Markets slip into the red zone

The domestic equity markets have slipped into the negative zone and have hit fresh intraday low at this point of time due to sustained selling in some of the frontline stocks. Though BSE's Sensex managed to hold on to its crucial 20,000 mark, the NSE's Nifty could not keep the momentum going and breached the 6,000-mark once. Sentiments across the global markets were also not very supportive, as though most of the Asian markets settled in the positive zone, European markets were trading in mixed range. The US index futures were also showing down-tick in screen trade today. Back on the Dalal Street, while selling was witnessed across the board with metal, realty, public sector undertakings and fast moving consumer goods stocks leading the pack of losers, while Healthcare, Consumer Durables, Information Technology and Capital Goods stocks were trading firm. Trading volume on the street was around Rs 94,000 crore at this point of time. The market breadth on the BSE was positive; the gainers outpaced the losers in a ratio of 1461:1366 while 108 shares remained unchanged.

The BSE Sensex lost 18.26 points or 0.09% to 20,055.40. The index touched a high and a low of 20,190.13 and 20,020.78, respectively.  

The BSE Mid-cap index declined 0.06%, while BSE Small-cap index rose 0.27%.

Metal down 1.09%, Realty down 0.51%, Public Sector Undertaking (PSU) down 0.34%, Fast Moving Consumer Goods (FMCG) down 0.23% and Power down 0.19% were the only losers in the BSE sectoral space.

On the other hand, Healthcare (HC) up 0.78%, Consumer Durables (CD) up 0.50%, Information Technology (IT) up 0.38% and Capital Goods (CG) up 0.20% were the only gainers in the BSE sectoral space.

Meanwhile, even as the global crude oil prices continue to hover above the $90 a barrel mark and the oil marketing companies continuing to suffer heavy losses by selling fuels below the cost of production, the government has cleared that it has not yet made any decision on hiking the administered prices of diesel or cooking fuels.

The Empowered Group of Ministers (EGoM) led by the union finance ministry Pranab Mukherjee is expected to meet later this week to clear the prices hike. But Mukherjee himself stated on Saturday that the issue was being constantly monitored and while no decision had been made yet, there was no reason to press the panic button either.

'Prices of petroleum products are constantly under review. However, no decision has been taken on increasing prices of LPG and diesel. A group of ministers is looking into it and everything will have to be factored in before any decision. The Cabinet will take decision at an appropriate time,' Mukherjee said, while inaugurating the new hydrocracker unit and expansion of IOC's Haldia Refinery on Saturday.

He also praised the publically controlled OMCs saying they were doing a commendable job by keeping fuel prices in reach of the marginal section of society. "Even at this moment, when I am speaking to you, oil marketing companies are subsidising diesel at Rs. 5.41 per litre, kerosene at Rs. 16.88 per litre and LPG cylinders at Rs. 272.19 each," Mukherjee said explaining the losses being suffered by the fuel retailers.

The major gainers on the Sensex were Tata Power up 1.09%, BHEL up 0.89%, Hero Honda up 0.79%, Cipla up 0.74% and DLF up 0.64%.

The major losers on the index were RCom down 3.45%, Sterlite Inds down 2.33%, Bharti Airtel down 1.99%, Reliance Infra down 1.80% and Tata Steel down 1.26%.

Industry body ASSOCHAM has said that as tight liquidity scenario, rising demand for credit and high inflation will cause interest rates to inch up in 2011 even as the Indian economy grows at a rapid pace. There is already some upside bias in rates in wake of very tight liquidity scenario currently prevailing in the system and the upward bias is likely to continue remaining there in the system in next calendar year as well.

Overall liquidity has remained in the deficit mode in Indian banking system since mid-September with average daily injection increasing significantly in following months. In order to alleviate frictional liquidity pressure, the RBI has taken a host of measures, but things remain tight for now. Although the deficit mode in the LAF window has been consistent with the tightening of policy stance by the central bank, even the RBI has accepted that too much negative liquidity was impacting banks. Economists feel that if the scenario continues in 2011, banks will have to hike rates.

The industry body feels that even as the central bank has considerably tightened its monetary policy over the current fiscal so far, inflationary pressures continue to put pressure on the Reserve Bank of India (RBI). Most analysts expect that the RBI will hike policy rates in the forthcoming quarterly review in January after having taken a pause in the December review.

'The days ahead are extremely dicey...The options with RBI are limited as the growth is not likely to be sacrificed for inflation. Hence there is every likelihood of policy rates to inch up in the next monitory policy,' Assocham said, adding that if market rates increase significantly over the 2011, it can impact the overall level of investment in the country.

The S&P CNX Nifty shed 8.60 points or 0.14% at 6003. The index touched a high and a low of 6045.75 and 5992.10, respectively. 

The top gainers on the Nifty were Ambuja Cements up 1.95%, Dr Reddy up 1.73%, Sun Pharma up 1.29%, Tata Power up 1.19% and Sesa Goa up 0.98%.

The top losers on the index were SAIL down 3.81%, RCom down 3.56%, Sterlite Inds down 2.41%, Bharti Airtel 1.91% and Rel Infra down 1.86%.

Rest of the Asian markets were trading mixed. Shanghai Composite dropped 1.90%, Hang Seng declined 0.30% and Seoul Composite trimmed 0.37%.

On the flip side, Jakarta Composite advanced 0.38%, KLSE Composite added 0.01%, Nikkei 225 gained 0.75%, Straits Times rose 0.49% and Taiwan Weighted slipped 0.35%.

Major European markets were trading in mixed range. CAC-40 declined 1.29% and DAX shed 1.16%, while FTSE 100 rose 0.21%.

 

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