Benchmarks continue to languish into red zone; negative European equities add to pressure

With no recovery in sight, frontline equity indices continued to languish into negative territory on first trading session of fresh F&O series amidst pessimistic global set-up. Meanwhile, negative start of European markets further pressurizing the sentiment at Dalal Street, dragged both Sensex and Nifty further away from psychologically crucial 26,300 and 7,900 levels respectively with losses of around 3/4th of a percent. Nevertheless, selling pressure was brutal for broader indices, which were trading lower with cut of over a percent. On the global front, receiving a negative handover from Asian counterparts, European shares too got off to somber start, with investors trying to place large bets on indexes on the last trading day of the week.

Closer home, bourses’ losses were mainly endorsed by stocks belonging from Consumer Durable, Auto and Technology counters. Meanwhile, most PSU bank stocks extended recent losses triggered by concerns of bad loans due to their exposure to coal mines after the Supreme Court's decision on Wednesday, September 24, 2014, cancelling most coal block allocations since 1993. However, stocks from Healthcare and Metal counters were the only exceptions. While, Pharma stocks gained on rupee weakness, Metal stocks were trading higher on renewed buying interest. The overall market breadth on BSE was in the favour of declines which thumped advances in the ratio of 1788:875; while 86 shares remained unchanged.

The BSE Sensex is currently trading at 26285.54, down by 182.82 points or 0.69% after trading in a range of 26220.49 and 26578.55. There were 8 stocks advancing against 22 stocks declining on the index. The broader indices were trading in red; the BSE Mid cap index was down by 1.17%, while Small cap index down by 1.37%.

The gaining sectoral indices on the BSE were Healthcare up by 0.67% and Metal up by 0.17% while, Consumer Durables down by 1.73%, Auto down by 1.20%, TECK down by 0.98%, INFRA down by 0.92% and Realty down by 0.88% were the losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 4.29%, Hindalco up by 3.11%, Tata Steel up by 1.29%, Mahindra & Mahindra up by 1.18% and ONGC up by 1.09%. On the flip side, Maruti Suzuki down by 2.82%, Hero MotoCorp down by 2.72%, Cipla down by 2.56%, HDFC down by 2.42% and GAIL India down by 2.34% were the top losers.

Meanwhile, elements of the Indian business environment continue to deter foreign investors, according to Economic and Social Commission for Asia and the Pacific, UN-ESCAP, which also expects the macroeconomic uncertainties and structural constraints in India to continue to concern foreign investors.

According to the commission, the country currently is experiencing slower economic growth, high current account deficit, and enduring high inflation and pointed that despite this the foreign direct investment inflows into India have grown by 16.5% to $28 billion in 2013.

However, pressing upon the growing need for FDI, the commission in its Asia-Pacific Trade and Investment Report 2014, highlighted that with reforms of investments there would be a potential for attracting higher rates on investments in India and that higher FDI could help strengthen the economy and provide incremental level of productive employment, besides encouraging technological up-gradation.

Additionally, the commission also highlighted that many sectors continue to retain the equity limits on foreign ownership, which is quite usual and that finding suitable joint venture partner could risk hampering FDI inflows. It pointed that FDI cap of 51% in the multi-brand retail was a major obstacle in the FDI inflows to the sector and that foreign investors have been awaiting positive signals from the new government, which was elected in early 2014.

The CNX Nifty is currently trading at 7867.40, down by 44.45 points or 0.56% after trading in a range of 7841.80 and 7952.95. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 4.26%, Hindalco up by 3.89%, NMDC up by 1.85%, DLF up by 1.41% and Tata Steel up by 1.35%. On the flip side, GAIL India down by 3.04%, Hero MotoCorp down by 2.67%, Cipla down by 2.64%, BPCL down by 2.42% and Maruti Suzuki down by 2.40% were the top losers.

Asian markets were set for a negative close; with Nikkei 225 down by 144.28 points or 0.88% to 16,229.86; Hang Seng down by 97.01 points or 0.41% to 23,671.12; Jakarta Composite down by 87.92 points or 1.69% to 5,113.46; Taiwan Weighted down by 21.77 points or 0.24% to 8,989.82; FTSE Bursa Malaysia KLCI down by 6.04 points or 0.33% to 1,837.07; KOSPI Index down by 2.47 points or 0.12% to 2,031.64 and Straits Times down by 1.53 points or 0.05% to 3,289.46. On the flip side, Shanghai Composite up by 2.62 points or 0.11% to 2,347.72 was the lone gainer amongst Asian pack.

European markets were reeling under pressure; with Germany’s DAX trading lower by 31.53 points or 0.33% to 9,478.48; UK’s FTSE 100 edging lower by 13.58 points or 0.2% to 6,626.13 and France’s CAC declining by 6.01 points or 0.14% to 4,349.27.