Sensex ends down 1.17% on weak global cues Analysis for Dec 29, 2011

Extending their two-day losing streak, the domestic benchmarks closed on a negative note as weak cues from the Asian market weighed on sentiment. The Oil & Gas and Capital Goods space led the decline.

BSE SENSEX closed at 15543.93 down by 183.92 points or by 1.17% and then NSE Nifty ended at 4646.25 down by 59.55 points or by 1.27%.The BSE MIDCAP closed at 5118.99 down by 18.19 points or by 0.35%, while the BSE SMLCAP ended at 5544.99 down by 41.56 points or by 0.74%.The BSE Sensex touched intraday high of 15724.6 and intraday low of 15515.44 The NSE Nifty touched intraday high of 4701.8 and intraday low of 4639.

The negative closing of the US markets on Wednesday weighed on domestic sentiment during morning trade. On Wednesday, the Dow Jones Industrial lost 139.94 points and closed at 12151.41. The S&P 500 lost 15.79 points and closed at 1249.64 and the Nasdaq closed at 2589.98, losing 35.22 points over the previous day"s closing. Soon after witnessing a gap down opening, the domestic benchmarks slipped further amid weak cues from the Asian markets. Most of the Asian indices were trading lower on Thursday as sentiment was dampened after the European Central Bank said on Wednesday that its balance sheet soared to a record 2.73 trillion euro after it lent a record 489 billion euro last week to Eurozone banks to boost liquidity , raising concerns that the debt crises is worsening. Eurozone banks deposited a record USD 590.72 billion with the ECB on Wednesday, the central bank said. Banks in the region are opting to park more funds with the ECB rather than lending them to cash strapped businesses and households. This may adversely affect the credit growth of the Eurozone and accelerate the current economic downturn in the region. Investors were also cautious ahead of the crucial Italian bond auction on Thursday. Moreover, investors were also wary of taking fresh positions in stocks with the year soon coming to an end. The domestic benchmarks pared off their morning losses but the recovery was short-lived as weak global cues led to significant selling pressure. The benchmarks traded on a volatile note in the negative terrain during afternoon trade. The expiry of the F&O derivate contracts also added to market volatility. The benchmarks fell sharply in the last one hour of the trading session despite supportive cues from the European markets. Finally, the benchmarks ended on a weak note, with the BSE Sensex and NSE Nifty shedding over 1.10% each. Among the BSE sectoral indices, BSE Oil & Gas, BSE Capital Goods lost 2.62% and 2.39% respectively.

Among the 30 Sensex stocks, Maruti Suzuki, BHEL, RIL, Tata Power and DLF closed lower by 3.96%, 3.59%, 3.47%, 3.38% and 3.01% respectively. Among the Sensex stocks, there were 8 advances and 22 declines. On BSE out of total shares traded 2863, shares advanced were 1175 while 1561 shares declined and 127 were unchanged.

On the global front, industrial production in Asia"s fourth largest economy, South Korea, contracted for a second straight month in November 2011 as demand weakened amid the lingering debt crises in Europe and worsening global outlook, said a report by Statistics Korea on Thursday. Industrial production fell by 0.4 per cent in November 2011, compared to the previous month.

On the economic front, India"s food inflation fell to a six-year low of 0.42 per cent in the week ended December 17,2011as prices of potato and onion declined.

On the Shanghai Composite closed up 0.16%, Hang Seng closed lower by 0.65% and Nikkei 225 ended down 0.29% on Thursday.

On the European front, CAC40 was up 0.21%, DAX was up 0.37% and FTSE100 was trading higher by 0.22% on Thursday.

On the Corporate front, the stock of Sensex heavyweight slumped to a fresh 52-week low of Rs 709 on the BSE. The stock ended 3.47 per cent lower at Rs 712.90 on Thursday.

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