Indian equities continue weak trade; Sensex below 17,500 mark

Indian equities drifted further continuing its weak trade on account of profit booking by investors whose morale took a hit after discouraging developments from global front surfaced. Sentiments were so dampen that investors overlooked India’s PMI reading which showed that manufacturing sector in October recovered for the first time in last six months on the back of improved conditions in the sector, which reflected rise in domestic orders for new business. Traders were seen selling in Metal, Realty and Auto sector. In the scrip specific development, ITC and M&M were trading weak in red on speculation that government is mulling hike in excise duty on cigarettes, diesel cars. FMCG giant Hindustan Unilever is trading in green in the weak market, with the stock extending Monday's rally triggered by strong Q2 results. Index heavyweight Reliance Industries drifted lower after the company refuted speculation that it is considering acquiring Valero Energy, Inc. Punjab National Bank (PNB), country's second largest PSU bank by market cap is in green on posting good quarterly numbers. Maruti Suzuki was trading weak after the company announced its poor sales numbers for the month of October. On the global front, Asian markets were trading in mixed note while the European markets were trading in red on pessimistic note. Investors lacked fervor as little clarity emerged over how the Euro-zone sovereign debt trouble will be tackled while the Greek Prime Minister George Papandreou’s call for a confidence vote and a referendum on last week’s deal too spooked sentiments globally. Also reports that the Chinese manufacturing activity, South Korean exports and Taiwan’s economy are all growing at the weakest pace since 2009; did not go down well with market participants as it indicated that the global economy is still not firm on its road to recovery. Back home, the NSE Nifty and BSE Sensex were trading below their psychological 5,250 and 17,500 levels, respectively. The market breadth on the BSE was negative in the ratio of 965:1706 while, 111 scrips remained unchanged.

The BSE Sensex is currently trading at 17,457.72 down by 247.29 points or 1.40% after trading as high as 17,661.78 and as low as 17,427.36. There were 7 stocks advancing against 23 declines on the index.

The broader indices were trading in the red terrain; the BSE Mid cap index shed 0.93% while Small cap fell 0.64%.

On the BSE sectoral space there were no gainers while Metal down 2.12%, Realty down 2.02%, Auto down 1.88%, Bankex down 1.67% and IT down 1.30% were the major losers in the space.

HUL up 2.58%, Sun Pharma up 1.53%, Tata Power up 0.75%, Wipro up 0.53% and Bharti Airtel up 0.41% were the major gainers on the Sensex, while Sterlite down 3.96%, ICICI Bank down 3.75%, Tata Steel down 3.30%, M&M down 2.93% and JP Associates down 2.79% were the major losers on the index.

Meanwhile, the government owned oil marketing companies (OMCs) on October 31, increased the price of aviation turbine fuel (ATF), or jet fuel by 3.8%. After the hike, the fuel prices in Delhi surged by Rs 2,845 per kilolitre (KL) or 3.8% to Rs 61,115 per KL. The price rise comes on the back of three consecutive massive hikes since February this year, when crude oil spiked to over $100 per barrel and further a marginally 0.5% cut in rates to Rs 58,271 per KL effected from October 16.

The recent hike is the 11th direct increase in jet fuel prices since October 2010, when international crude oil prices started soaring. However, the OMCs on October 1 and September 16 had raised jet fuel prices by 2.5% and 1.5% respectively, mainly because of costlier imports due to recent depreciation in rupee against US dollar.

After the hike, the fuel prices in Mumbai, home to India’s busiest airport, increased by Rs 2,950 per KL to Rs 61,984 per KL compared to the old price of Rs 59,021 per KL.  

The ATF accounts for around 40% of the airlines’ operating cost and prices vary from airport to airport depending on the local sales tax or VAT. The sharp increase in the prices will increase the burden on the airlines, which are already in bad financial condition.

All the three government owned OMCs i.e. Indian Oil Corp (IOC), Hindustan Petroleum and Bharat Petroleum revise jet fuel prices on 1st and 16th of every month based on the average international price in the preceding fortnight.

The S&P CNX Nifty is currently trading at 5,245.85, lower by 80.75 points or 1.52% after trading as high as 5,310.85 and as low as 5,238.30. There were 12 stocks advancing against 38 declines on the index.

The top gainers on the Nifty were HUL up 2.70%, PNB up 2.04%, Sun Pharma up 1.59%, Tata Power up 0.55% and Cairn up 0.50%.

Reliance Infra down 4.48%, Sterlite down 4.20%, ICICI Bank down 3.77%, JP Associates down 3.42%, and M&M down 3.35% were the major losers on the index.

Asian markets traded on a weak note, Hang Seng plunged 2.49%, Jakarta Composite sank 1.96%, KLSE Composite declined 1.05%, Nikkei 225 plummeted 1.70%, and Straits Times shaved off 2.08%.

On the flipside, Shanghai Composite added 0.07%, Seoul Composite rose 0.03% and Taiwan Weighted gained 0.45%.

The European markets were too trading in red with, France’s CAC 40 down 3.25%, Germany's DAX dropped 3.93% and Britain’s FTSE 100 down 2.58%.