Markets end at 3-month low as hopes of GST passage dwindle

Among global peers, Asian stock markets risked slipping to two-month lows on Wednesday as crumbling oil prices took a toll on energy and resource shares, with cooling demand from China putting more pressure on resources-reliant economies.

Markets finished lower for the sixth consecutive day as hopes of the Goods and Services tax (GST) bill being passed in the current session of the Parliament faded considerably.

To further dampen the spirits of participants on Dalal Street, the rout in the commodity prices globally weighed on the sentiment.

The S&P BSE Sensex ended 274 points to trade at 25,036 while the Nifty50 settled at 7,612,down by 89 points.

According to Jayant Manglik, President, Retail Distribution, Religare Securities, “All indications are pointing towards decline to continue and expect Nifty to form a new 52 weeks low in near future. We uphold our view to maintain bearish option spreads in Nifty. Correction in broader market signals possibility of profit taking in Midcap and Smallcap segment also in last leg of fall so maintain extra caution on that front.”

The passage of GST Bill in the Upper House of the Parliament looks like a herculean task for the NDA led government after the main opposition party, Congress created a ruckus in the Parliament over the National Herald controversy where it accused the ruling part of pursuing a ‘political vendetta’ against the Gandhi family.

The government had earlier planned to roll out the ambitious reform bill, if passed, from April 2016.

The logistics companies that are the direct beneficiaries of the GST bill tumbled between 1%-7% in today’s trades.

Meanwhile, the US Federal Reserve in its significant meet on December 15-16 is expected to hike the interest rates, which were kept at zero since 2008.

If the Fed increases the rates, Indian equities are likely to see an accelerated capital outflows, which has further weighed on the local sentiment.

As per provisional stock exchange data, FPIs were the net sellers to the tune of Rs 518.24 crore on Tuesday.

STOCKS IN FOCUS

Sectorally, BSE Healthcare, metal and energy indices ended down between 2%-3% each.

The rout in the global commodity prices continued in today’s trades, following which the metal shares lost sheen.

Coal India, Vedanta, Hindalco, Tata Steel dipped between 2%-5% each.

The crude oil prices edged slightly higher in today’s trades to quote at $40/barrel as against $39/barrel yesterday- its lowest level since 2009. However, the oil and gas shares across the board are under selling pressure. ONGC, Reliance Industries, HPCL, BPCL all slipped between 0.6%-3% each.

Another stock that is the talking point today is Dr Reddy’s Labs. The pharma company slipped 2.4% after the changing political landscape of Venezuela might impact the business of the drug company.

Further, the drug major has submitted its response to a warning letter from the USFDA on 7 December 2015.

Among its peers, Glenmark Pharma, SunPharma, Cipla all finished down between 1%-5% each.

Among other losers, Bharat Forge nosedived 6% after the company said that commercial vehicle (CV) market is likely to decline 15% in calendar year 2016. Lupin, Bajaj Auto, Axis Bank, and Maruti Suzuki were other notable losers on the Sensex after these companies ended down between 1%-3% each.

On the flip side, BHEL gained 2.6% in a weak market after heavy industry minister clarified to the media that there were no plans of divestment of the government's stake in the company.

TCS is another company that finished in green after Oman Housing Bank (OHB) decided to replace its home-grown legacy systems with a complete solution from TCS BaNCS that covers loans, deposits, origination, payments, funds transfer and compliance. The stock gained 1.5%