Benchmarks trade near their day’s low; Sensex declines by 234 points

The benchmark equity indices are trading near their day's low in late afternoon session on the back of weak cues from European market. Dow future was also down by 45 points in the screen trade. Meanwhile other regional peers settled mixed. Back home the BSE benchmark--Sensex-- shed more than   200 points while the Nifty was trading well below the 6100 level, led by further sell-off in banking, reality capital goods, realty, and auto companies' shares along with heavyweights ICICI Bank which lost 3.27% DLF down 2.90%  ONGC tanked 2% , HDFC down 2.80% and  L&T that lost 2.40%. Reliance Industries too slipped into red. Jim Walker, MD of Asianomics said that Europe is a bigger problem than China and US. "Europe is going to see political turmoil. According to him, the US economy may see weakness in the next six months. Expressing concern, Walker stressed that there might be monetary tightening across Asia. He believes that the Reserve Bank of India (RBI) is likely to hike interest by 25 bps this month. Back on street, the broader markets too were trading lower mirroring the benchmark indices at this point of time. The market breadth on the BSE is extremely negative; there were 1973 shares on the gaining side against 908 shares on the losing side, while 101 shares were unchanged. Banking counters continued to witness hammering from the bears.

The BSE Sensex trimmed 234.41 points or 1.14% at 20,264.31. The index touched a high and a low of 20,509.95 and 20,243.31, respectively.

The BSE Mid-cap and Small-cap indices slipped 1.35% and 1.10%, respectively.

The main losers in the BSE sectoral space were Bankex down 2.41%, Realty down 1.95%, Capital Goods (CG) down 1.81%, Auto down 1.67% and PSU down 1.20%.

On the other hand, Information Technology (IT) up 0.19% and Fast Moving Consumer Goods (FMCG) up 0.45% were the only gainers in the BSE sectoral space.

The top gainers on the Sensex were Tata Power up 1.57%, Hindalco Inds up 1.03%,TCS up by 0.63%, ITC up by 0.62 and Wipro up 0.36%.

Bajaj Auto down 3.87%, ICICI Bank down 3.27%, DLF down 2.90%, HDFC down 2.80% and Hero Honda 2.64% were the top losers on the index.

India's services sector growth slowed down a bit in December from the four-month high seen in November. However, in an absolute sense, the growth is still very strong and business activity is increasing fast with increased backlogs of work, sustained employment growth and increasing cost and prices, a survey showed on Wednesday.

The seasonally adjusted HSBC Purchasing Managers' Index (PMI) for the service sector activity eased to 57.7 in December from 60.1 in November. The composite index, which accounts for both the services and manufacturing sector, as a result, also came down to 58.9 in the last month from 61.3 in November. Both however remain substantially higher than the watershed mark of 50 which separates expansion from contraction.

The survey results showed incoming new business received by service companies in India increased strongly in December, which was the seventh consecutive increase since May 2009. However, the expansion in December was slower than the last month, but still higher than the seventeen-month low recorded in October. It was also below the long-run series average. Same was the case in manufacturers where growth was rapid but at a slower pace than in November.

Despite the weaker rise in new work intakes, outstanding business in the Indian economy increased during December for a second month running. Respondents in both the manufacturing and service sectors indicated that backlogs of work had increased, although the rate of accumulation slowed in the former. Employment in the Indian service sector also increased though at a moderate pace during the month under review, said the Markit research in a press release detailing the survey results.

Also, the results from the December PMI clearly signalled a sharp rise in input costs faced by companies in India. The latest rise was the fastest in seven months, and was driven by increased input prices in both the manufacturing and service sectors. Output prices also increase significantly during December, and at a pace above the long-run series average. This indicates that producers were finding it easier to pass on higher costs to the consumers, suggesting a strong demand scenario.  Commenting on the India Services PMI survey, Leif Eskesen, Chief Economist for India at HSBC said, 'The upturn in the service sector continued in December and companies remained optimistic about the outlook, although the respective index readings eased from the previous month. The expansion in activity was primarily driven by new business, which benefitted employment but also led to a small increase in outstanding business. As we saw for the manufacturing sector, strong growth momentum pushed up input costs (mainly from higher wages and fuel costs) at an accelerated pace and service sector companies saw increasing scope (and need) to pass on these higher costs to end-consumers. The tightening capacity constraints and rising inflation pressures call on RBI to deliver on its hawkish statement and resume tightening in early 2011.'

The S&P CNX Nifty shed 76.70 points or 1.25% to 6069.65. The index touched a high and a low of 6141.35 and 6062.35, respectively. 

The top gainers on the Nifty were HCL Tech up 2.35%, Sun Pharma up 1.55%, Tata Power up 2.56%, ITC up 0.87% and Dr Reddey up 0.86%.

The top losers on the index were Bajaj Auto down 3.73%, HDFC down 3.38%, ICICI Bank down by 3.28%, Axis Bank down by 3.07% and DLF was down 2.98%.

Majority of the regional peers settled in mixed. Hang Seng increased 0.38%, Jakarta Composite gained 0.63%, KLSE Composite added 0.92% and Straits Times rose 0.12%. While, Shanghai Composite shed 0.49%, Taiwan Weighted trimmed 1.68%, Nikkei 225 decreased 0.17% and Seoul Composite declined 0.12%.

The European markets were trading in red. CAC-40 decreased 0.83%, FTSE 100 trimmed 1.51% and DAX was down 1.20%.

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