Sensex succeeds…Snaps 3-day losing streak

Main Indian stock indices managed to notch decent gains on Tuesday, breaking the sequence of three straight losing sessions, with the BSE Sensex ending above 16,000 and the NSE Nifty closing at 4,800. The advance today was led by the Large-Cap shares while the broader market weakened. Also, the market overlooked a steep drop in the Indian rupee, which touched a new all-time low before recovering slightly. Another interesting aspect was that today’s gains came in the backdrop of weak overseas cues.



The rise today was a tad surprising, as it came a day after the release of the dismal IIP data for October. However, there are some who expect the RBI to tone down its hawkish stance on monetary policy at the Dec. 16 meeting. Any hint of policy easing going forward is also not ruled out given the sharp ‘U’ turn in India’s economic fortunes this fiscal year.

The markets will have to contend with the FOMC policy meeting later today in the US and inflation report for November tomorrow. A sharper-than-forecast drop in inflation may further boost the sentiment ahead of the RBI meeting on Friday.

Coming back to today’s session, the BSE Sensex closed at 16,002, up 132 points or 0.8% over the previous close. It had earlier been as high as 16,079 and as low as 15,771. The Sensex had opened at 15,778.

The NSE Nifty finished at 4,800, up 35 points or 0.7% from the last close. It earlier hit a day’s high of 4,824 and a day’s low of 4,728. It opened at 4,733.

The gains were led by select shares in Metals, Oil & Gas and Auto sectors. The BSE Metal index was up 2%. Oil & Gas and Power indices rose 1% apiece.

On the other hand, the Consumer Durables index was down 2% while the Capital Goods index lost ~0.8%. The Banking index finished flat.

The broader market could not keep pace with the Large-Cap indices. The BSE Small-Cap index and the BSE Mid-Cap index dropped 0.7% and ~0.6%, respectively. As a result, the advance-decline ratio was also negative.

Meanwhile, the INDIA VIX fell by almost 4% to end at day’s low of 28.11. It opened at 28.47 versus the previous close of 29.27. It touched a day’s peak of 29.61.

Asian equity indices declined after a trio of top rating agencies warned of possible downside risks to the eurozone sovereign ratings citing what they termed as disappointing outcome of the EU Summit last week.

Australia S&P/ASX200 closed down 1.4% at 4,193.40 while the Nikkei Stock Average ended down 1.2% at 8,552.81. The Hang Seng Index ended down 0.7% at 18,447.17 while South Korea’s Kospi lost 1.9% to 1,864.06.

China’s Shanghai Composite index dropped 1.9% to 2,248.59 for its fourth-straight day of losses. Taiwan’s Taiex slid 0.8% to 6,896.31.

European indices are trading in the positive zone with stocks in Italy and Spain pacing the advance. Spain sold €4.94bn in bonds with yields falling from similar auction last month. Germany's ZEW indicator improved in December, marking the end of a nine-month downward trend. The IEA trimmed oil demand forecast on weak economic data.

US retail sales and business inventories data are due out later today apart from the Federal Reserve announcement on its monetary policy.