Post Session: Quick Review

Markets witnessed consolidation after hitting string of record highs in the recent session on Thursday, which led to Sensex and Nifty, concluding below the psychologically crucial 27,150 and 8,100 levels respectively, with little loss of over one tenth of a percent. ‘Choppiness’ mainly turned out to be theme of the session as barometer gauges dipped several times below their psychologically crucial 27,000 (Sensex) and 8,100 (Nifty) levels only to recover later, nevertheless it was buying in the last hour of trade that downsized bourses’ losses. Meanwhile, broader indices unable to decide upon a single trajectory, ended on a mix note, which led Midcap index ending higher with gains of over one tenth of a percent and Small-cap index settling lower with cut of over three tenths of a percent.

Absence of buying activities on the back of somber global cues due to prevailing caution ahead of key data and events, such as outcome of the European Central Bank's policy meeting later in the day and the U.S. non-farm payrolls data on Friday, mainly led to downbeat mood at Dalal Street. Besides, an annual Global Competitiveness report by Geneva-based World Economic Forum (WEF), which placed India at 71st position in global competitiveness list, the lowest among BRICS countries, weighed down by challenging economic conditions for most part of the past year, also hurt buying sentiments.

On the global front, a month-long march higher for European and Asian stock markets stalled on Thursday on concerns the European Central Bank will do nothing immediate at its meeting later in the day to address a deteriorating economic outlook. Meanwhile, Asian stocks also took a hit after Bank of Japan board decided by a unanimous vote to leave the bank's policy target unchanged, keeping its 'cautiously’ optimistic economic outlook intact.

Closer home, most of the sectoral indices on BSE concluded into negative territory; however stocks from Fast Moving Consumer Goods (FMCG), Healthcare and Auto counters managed to showcase resilience. On the flip side, much of the beating was taken by stocks belonging from Realty counter, closely followed by stocks from Metal and Capital Goods space. Realty counter fall was led by plunge of DLF stocks, which cracked as much as 8% after Punjab and Haryana High Court cancelled a 350-acre plot of land that DLF had acquired from Haryana. Meanwhile, banking shares also lost their steam after RBI permitted ECB lenders for extending loans in Indian Rupees to domestic businesses, a move which would add to the competition for local banks, which are already facing poor credit off-take by India Inc. The market breadth on the BSE remained in the favour of decliners; advancing and declining stocks were in a ratio of 1242:1718, while 99 scrips remained unchanged. (Provisional)

The BSE Sensex ended lower by 54.01 points or 0.20% at 27085.93 after trading in a range of 26972.39 and 27169.12. There were 11 stocks advancing against 19 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index was up by 0.11%, while Small cap index down by 0.36%.

The gaining sectoral indices on the BSE were FMCG up by 0.26%, Consumer Durables up by 0.13% and Auto up by 0.11% while, Realty down by 4.42%, Metal down by 1.50%, Capital Goods down by 1.00%, Oil & Gas down by 0.53% and PSU down by 0.51% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Bajaj Auto up by 3.58%, Hero MotoCorp up by 2.15%, NTPC up by 1.72%, HDFC up by 1.51% and Bharti Airtel up by 1.19%. On the flip side, BHEL down by 4.74%, Hindalco down by 3.74%, Tata Steel down by 2.89%, Tata Motors down by 1.74% and GAIL India down by 1.60% were the top losers. (Provisional)

Meanwhile, right after liberalizing foreign direct investment (FDI) norms in the defence sector and the Railways, the government is now gearing up to fast-track the decision on easing rules for foreign investments in the construction development sector.   It is in view of this, the department of Industrial Policy & Promotion (DIPP) floated a cabinet note proposing to scale down the minimum built-up area requirement for FDI in construction projects from 50,000 sq metres to 20,000 sq metres. It has also proposed reducing the minimum capital requirement for such projects from $10 million to $5 million.

The current policy though allows 100% FDI in the construction sector, but is subjected to minimum built-up area and minimum capitalization requirements, vis-a vis, minimum area to be developed under each project in case of development of serviced housing plots, should be minimum land area of 10 hectares; in case of construction-development projects should be a minimum built-up area of 50,000 sq. mts; and lastly in case of a combination project, could be any one of the two conditions. Further, on investment front, it required minimum capitalisation of $10 million for wholly owned subsidiaries and US$ 5 million for joint ventures with Indian partners.

Meanwhile, the cabinet note floated by DIPP, also suggested that projects which commit at least 30% of the total project cost for low cost affordable housing would be exempted from minimum built-up area and capitalization requirements.

At a time when the government is keen to attract investments in the 100 smart cities proposed in the Budget, relaxing rules in construction is the need of the hour. Further, in encouraging development, countries such as the US, Japan and UK have already expressed interest in investing in smart cities.

India VIX, a gauge for markets short term expectation of volatility dropped 2.35% at 13.07 from its previous close of 13.33 on Wednesday. (Provisional)

The CNX Nifty edged lower by 18.65 points or 0.23% at 8095.95 after trading in a range of 8060.90 and 8114.80. There were 17 stocks advancing against 32 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bajaj Auto up by 3.42%, Hero MotoCorp up by 2.12%, NTPC up by 1.97%, HDFC up by 1.65% and Power Grid Corporation up by 1.05%. On the flip side, DLF down by 8.42%, BHEL down by 4.14%, Jindal Steel & Power down by 3.93%, Tata Steel down by 3.22% and Hindalco down by 3.20% were the top losers. (Provisional)

European Markets were trading mostly in the red; Germany’s DAX was down by 0.55% and France’s CAC was down by 0.21%, while UK’s FTSE 100 was up by 0.13%.

Asian markets ended mostly in red on Thursday, with the benchmark index retreating from a one-month high. China’s stocks rose, sending the benchmark indices to a 15-month high, as real-estate and financial companies gained on speculation the government is loosening financing curbs. The Bank of Japan board decided by a unanimous vote to leave the bank’s policy target unchanged, as expected, keeping its cautiously optimistic economic outlook despite recent soft retail sales. Under the current easing framework, the BoJ is committed to doubling the sum of money in circulation and deposited at the central bank in two years from 138 trillion yen at the end of 2012. Japanese Prime Minister Shinzo Abe’s new cabinet appointments signal his determination to deliver on pledges to overhaul the pension system and bring more women into the workforce. South Korea’s gross domestic product rose less-than-expected last month. South Korean GDP rose to a seasonally adjusted 0.5%, from 0.6% in the preceding month.