is significant, because for the first time since the rally began in March 2009, the indices have made a lower top and a lower bottom. The recent top at 20,664 (6,181 in Nifty) was lower than the previous top of 21,108 (6,338), while today's low of 18,812 (5,640 on the Nifty) is lower than the previous low of 18,954 (5,690). In fact, the indices are now trading at a level that is very close to the end of the two-year bull market. There will be short rallies, but unless the recent highs are crossed, the decline will continue.
The market breadth favoured the declining stocks, yet again. The Sensex had 25 losers against five gainers, while the Nifty ended with 42 declining stocks and eight in the advancing list. The broader markets outperformed the Sensex today. The BSE Mid-cap index was down 1.18% and the BSE Small-cap index fell 1.04%.
The sectoral space was a sea of red today. The BSE Realty was the top loser (down 2.77%), followed by the BSE Bankex (down 2.62%), BSE Metal (down 2.44%), BSE Auto (down 2.31%) and BSE Capital Goods (down 1.89%).
Tata Power (up 2.11%), Wipro (up 1.77%) and Jindal Steel (up 0.31%) were the noteworthy gainers in the Sensex list. Tata Motors (down 4.62%) led the losers list that included HDFC Bank (down 4.16%), HDFC (down 3.95%), Sterlite Industries (down 3.45%) and Bajaj Auto (down 3.09%).
Inflation shot up to 8.43% in December, from 7.48% in the previous month, as prices of certain food and non-food items continued to show an upward trend, according to official data announced today. After moderating somewhat in November, the overall inflation-measured on the basis of wholesale prices-rose in December, as vegetables like onions, and other protein-based items became expensive.
With inflation showing no signs of moderating, it is widely expected that the Reserve Bank of India will raise key policy rates at its quarterly review of monetary policy on 25th January.
Markets in Asia closed mostly lower today as crude and metal prices declined and on the slowing pace of the global recovery. Rumours of the Chinese government raising interest rates and bank reserve requirements again played on investors' minds. The Beijing government has ordered banks to set aside more reserves six times and hiked rates twice in 2010 to curb asset bubbles after hefty gains in lending and property prices.
The Shanghai Composite tumbled 1.31%, the KLSE Composite declined 0.11%, the Nikkei 225 fell 0.86%, the Straits Times was down 0.30% and the Taiwan Weighted shed 0.03%. On the other hand, the Hang Seng rose 0.18%, the Jakarta Composite added 0.12% and the Seoul Composite surged 0.89%.
Back home, foreign institutional investors were net sellers of stocks worth Rs249.77 crore on Thursday. On the other hand, domestic institutional investors were net buyers of equities worth Rs242.42 crore.
Tata Coffee (up 20%) on Thursday roped in the iconic coffee chain Starbucks to jointly source and roast the beans from its plantations, which in turn would pave the way for the American coffee brand to enter the domestic market, six months down the line. The Seattle-based Starbucks, the world's largest coffee chain has been planning to enter the Indian market for the past five years.
Pharma major Lupin (down 1.53%) has received final approval from the US health regulator to market Nabumetone tablets, used in treating arthritis, in the American market. The company's US arm, Lupin Pharmaceuticals Inc, has been granted final approval by the US Food and Drug Administration for Nabumetone tablets in strengths of 500mg and 750mg, Lupin said in a statement filed with the exchanges.
Nabumetone is the generic equivalent of GlaxoSmithKline's Relafen tablets, used for treatment of acute and chronic osteoarthritis and rheumatoid arthritis.
Gearing up to intensify its play in the luxury segment, Maruti Suzuki India (down 2.88%) is set to launch its sedan Kizashi next month. The vehicle, to be imported fully from parent Suzuki's facility in Japan, will be positioned between the likes of Honda Accord and Toyota Camry at the upper end and Honda Civic, Volkswagen Jetta and Toyota Corolla at the lower end.
As some of the top bankers in the US vie to manage what could be one of the largest share sales in history, Cramer said there's no reason Goldman Sachs shouldn't be considered for the AIG share sale.