Markets magnify losses amidst global anxiety ahead of U.S. Federal Reserve's policy stance

Local equity markets have magnified their losses in absence of any positive trigger amidst global anxiety as investors brace for a possible hawkish shift in the U.S. Federal Reserve's policy stance as the Fed begins a two-day policy meeting later in the day. Sentiment also took a hit to some extent after RBI’s governor, underscored that there were no chances of RBi slashing rates at the month-end monetary policy announcement, citing that Inflation in Asia's third-largest economy, India, was still high and hence there was no point in slashing interest rates since this would further build on to inflationary pressures. BSE Sensex and Nifty were trading in the red after data showed that foreign funds sold cash shares worth Rs 74.6 crore in the previous session. Trading with losses of around three tenths of a percent, while Sensex was trading sub 26750 level, Nifty was looking dangerously close of breaching 8,000 mark. Meanwhile, broader indices too succumbing to selling pressure, were trading with cut of around 0.10-%0.35%.

On the global front, Asian pacific shares were set for red close, while European shares too got off to a negative start as investors were reluctant to do much as they waited for fresh guidance on interest rates from the Federal Reserve.

Closer home, most of the sectoral indices were reeling under pressure, nevertheless stocks from Oil & Gas, Public Sector Undertaking and Power counters were the prominent losers. On the flip side, stocks from Realty, Information Technology and Technology counters witnessing much of the demand, topped the gainers list of BSE. Meanwhile, PSU oil marketing companies stock took a hit after reports suggested that India would decide on ending government control on diesel pricing after elections in two states next month even though local prices of the fuel were higher than the global rates, making a case for a cut in retail prices. The overall market breadth on BSE was in the favour of declines which thumped advances in the ratio of 1384:1377; while 90 shares remained unchanged.

The BSE Sensex is currently trading at 26724.08, down by 92.48 points or 0.34% after trading in a range of 26723.78 and 26861.29. There were 9 stocks advancing against 21 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.35%, while Small cap index down by 0.09%.

The gaining sectoral indices on the BSE were Realty up by 0.93%, IT up by 0.40%, TECK up by 0.39%, Consumer Durables up by 0.31% and FMCG up by 0.12% while, Oil & Gas down by 1.51%, PSU down by 1.49%, Power down by 0.89%, Metal down by 0.87% and INFRA down by 0.82% were the losing indices on BSE.

The top gainers on the Sensex were Dr. Reddys Lab up by 1.70%, Sun Pharma Inds. up by 1.20%, Infosys up by 0.93%, Bharti Airtel up by 0.68% and Hero MotoCorp up by 0.54%. On the flip side, ONGC down by 2.59%, Axis Bank down by 2.10%, Coal India down by 1.95%, Tata Steel down by 1.20% and Sesa Sterlite down by 1.17% were the top losers.

Meanwhile, in what could be termed as first step in the direction of ‘made in India’ concept announced by Prime Minister Narendra Modi, the government on Monday approved a Rs 930 crore scheme to enhance the competitiveness of the capital goods sector in order to boost the economy. The scheme on enhancement of competitiveness in the Indian capital goods sector which will be implemented in the 12th Plan period and spill over to the 13th Plan period, requires an estimated outlay of Rs 930.96 crore. However, the gross budgetary support (GBS) from the government for the scheme would be Rs 581.22 crore and the balance Rs 349.74 crore would be contributed by the stakeholder industries.

Further, the scheme would cover sub sectors like machine tools, textile machinery, construction and mining machinery, and process plant machinery. However, for the scheme to be implemented, issue of technological depth creation in the capital goods sector and creation of common industrial facility centres would have to be addressed.

The scheme basically has five components to be achieved including creation of advanced centres of excellence for R&D and technology development, integrated industrial infrastructure facilities or machine tool parks and setting up common engineering facility centre for textile machinery. It would also include testing and certification centre for earth moving machineries and setting up of a technology acquisition fund under the Technology Acquisition Fund Programme (TAFP) to help the capital goods industry to acquire and assimilate specific technologies.

Interestingly, the announcement of this scheme comes at a time when Prime Minister is keen to turn India into a manufacturing hub and would also give a fillip to capital goods production that contracted 3.8% in July this year. The sector however provides 9%-12% of the total manufacturing value added, while the consumption of capital goods constitutes a constant share of 17%-21% of the total gross domestic investment in the country.

The CNX Nifty is currently trading at 8013.80, down by 28.20 points or 0.35% after trading in a range of 8012.30 and 8044.90. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Dr. Reddys Lab up by 1.53%, DLF up by 1.53%, United Spirits up by 1.46%, Sun Pharma Inds. up by 1.24% and Indusind Bank up by 1.09%. On the flip side, ONGC down by 2.55%, BPCL down by 2.54%, Axis Bank down by 2.10%, Asian Paints down by 1.87% and Coal India down by 1.72% were the top losers.

Asian markets were trading mostly lower; Hang Seng down by 126.69 points or 0.52% to 24,230.30; Taiwan Weighted down by 84.06 points or 0.91% to 9,133.40; Shanghai Composite down by 43.32 points or 1.85% to 2,295.82; Straits Times down by 37.92 points or 1.14% to 3,274.55; Nikkei 225 down by 36.76 points or 0.23% to 15,911.53 and FTSE Bursa Malaysia KLCI down by 8.34 points or 0.45% to 1,847.30.

European markets were reeling under pressure; Germany’s DAX was trading lower by 30.3 points or 0.31% to 9,629.33; UK’s FTSE 100 edging lower by 13.77 points or 0.2% to 6,790.44 and France’s CAC losing 13.31 points or 0.3% to 4,415.32