Post Session: Quick Review

Local equity markets nursed heavy losses of over a percent on Tuesday in absence of any positive triggers amidst pessimistic global set-up. In the extremely dismal session of trade, markets witnessed bloodbath on account of ferocious selling pressure that dragged benchmarks at day’s low point by close of trade, Market-participants failed to draw any sense of relief from Service PMI data. Services, the biggest sector of India's economy, grew at higher pace in September on new orders, even as sentiments continued to subside after a surge post-election. Widely-tracked HSBC purchasing managers' index (PMI) rose to 51.6 points in September against 50.6 in August. Besides, markets also failed to draw heart from the report which suggested that CII Business Confidence Index (CII-BCI) for July-September quarter FY15 shot up to 57.4, up from 53.7 in April-June quarter and 49.9 in Jan-March quarter this year. By close of trade, both Sensex and Nifty concluded below 27,000 and 7,900 levels respectively. Meanwhile, broader indices too participated into the gloom and ended lower in the range of 0.75%-0.90%.

On the global front, Asian shares inched lower on Tuesday as the focus turned to an imminent policy decision from the Bank of Japan. Meanwhile, European shares snapped a two-session climb in early trade Tuesday, burdened by lackluster German industrial production data dealing yet another blow to the continent’s largest economy and amplifying concerns surrounding the growth outlook for the whole euro-zone.

Closer home, amidst the broad-based selling pressure, none of the sectoral indices could show resilience, stocks from Metal, Healthcare and Capital Goods counters were the prominent losers. Metal stocks led the losers list on BSE on concerns over growth in China. In stock-specific activity, shares of tyre manufacturers rallied in otherwise subdued market on hopes of higher margins due to falling rubber prices. Prices of natural rubber, the most important raw material for the industry, have dropped to multi-year low in the international market on account of poor demand from countries like China and oversupply of the commodity.  The market breadth on the BSE remained in the favour of decliners; where advancing and declining stocks were in a ratio of 1121:1758, while 112 scrips remained unchanged. (Provisional)

The BSE Sensex ended lower by 296.02 points or 1.11% at 26271.97 after trading in a range of 26250.24 and 26570.38. There were 5 stocks advancing against 25 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.90%, while Small cap index down by 0.79%. (Provisional)

The losing sectoral indices on the BSE were Metal down by 2.65%, Capital Goods down by 1.78%, Consumer Durables down by 1.72%, Realty down by 1.27% and PSU down by 1.20%, while there were no gaining sectoral indices on the BSE. (Provisional)

The top gainers on the Sensex were NTPC up by 1.55%, GAIL India up by 1.12%, Tata Power up by 0.68%, Wipro up by 0.28% and Bharti Airtel up by 0.07%. On the flip side, Hindalco down by 4.61%, Sesa Sterlite down by 4.12%, Cipla down by 3.59%, Dr. Reddy's Lab down by 3.30% and HDFC down by 3.09% were the top losers. (Provisional)

Meanwhile, the activity in Indian services sector, which accounts for around 60% of country’s GDP, expanded in September as order books filled up at a faster rate. The HSBC services Purchasing Managers’ Index (PMI), based on the survey of around 350 private service sector companies, rose from 50.6 in August to 51.6 in the month of September, above 50 mark indicating a fifth consecutive monthly expansion in service sector output. Among the six monitored sub-sectors, the business activity rose in three sub-sectors with the sharpest expansion witnessed in post and telecommunication services. Indicating expansion in business activity overall, the HSBC India Composite Output Index, which measures activity in both the manufacturing and services sector, increased to 51.8 in September from 51.6 in August.

Services providers attributed expansion in output to increase in new businesses amid strengthening demand. The new business sub-index climbed to 52.4 in September from 51.9, signaling robust demand.  Employment across the private sector also rose for the first time since June; however the rate of hiring was fractional overall. Amid rising demand and fractional increase in employment level, backlogs of work held by Indian services companies continued to grow in September, extending the current sequence of accumulation to six months. On inflation front, the HSBC survey indicated that inflationary pressures from inputs for services firms eased in September. Accordingly, services providers slightly increased output prices and the rate of charge inflation was below the historically inflation trend. Meanwhile, Indian services companies maintained their positive outlook for output growth over the next 12 months on the back of supportive factors such as anticipated improvements in demand and new marketing initiatives. 

Further, the survey highlighted that employment level rose and inflation fell significantly in September, however, business sentiment continue to deteriorate in services sector after a strong post-election uptick. Therefore, there is a need for more reforms to put growth on a firm track and address supply side risks to inflation.

India VIX, a gauge for markets short term expectation of volatility zoomed 11.25% at 14.46 from its previous close of 13.00 on Wednesday. (Provisional)

The CNX Nifty ended lower by 93.15 points or 1.17% at 7852.40 after trading in a range of 7842.70 and 7943.05. There were 9 stocks advancing against 41 stocks declining on the index. (Provisional)

The top gainers on Nifty were NTPC up by 1.15%, GAIL India up by 1.04%, Power Grid Corporation up by 0.96%, Wipro up by 0.45% and Tata Motors up by 0.44%. On the flip side, DLF down by 5.85%, Sesa Sterlite down by 4.58%, Hindalco down by 4.51%, Jindal Steel & Power down by 4.51% and Cairn India down by 4.12% were the top losers. (Provisional)

European Markets were trading in the red; UK’s FTSE 100 was down 0.64%, France’s CAC was down 1.02% and Germany’s DAX was down by 0.79%.

Asian markets ended mostly in red on Tuesday, while Hong Kong market closed in green after agreement on formal talks between protesters and Hong Kong officials boosted shares in the city. The Bank of Japan maintained its record stimulus as the yen traded near a six-year low and economists pushed back forecasts for further monetary easing. The central bank kept its pledge to increase the monetary base at an annual pace of 60 trillion yen to 70 trillion yen ($643 billion). The central bank projects prices to rise in the midterm and some BOJ board members believe it wouldn’t be appropriate to trigger a more rapid weakening of the currency with more stimulus now. Japan’s index of leading economic indicators rose to a seasonally adjusted 104.0, from 105.4 in the preceding month.

Sales at major Hong Kong retailer chains have fallen as much as 50 percent during the bulk of the Chinese National Day holidays after pro-democracy protests disrupted the shopping season. The Hong Kong Retail Management Association stated that sales dropped at least 15 percent during the first five days of the holidays known as Golden Week, versus a year earlier. Taiwanese Trade Balance fell to a seasonally adjusted annual rate of 3.50B, from 4.11B in the preceding month while Taiwanese CPI fell to a seasonally adjusted annual rate of 0.72%, from 2.07% in the preceding quarter. Malaysian Trade Balance rose to 3.86B, from 3.60B in the preceding month.