After a weak start in early trade, Indian markets continued to fall through the trading session on Thursday dragged down by poor performance of banking and capital goods sector.

The BSE Sensex ended down 2.55 points or 1.25 per cent at 20,193.35, and the NSE Nifty fell 82.90 points or 1.36 per cent to 6,001.

On the BSE, except realty all sectoral indices finished in the red with banking (-2.11%) and capital goods (-2.06%) indices topping the losers' list.

Cipla fell the most among the Sensex 30 after it reported lower consolidated profits for the third quarter at Rs 284.31 crore (Rs 340.31 crore during the same period the previous year).

Cipla shares were down 7.70 per cent at Rs 381. The other significant losers were ONGC, Coal India, BHEL and Tata Power. Barring Realty, all other BSE sectoral indices were trading in the red with banking index down 1.46 per cent.

Volatility was up with the India Vix ending at 17.8.

On the NSE, DLF, TCS, Sun Pharma, M&M and Sesa Sterlite were the top gainers while Cipla, Bank of Baroda, Jindal Steel, Grasim and IDFC were the top losers.

The Bank Nifty was down 1.93 per cent or 199 points at 10,149.

Dhananjay Sinha, Head Institutional Research in a report, said “Extended contraction in IIP growth in Dec’13 indicates that improvement in exports has not been sufficient to invigorate domestic sectors. Recent trends suggest weakness in both consumption and investments. Surprisingly, this situation has persisted despite the good monsoon and high government spending. The much expected revival in investments due to speedy projects clearances has not materialised. We expect IIP to contract further by 2% in Q4FY14, implying FY14 average at -0.5% vs 1.2% in FY13.

The decline in CPI inflation to 8.8% has been primarily due to steeper than seasonal decline in food prices resulting in lower food inflation at 9.9%. The core CPI inflation inched up to 7.9%. We expect CPI inflation to ease ahead with March end at 8.6%.

The prevailing dynamics of moderating inflation and low growth indicate that it will still be several months before we can see declining inflation supporting growth. On the contrary, fiscal compression will be required to bring down inflation to a threshold level that is conducive for growth. In the interim, we believe growth will continue to remain subdued.

Hence, in the above context and in the backdrop of potential volatility in global financial conditions we see no scope for the RBI to ease rates or induce counter-cyclical monetary expansion.”

(This article was published on February 13, 2014)
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