Post Session: Quick Review

In the extremely volatile session of trade, local equity markets ended with slender losses of around one tenth of a percent as market-participants winded up their pending long position ahead of monthly expiry in derivative segment on Wednesday. Meanwhile, prevailing caution ahead of RBI’s monetary policy on September 30, 2014, also weighed on the sentiment. Further, geo-political concerns, which emerged after US began air strikes on Islamic State targets, also added to the pessimistic milieu. Nevertheless, the losses to some extent were capped on account of reports suggesting that Former Finance Minister P Chidambaram underscored India could achieve 8% growth in the next 2-3 years if it followed the path of fiscal prudence, which could be financed by domestic savings and some foreign direct investment. Thus, by close of trade, Sensex taking a hit of over one tenth of a percent, concluded below 26,750 level, while Nifty settled above crucial 8,000 mark. However, the session turned out to be spiteful for broader indices which shut shop with hefty losses of over a percent.

On the global front, Asian markets witnessed mixed trade on Wednesday, with geopolitical concerns creating uncertainty. Investor confidence in Hong Kong and China was helped by a better-than-expected survey of Chinese manufacturing activity. Meanwhile, weak German economic data and tepid corporate results from Dutch group TNT weighed on European shares on Wednesday, although supportive comments from European Central Bank chief Mario Draghi limited the losses.

Closer home, almost all the sectoral indices on BSE concluded into negative territory, however, stocks from FMCG, Healthcare and Oil & Gas counters were the only pockets of strength, while Realty, Capital Goods and Consumer Durable counters were the prominent losers. On the flip side,  Shares of fast moving consumer goods (FMCG) companies concluded higher, with Hindustan Unilever (HUL), ITC, Dabur India, Nestle India, Godrej Consumer Products, Britannia Industries and Colgate-Palmolive (India) posting gains in the range of 1%-3%. Besides, stocks related to pharma sector ended upbeat for second consecutive session after Department of Pharmaceuticals withdrew guidelines issued by it on May 29 which gave National Pharmaceutical Pricing Authority (NPPA) the powers to fix the prices of drugs that are not on the essential medicines list in response to a plea filed by an organization of drug manufacturers challenging the drug regulator’s July 10 notification that brought over 100 medicines under price control.

On the flip side, power and coal stocks witnessed selling after Supreme Court cancelled all coal block allocations except for government-run blocks that operate on a non-JV basis. Besides, banking shares mainly public sector undertakings (PSU) witnessed drubbing on concerns of asset quality due to their exposure to coal mines. The market breadth on the BSE remained in the favour of decliners; where advancing and declining stocks were in a ratio of 1027:1929, while 104 scrips remained unchanged. (Provisional)

The BSE Sensex ended lower by 31.00 points or 0.12% at 26744.69 after trading in a range of 26560.00 and 26844.70. There were 13 stocks advancing against 17 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 1.19%, while Small cap index down by 1.62%. (Provisional)

The few gaining sectoral indices on the BSE were FMCG up by 1.75%, Healthcare up by 0.55%, Oil & Gas up by 0.23% and PSU up by 0.01% while, Capital Goods down by 1.69%, Realty down by 1.69%, Consumer Durables down by 1.27%, Bankex down by 1.08% and Infrastructure down by 0.76% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Coal India up by 4.92%, Hindustan Unilever up by 2.98%, Cipla up by 2.91%, ITC up by 1.78% and Wipro up by 1.63%. On the flip side, SBI down by 3.06%, Tata Steel down by 3.00%, Larsen & Toubro down by 2.26%, BHEL down by 2.17% and TCS down by 1.58% were the top losers. (Provisional)

Meanwhile, global rating agency, Fitch outlined that hiking of interest rates by US Federal Reserve by the middle of 2015, would surely have some impact in the form of capital outflows on emerging markets, including India. However, it also underscored that India's credit profile was much stronger than other EM peers as the country was well prepared to deal with external shocks, including a rate hike by the Fed.

The rating agency which recently conducted a stress test to ascertain the impact of the US Fed rate hike on emerging markets, pointed that countries like Hungary, Mongolia and potentially Turkey were more vulnerable to the impact of rate hikes as compared to other countries that showed less vulnerability, which included names like India as well as Vietnam and Brazil.

It also emphasized that the decision of hike interest rates was bound to have affect emerging markets around the world, especially the BRICS (Brazil, Russia, India, China and South Africa). However, asserted that cycle was certainly in the favour of India, which saw strong 5.7% growth number in the second quarter, due to lower base effect. The agency also lauded RBI’s approach of taking preventive decision, i.e. by slashing has cut its current account deficit by more than half -- from $87.8 billion to $32.4 billion -- through curbs on gold imports and increases on other duties.

It was the reduction in the Current Account Deficits (CAD) since 2013 that has prevented any rating downgrade for the country from Fitch, which has consolidated India's rating at its current level of BBB minus with a stable outlook and unveiled a chance of future positive action if the country could further reduce its fiscal deficit and government debt levels.

India VIX, a gauge for markets short term expectation of volatility rises 0.96% at 12.53 from its previous close of 12.49 on Tuesday. (Provisional)

The CNX Nifty ended lower by 15.15 points or 0.19% at 8002.40 after trading in a range of 7950.05 and 8042.05. There were 21 stocks advancing against 29 stocks declining on the index. (Provisional)

The top gainers on Nifty were Coal India up by 4.83%, Hindustan Unilever up by 2.97%, Cipla up by 2.69%, DLF up by 2.64% and ITC up by 1.73%. On the flip side, Jindal Steel & Power down by 10.15%, PNB down by 4.04%, Tata Steel down by 2.76%, SBI down by 2.73% and Bank of Baroda down by 2.55% were the top losers. (Provisional)

European Markets were trading mostly in the red; Germany's DAX was down by 0.14% and UK's FTSE 100 was down by 0.22%, however France’s CAC was up by 0.30%.

Asian markets ended mixed on Wednesday, with China’s stocks rising, sending the benchmark index to its biggest gain in about seven weeks, as a jump in new trading accounts lifted brokerages and defense companies rallied on speculation of increased state spending. Japanese manufacturing activity eased slightly in September but output rose at the fastest pace in six months suggesting industrial production is stabilizing after a sharp slump in demand following a sales tax increase in April. Japan’s Manufacturing Purchasing Managers Index (PMI) fell to a seasonally adjusted 51.7 in September from a final reading of 52.2 in August. The output component of the flash PMI index rose to 53.4 from a final 52.9 in August to reach the highest level in six months. Indonesia’s Finance Minister M. Chatib Basri stated that the government seeks to trim the state’s budget deficit and seeks more financing from domestic sources to shield the country from financial instability that may come as a result of rising interest rates in the US.