Weakness continued on the bourses in early afternoon trade. At 12:22 IST, the barometer index, the S&P BSE Sensex, was off 144.85 points or 0.55% at 25,973. The Nifty 50 index was off 40.95 points or 0.52% at 7,890.40. The Sensex continued to hover below the psychological 26,000 mark. 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, 1,295 shares rose and 1,144 shares fell. A total of 134 shares were unchanged. The BSE Mid-Cap index was currently off 0.04%. The BSE Small-Cap index was currently off 0.01%. 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.
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.
Pharma stocks declined. Glenmark Pharmaceuticals (down 0.76%), Aurobindo Pharma (down 0.23%), Cipla (down 1.56%), Dr Reddy's Laboratories (down 0.83%), Cadila Healthcare (down 1.29%), Lupin (down 1.36%), Divi's Laboratories (down 0.68%), and Sun Pharmaceutical Industries (down 0.61%) declined.
Realty stocks witnessed a mixed trend. Indiabulls Real Estate (up 1.12%), Unitech (up 0.69%), Housing Development & Infrastructure (HDIL) (up 1.85%), DLF (up 0.56%) and Anant Raj (up 2.02%) edged higher. Phoenix Mills (down 1.01%), Sobha (down 0.15%) and Oberoi Realty (down 0.56%) declined.
Bhushan Steel jumped 13.14% after reports the company is in the process of getting Rs 3000 crore from sale and lease-back arrangements for two of its assets in Odisha. With debt of Rs 40000 crore, Bhushan had become a worry for banks.
Visa Steel was locked at 20% upper circuit at Rs 18.44 at after Cresta Fund bought 33 lakh shares of the company at an average price of Rs 15.10 per share from Visa Infrastructure in a bulk deal on the NSE yesterday, 2 December 2015. Promoter group entity, Visa Infrastructure held 45.58% stake in Visa Steel as per the shareholding pattern as on 30 September 2015. Cresta Fund held 3.79% stake in Visa Steel as per the shareholding pattern as on 30 September 2015.
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