Further losses for index heavyweight and cigarette major ITC weighed on key benchmark indices in afternoon trade. At 13:15 IST, the barometer index, the S&P BSE Sensex, was off 165.12 points or 0.63% at 25,952.73. The Nifty 50 index was off 49.40 points or 0.62% at 7,881.95. The Sensex continued to hover below the psychological 26,000 mark. The barometer index hit its lowest level in almost a week when it lost 179.86 points or 0.68% at the day's low of 25,937.99 in afternoon trade. The Nifty hit one-week low when it dropped 53 points or 0.66% at the day's low of 7,878.35 in morning trade. Data showing slowdown in India's services sector growth last month and prospects of increase in interest rates in the United States weighed on key indices.
The market breadth indicating the overall health of the market was positive. On BSE, 1,317 shares rose and 1,227 shares fell. A total of 136 shares were unchanged. The BSE Mid-Cap index was currently off 0.06%. The BSE Small-Cap index was currently off 0.11%. The decline in both these indices was lower in percentage terms than the Sensex's fall.
The seasonally adjusted Nikkei Services Business Activity Index fell to 50.1 in November from October's eight-month high reading of 53.2, pointing to slowdown in growth in India's services sector. The reading of 50 separates contraction from expansion. Services companies displayed a lack of optimism with regards to the 12-month outlook for activity, as sentiment dropped to the lowest in the ten-year survey history. Difficult economic conditions and weak demand reportedly hit confidence.
In overseas stock markets, Asian stocks declined after hawkish comments from Federal Reserve Chairwoman Janet Yellen reinforced the case for an interest rate hike during the middle of this month. US stocks fell yesterday, 2 December 2015, as Yellen signalled a readiness to hike interest rates and US data indicated a solid labour market. Yellen said she was looking forward to a US rate hike that will be seen as a testament to the economy's recovery from recession, although she did not indicate if she still expected a hike would be warranted at the Fed's last policy meeting of the year on 15-16 December 2015. The Fed-funds futures market is pricing in 75% probability of an increase in US benchmark interest rate in December.
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.
Index heavyweight and cigarette major ITC dropped 1.8% to Rs 343.65. The stock hit a high of Rs 350.80 and low of Rs 343.45 so far during the day.
FMCG stocks fell across the board. Dabur India (down 1.29%), Godrej Consumer Products (down 1.84%), Hindustan Unilever (down 1.61%), Marico (down 1.26%), Nestle India (down 0.61%), Britannia Industries (down 0.58%), GlaxoSmithkline Consumer Healthcare (down 0.59%), Colgate-Palmolive (India) (down 0.49%), Tata Global Beverages (down 0.88%), Jyothy Laboratories (down 0.79%) and Bajaj Corp (down 1.83%) fell. Procter & Gamble Hygiene and Health Care rose 0.16%.
Auto stocks declined. Tata Motors (down 1.72%), Mahindra & Mahindra (M&M) (down 1.7%), Bajaj Auto (down 0.53%), Hero MotoCorp (down 0.84%), Ashok Leyland (down 0.09%) and TVS Motor Company (down 2.66%) edged lower. Eicher Motors (up 2.02%) and Maruti Suzuki India (up 0.13%) gained.
Shares of hospitality companies extended gains registered during the previous trading session. Indian Hotels (up 3.84%), EIH (up 6.7%), EIH Associated Hotels (up 19.98%), Royal Orchid Hotels (up 7.58%), TajGVK Hotels & Resorts (up 3.91%) and Hotel Leelaventure (up 2.35%) edged higher.
Torrent Power fell 2.1% to Rs 193.50 on profit booking after the stock rose 7.54% in the preceding five trading session to Rs 197.65 on 2 December 2015, from a recent low of Rs 183.80 on 24 November 2015.
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