The markets largely followed global cues. The lukewarm response to the 2G telecom spectrum auction also added to the negative mood, said Rikesh Parikh, VP, market strategist, Motilal Oswal Securities. The broader 50-share NSE Nifty slipped 36 points, or 0.63%, at 5,631 on Thursday, while the BSE Sensex ended the day down 147 points, or 0.79% to close at 18,471.
According to a report by foreign brokerage Nomura, the government has managed to raise just R9,400 crore against its budgeted target of R40,000 crore in its recently conducted telecom spectrum auction. The missed target will make it even more difficult for the government to achieve its revised fiscal deficit target of 5.3% of GDP, according to Nomura.
Indias industrial output growth contracted 0.4% year-on-year in September, lower than Augusts 2.3% expansion. CPI inflation was broadly unchanged at 9.75% y-o-y in October from 9.73% in September, while the October WPI inflation tapered down to 7.45% from the earlier trend of 7.5%-plus levels in the last 10 months. The low IIP numbers, coupled with the inflation data, has raised hopes that the RBI might step in to reduce key policy rates earlier than expected, said Parikh.
On Tuesday, the day of Muhurat trading, foreign institutional investors (FIIs) sold shares worth R18 crore, while domestic institutional investors bought shares worth R19 crore, BSE data show.
FIIs have bought shares worth over $18 billion in the year to date. The benchmark BSE Sensex is up about 19.5% in the same period and is among the best performing among emerging markets. Market participants expect the FII floodgates to remain open if the reform measures go through. The quantitative easing in the US and Europe may also help whet their risk appetite. Among its peers, most of the key indices in Asia Pacific ended in the red on Thursday.
The Kospi, Straits Times and the Shanghai Composite declined by more than 1% each. The Hang Seng declined the most at 1.55%, while the Nikkei 225 bucked the trend and rose 1.9%. Japanese shares gained on hopes that a change of government may help in some ways to stimulate the economy.
Among the major European indices, the FTSE 100, the DAX and the CAC were all trading about half a percentage points in the red at 5.20 pm IST. US President Barack Obama had said on Wednesday that voters were in favour of cutting the budget deficit by imposing higher taxes on the wealthy and reducing spending. The Dow Futures was up 17 points at 12,561, while Brent crude oil prices were ruling higher by $0.3 at $109.91 per barrel.
Back home, 22 of the 30 Sensex stocks declined on Thursday. In the broader market, breadth was weak with 1,632 stocks traded on the BSE ending lower against 1,197 advances. Most of the 13 BSE sectoral indices ended in the red. The FMCG, Metal and IT indices declined by more than 1% each. The Realty and Consumer Durables indices bucked the trend and gained 1.9% and 1.6%, respectively.
In September, the government had unleashed a wave of big bang reforms, hiking the price of diesel by R5 per litre, capping the supply of subsidized LPG and allowing foreign supermarket chains to enter the country, among other things. The market will now be hoping that these reform initiatives go through. The NSE cash turnover on Thursday was at R13,233 crore, while the six-monthly daily average is about R11,000 crore. Turnover in derivatives was about R1.13 lakh crore and the daily average for the past six months is R1.26 lakh crore.