After hitting their lowest level in more than six weeks in mid-morning trade, key benchmark indices trimmed losses in early afternoon trade. At 12:19 IST, the barometer index, the S&P BSE Sensex was off 249.01 points or 0.96% at 25,617.94. The losses for the Sensex were higher in percentage terms than those for the Nifty 50 index. The Nifty was currently off 68.50 points or 0.88% at 7,756.50. Data showing acceleration of consumer price inflation in October 2015, deceleration in industrial production growth in September 2015 and weakness in global stocks hit sentiment on the domestic bourses adversely.
After a weak opening, the Sensex and the Nifty have remained in negative zone so far during the trading session. The Sensex slumped 326.22 points or 1.26% at the day's low of 25,540.73 in mid-morning trade. The barometer index lost 142.86 points or 0.55% at the day's high of 25,724.09 in opening trade. The Nifty slumped 94.10 points or 1.2% at the day's low of 7,730.90 in early afternoon trade. The index lost 50.20 points or 0.64% at the day's high of 7,774.80 in early trade.
The broad market depicted weakness. There were more than two losers against every gainer on BSE. 1,595 shares declined and 694 shares advanced. A total of 131 shares were unchanged. The BSE Mid-Cap index was currently down 1.54%. The decline in this index was higher than the Sensex's decline in percentage terms. The BSE Small-Cap index was currently down 0.87%. The decline in this index was lower than Sensex's decline in percentage terms.
In overseas stock markets, Chinese stocks led decline in Asian equities as a slump in commodities markets deterred investors from riskier assets and as investors took the latest remarks from various US Federal Reserve officials as fresh a signal that the Fed is coming close to committing to an interest-rate increase in December 2015. US stocks dropped sharply yesterday, 12 November 2015, as a sharp slide in commodities triggered sell-off in shares of energy and raw-material providers.
The Fed-funds futures market is now pricing in 70% probability of an increase in US benchmark interest rate in December 2015. Investors in emerging markets, including India are worried that once the Fed starts raising interest rates, it will drain liquidity from global emerging markets and redirect it to developed economies. The Fed has held its benchmark short-term interest rate near zero since December 2008. The ultra-loose monetary policy in the US has encouraged heavy investment in higher-yielding emerging markets. The next monetary policy review from the Fed is scheduled on 15-16 December 2015.
Capital goods stocks edged lower. L&T (down 1.94%), Bharat Heavy Electricals (Bhel) (down 1.19%), ABB India (down 1.19%), BEML (down 0.45%), Bharat Electronics (down 3.05%), Crompton Greaves (down 0.83%), Siemens (down 0.41%) and Thermax (down 3.27%) declined.
Realty stocks fell. Indiabulls Real Estate (down 1.32%), Housing Development and Infrastructure (down 1.19%), D B Realty (down 1.15%), Unitech (down 3.44%), Sobha (down 1.36%), Godrej Properties (down 1.13%), Oberoi Realty (down 1.35%) declined.
Shares of select companies declined following the semi-annual reshuffle of indices by MSCI, a global provider of research-based indices and analytics.
DLF (down 1.83%) and Oil India (down 6.7%) fell after global index provider MSCI removed these two stocks from MSCI India index after a semi-annual index review. Tata Motors DVR (up 4.09%) and Ashok Leyland (up 0.17%) rose as these two stocks were added in the MSCI India index. Maruti Suzuki India (down 1.42%) and Cadila Healthcare (down 1.34%) fell. These are two among the total of four additions made in the MSCI India index. MSCI said that the changes will be effective from the close of trading on 30 November 2015.
On the macro front, the latest data showed that inflation based on the consumer price index (CPI) accelerated to four-month high of 5% in October 2015, compared with 4.4% reading in September 2015. Among the CPI components, inflation of food and beverages increased to 5.3% in October 2015 from 4.3% in September 2015 mainly contributing to the rise in CPI inflation. The increase in prices of pulses was the key driver of food price inflation.
Another data showed that growth in industrial production moderated to 3.6% in September 2015 from a revised growth of 6.3% in August 2015. The slowdown in growth was due base effect. In 2014, Diwali was in October whereas this year the festival is in November.
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