Dalal Street ends a disappointing session with cut of about a percent

Domestic benchmark indices finished another disappointing session of trade with large cuts, as the New Year cheer turned pale prompting investors to cash in on the gains. The benchmarks were weighed down by sluggish global cues as investors continued to book profits in rate sensitive's like banks, realty and auto stocks. The Nifty 50 plunged over a percent to settle way below the psychological 6,100 mark while BSE's 30-share sensitive index, Sensex contracted almost two hundred points to close a tad above the crucial 20,300 level. The broader markets to showed weakness in tandem with their larger peers and ended in the red territory for the second straight day with the midcap and smallcap indices succumbing to intense selling pressure as they lost well over a percent points. Banking counter remained the top sectoral laggard on the BSE losing over 2% in day's trade on the back of sustained selling amid fears of a sharp hike in interest rates due to rising inflation. Banking heavyweights like ICICI Bank and HDFC plummeted 3.08% and 2.75% respectively as investors started offloaded positions in rate sensitive's ahead of RBI policy meeting. While auto stocks too saw huge bouts of profit booking as apprehensions that the hike in interest rates and higher vehicle prices may dent demand for vehicles loomed. Auto stocks including Bajaj Auto and Hero Honda nosedived 3.69% and 3.60% respectively. Among the other losers, index heavyweight Reliance Industries, which traded in the positive for most part of the day, drifted below the neutral line in late hours to end with a cut of a quarter percent. While, Fertilizer shares too went home with losses as the group of ministers (GoM) meeting to deliberate on raising the price of urea and decontrol the sector was going on. On the other hand, Information technology stocks bucked the weak markets and witnessed some buying interests today taking cue from the strength in the dollar.

On the global front, cues remained sluggish from the Asian counterparts which closed on a mixed note following the overnight US markets which made a mixed closing despite encouraging data that suggested the economy is improving. All key benchmark indices in Europe were trading in the red region with DAX being the biggest laggard in the space after sinking around one and half percent. The US index futures were also indicating that the markets could decline around half a percent at the beginning.

Earlier on the Dalal Street, the bourses commenced the day on flat note as pessimistic global cues undermined investor sentiments back home. The frontline indices extended losses in early trade on Wednesday and drifted for a southward journey. The benchmarks gyrated in a narrow range through the first half; however, huge bouts of profit taking in the late second half session led the bourses snap the session with large cuts of around a percent. Volumes in the local markets remained weak at Rs 1.12 lakh crore while the turnover for NSE F&O segment too remained on the lower side compared to Tuesday at over Rs 95 thousand crore. The market breadth on the BSE was extremely weak; there were 1020 shares on the gaining side against 1864 shares on the losing side while 184 shares remained unchanged. Meanwhile, according to the HSBC, India's seasonally adjusted 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. 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.

On charts: The S&P CNX Nifty closed near its crucial support level 6080, if the index holds above this level, the next resistance will be around 6102 and 6180 levels. On the other hand, support will be around 6028 and 5952 level.

Finally, the BSE Sensex plunged 197.62 points or 0.96% to settle at 20,301.10 while the S&P CNX Nifty plummeted 66.55 points or 1.08% to end at 6079.80.

The BSE Sensex touched a high and a low of 20,509.95 and 20,243.95, respectively. The top gainers on the Sensex were HUL up 1.43%, ITC up 1.38%, Hindalco Inds up 1.36%, TCS up 1.25% and Tata Power up 1.17%.

Bajaj Auto down 3.69%, Hero Honda down 3.60%, DLF down 3.28%, ICICI Bank down 3.08% and RCom down 2.81%, were the top losers on the index.

The BSE Mid-cap and Small-cap indices fell 1.27% and 1.02%, respectively.

Meanwhile, 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 main losers in the BSE sectoral space were Bankex down 2.19%, Realty down 2.03%, Auto down 1.95%, Capital Goods (CG) down 1.60% and Public Sector Undertakings (PSU) down 1.05%.

On the other hand, Fast Moving Consumer Goods (FMCG) up 0.72% and Information Technology (IT) up 0.34% were the only gainers in the BSE sectoral space.

Union Home Minister P Chidambaram said on Tuesday that while the telecom operators which are going to provide the third generation (3G) services should provide the law enforcement agencies facilities for legitimate monitoring of these services, they can go ahead with the rollout while the monitoring system is being put in place.

Chidambaram said the idea was not to interrupt or delay the 3G services and the ministries of telecom and home were working together to put some rules and norms for intercepting or monitoring of 3G transactions in the interest of national security. He added that a monitoring system has to be there which will address the concerns of security agencies, while not interfering in the working of telecom operators.

'The idea is not to interrupt or delay the 3G services...The idea is to allow 3G services to go forward even while the monitoring mechanisms are (being) put in place... So no one needs fear that the 3G services will be interrupted or delayed,' Chidambaram said at his monthly press conference in New Delhi.

Earlier, the department of telecommunications (DoT) had issued notices to telecom operators asking them to stop the GenNext mobile services that are enabled with the 3G spectrum, including video calling and high speed mobile internet, until a suitable system of real time interception was found. The DoT and central security agencies had convened a meeting of industry officials last month and asked them to particularly avoid the video calling facility.

If the services do get delayed, it will hit the telecom operators hard which are already facing a squeeze on margins and have invested a lot of capital for offering the high-end services. The private operators and state run companies together paid Rs 67,000 crore to the government for 3G airwaves after an auction held in May 2010. In addition, companies have spent several hundreds of crores on erecting the infrastructure required for implementing the 3G architecture. The government however now seems to be willing to address the issues facing the industry and help it launch the high-end services sooner rather than later.

The S&P CNX Nifty touched a high and a low of 6141.35 and 6062.35, respectively.

The top gainers on the Nifty were HCL Tech up 2.70%, Sesa Goa up 2.14%, HUL up 1.59%, ITC up 1.52% and GAIL up 1.40%.

The top losers on the index were Hero Honda down 4.15%, DLF down 3.58%, IDFC down 3.52%, Bajaj Auto down 3.48% and HDFC down 3.38%.

Asian markets finished the day's trade on a mixed note on Wednesday. Chinese Shanghai declined about half a percent in today's trade as commodities fell the most in seven weeks on bets that a global economic rebound will bolster the dollar and equities, eroding investor demand for metals, energy and crops as alternative investments. Meanwhile, Taiwan Weighted dropped more than one and a half percent as profit-taking set in following recent strong gains in banks, including Chang Hwa Bank. This is the worst one-day percentage fall in nearly two months for the Taiwan's index.

Hang Seng rose 89.34 points or 0.38% to 23,757.82, Jakarta Composite increased 23.65 points or 0.63% to 3,783.71, KLSE Composite jumped 14.28 points or 0.92% to 1,566.17 and Straits Times was up by 3.96 points or 0.12% to 3,254.25.

On the flip side, Shanghai Composite shed 14.06 points or 0.49% to 2,838.59, Nikkei 225 slipped 17.33 points or 0.17% to 10,380.77, Seoul Composite was down 2.59 points or 0.12% to 2,082.55 and Taiwan Weighted fell 150.88 points or 1.68% to 8,846.31.

European markets were trading in the red on Wednesday. France's CAC 40 lost 1.11%, Germany's DAX shed 1.38%, and Britain's FTSE 100 slipped 0.39%.

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