Post Session: Quick Review

Selling pressure that crept in the last hour of trade erased all the early gains and led to slightly negative close of Indian equity markets on Monday. Prevailing caution ahead of the release of RBI’s fourth bi-monthly monetary policy review on Tuesday mainly prompted market-participants to pocket their gains amidst reports which suggested that India’s apex bank is likely to hold the key interest rate in its policy review and would lower them from February only.

However, losses remained capped on reports that Private equity investment in India is likely to touch a staggering $12 billion in 2014 primarily on account of reform measures taken by the government at the Centre. Additionally, a cut announced in the market borrowing by the government was also seen as positive factor. In consultation with Reserve Bank of India, the government trimmed down its annual market borrowing by Rs 8000 crore and decided to borrow Rs 2.40 lakh crore in the next six months starting October 1, against the budget estimate of Rs 2.48 lakh crore. Together with Rs 3.52 lakh crore during the first six months (April-September), the total borrowings for this fiscal stands at Rs 5.92 lakh crore, against the Budget estimate of  Rs 6 lakh crore. Thus, by close of trade, both Sensex and Nifty, despite slender losses, concluded above the psychologically crucial 26,550 and 7,950 levels respectively. Meanwhile, broader indices outperformed larger peers with fat margins and concluded with gains of over a percent.

On the global front, Asian stocks stumbled to a four-month low on Monday, as a crackdown on pro-democracy protesters in the city outweighed solid gains in the US market Friday. A campaign demanding free elections in the city has continued, despite police attempts to use tear gas Sunday evening to disperse crowds. Meanwhile, European shares slipped on Monday as strong gains on Wall Street on Friday were insufficient to tempt investors amid the unrest in Hong Kong and before the latest meeting of the European Central Bank.

Closer home, most of the sectoral indices on BSE concluded into positive territory, nevertheless stocks from Healthcare, Consumer Durables and Information Technology counters were the prominent gainers. Rupee’s weakness on account of month-end dollar demand from importers amidst strength of dollar index against basket of other major currencies, mainly worked in the favour of pharma and IT stocks. On the flip side, much of the drubbing was witnessed by stocks from Metal, FMCG and Banking counters.  Metal and mining stocks declined as latest data reaffirmed slowdown in China, the world's largest consumer of steel, copper and aluminum, while banking counters too succumbed to selling pressure ahead of RBI’s credit policy. The market breadth on the BSE remained in the favour of advances; where advancing and declining stocks were in a ratio of 1858:1082, while 96 scrips remained unchanged. (Provisional)

The BSE Sensex ended lower by 29.21 points or 0.11% at 26597.11 after trading in a range of 26518.01 and 26715.77. There were 9 stocks advancing against 21 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 1.01%, while Small cap index up by 1.49%. (Provisional)

The gaining sectoral indices on the BSE were Healthcare up by 2.21%, IT up by 1.84%, Consumer Durables up by 1.79%, TECK up by 1.50% and INFRA up by 0.24%while, Metal down by 1.11%, FMCG down by 0.92%, Bankex down by 0.91%, PSU down by 0.59% and Auto down by 0.44% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were TCS up by 3.47%, Sun Pharma up by 3.38%, GAIL India up by 2.13%, Infosys up by 1.90% and Hindalco up by 1.78%. On the flip side, Coal India down by 1.78%, Tata Steel down by 1.70%, Sesa Sterlite down by 1.47%, ICICI Bank down by 1.42% and ITC down by 1.39% were the top losers. (Provisional)

Meanwhile, in a big fillip to India’s growth story, international rating agency, Standard & Poor (S&P’s) reversing the stance it took two years ago, lifted India’s rating outlook to 'stable' from 'negative', in a validation of Prime Minister Narendra Modi's ambitious agenda of economic and fiscal reforms. S&P, in April 2012, had cut India's “BBB-minus” rating to 'negative', leaving it on the verge of a 'junk' rating. Thus, with this outlook upgrade, India is now rated at the lowest investment grade with a 'stable' outlook by all three major global credit agencies, in line with fellow BRICS countries Brazil and South Africa.

S&P cited India's external position and its improving current account balance as other positive factors. It acknowledged the country’s progress in narrowing its Current Account Deficit (CAD), with measures such as curbs on gold imports by the previous Congress government, along with Reserve Bank of India Governor Raghuram Rajan's commitment to curb inflation, were factors behind the recovery of foreign investor interest in India.

The international rating agency, in its press note, underscored that its stable outlook reflects its views that the new government had both willingness and capacity to implement reforms necessary to restore some of India's lost growth potential. However, it warned that the rating agency could lower country’s rating should the reform agenda stall over the next 24 months and highlighted that its key constraints for the rating upgrade included India’s low wealth level as well as its weak public finances.

India VIX, a gauge for markets short term expectation of volatility declined 2.78% at 12.92 from its previous close of 12.92 on Friday. (Provisional)

The CNX Nifty ended lower by 9.95 points or 0.12% at 7958.90 after trading in a range of 7934.70 and 7991.75. There were 18 stocks advancing against 32 stocks declining on the index. (Provisional)

The top gainers on Nifty were Sun Pharma up by 3.62%, TCS up by 3.13%, GAIL India up by 2.13%, Infosys up by 1.87% and Power Grid Corporation up by 1.86%. On the flip side, Jindal Steel & Power down by 3.62%, DLF down by 2.61%, Kotak Mahindra Bank down by 2.05%, Tata Steel down by 1.66% and Sesa Sterlite down by 1.56% were the top losers. (Provisional)

European Markets were trading mostly in the green; Germany's DAX was down by 0.17% and France's CAC was down by 0.27% and UK's FTSE 100 was down by 0.26%.

Asian markets ended mixed on Monday, with Hong Kong shares falling amid the biggest police crackdown on protesters since the city returned to Chinese rule. China’s industrial profits fell 0.6% in August from a year earlier, reversing from July’s 13.5% annual rise, the latest in a series of weak data from the world’s second-largest economy. Industrial companies made profits of 3.83 trillion yuan between January and August, 10% higher than the same period last year. The monthly decline adds to recent weak figures that have fueled fears that China is at risk of a sharp slowdown if it does not make fresh stimulus measures. China’s factory output grew at its weakest pace in nearly six years in August while growth in other key sectors such as retail sales and imports also cooled.

Indonesia rupiah fell to a seven-month low after the passage of a law scrapping direct elections for local officials spurred outflows from country’s stock market. Fitch Ratings stated that Indonesian banks are well positioned to face challenging environments, because of their well-capitalized position and the strengthened supervisory oversight of the country’s financial regulator.