Benchmarks witness massacre on feeble global cues

Indian barometer gauges witnessed bloodbath on Friday with both the major indices losing over one percent and ending below their crucial 7,900 (Nifty) and 26,300 (Sensex) levels. Sentiments remained dampened throughout the session after two Fed officials’ indicated that the Federal Reserve will probably start raising interest rates around the middle of next year. Moreover, investors opted to stay away from risky assets ahead of the industrial production data due later during the day. Selling was both brutal and wide-based as none of sectoral indices, barring software and technology, on BSE were spared. Counters, which featured in the list of worst performers, include metal, auto and fast moving consumer goods.

Sentiments remained down-beat on report from the HSBC Emerging Markets Index (EMI) has stated that manufacturing and services sectors in India expanded at a slower pace than China in September, even as emerging market output touched an 18 month high in the same month. Moreover, market-participants failed to draw any sense of relief from better than expected Infosys numbers. The IT bellwether has not only surpassed market expectations on almost all operating and financial fronts but gave a surprise to the street with a 1:1 bonus announcement. However, the company has maintained its guidance at 7-9% in dollar revenue growth, which is much lower than Nasscom’s growth rate of around 13-15%. Investors also failed to draw heart from Department of Industrial Policy and Promotion’s (DIPP) statement that India will receive the highest-ever inflow of foreign direct investment (FDI) in the current financial year, attracted by the policy reforms announced by the new government.

Selling got intensified as European markets made an awful start with CAC, DAX and FTSE all were trading with a cut of around half a percent. The Asian markets too ended the session in the red after the dollar appreciated against most of its major peers, as some Federal Reserve officials said the US economy may be at risk from a global slowdown.

Back home, the market sentiment was weighed down by the weakness in rupee which fell in on Friday due to fresh demand for the US currency from banks and importers. Sentiments also remained dampened on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 20.89 crore on October 9, 2014. Stocks related to metal sector hit rock bottom on the back of swift retreat in Chinese demand for iron ore and coal which in turn led the global iron ore prices to touch near five-year lows and local coal prices to their weakest in six years. On the flip side, stocks related to software and technology counters edged higher, as the finance ministry has said that companies will be able to transfer or redeploy up to 50% of manpower from existing units to new ones in special economic zones (SEZs) without losing any tax benefits.

The NSE’s 50-share broadly followed index Nifty tumbled by over one hundred points to end below the psychological 7,900 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by around three hundred and forty points to finish below its psychological 26,300 mark. Broader markets too witnessed blood-bath and ended the session with a cut of over a percentage point. The market breadth remained in favor of decliners, as there were 998 shares on the gaining side against 1,910 shares on the losing side while 115 shares remain unchanged.

Finally, the BSE Sensex plunged by 339.90 points or 1.28%, to 26297.38, while the CNX Nifty dropped by 100.60 points or 1.26% to 7,859.95.

The BSE Sensex touched a high and a low of 26555.92 and 26261.61, respectively. The BSE Mid cap index was down by 1.38%, while the Small cap index was down by 1.12%.

The top gainers on the Sensex were Infosys up by 6.68%, BHEL up by 0.91%, Hero MotoCorp up by 0.83%, Reliance Industries up by 0.59% and Sun Pharma up by 0.54%. On the flip side, Tata Motors down by 5.31%, Hindalco down by 4.79%, Sesa Sterlite down by 4.60%, Tata Steel down by 4.03% and Mahindra & Mahindra down by 3.59% were the top losers in the index.On the BSE Sectoral front IT up by 2.29% and TECK up by 1.17% were the only gainers, while Metal down by 4.11%, Auto down by 2.78%, FMCG down by 2.56%, Bankex down by 1.80% and Infrastructure down by 1.65% were the top losers in the space.

Meanwhile, in order to boost the international trade, India has initiated measures to ease customs norms. The government has decided to set up a national committee which will have representation from 7-8 departments to look after all aspects of trade facilitation. The committee will suggest and implement measurers to ensure seamless movement of cargo by addressing constraints like high transaction costs and poor infrastructure.

The move to ease custom norms came after the government blocked an international agreement on easing trade regulations. On July 31, India vetoed the trade facilitation agreement at the World Trade Organisation (WTO), arguing that there should be parallel deal on food security issue. However, India is fully committed to trade facilitation which is aimed at simplifying customs procedure, reducing transactions cost and increasing transparency.

Prime Minister Narendra Modi, during his US visit, had told President Barack Obama that trade facilitation was important for India and it expected the US' support in addressing India's concerns over public stockholding for food security. Moreover, Finance Minister Arun Jaitley in its budget speech had said that the government will allocate significant funds towards trade facilitation and provide facility like extension of 24x7 customs clearance facilities to many more ports, airports and sea ports.

 The CNX Nifty touched a high and low of 7,924.05 and 7,848.45 respectively.

The top gainers of the Nifty were Infosys up by 6.51%, HCL Technologies up by 2.34%, Asian Paints up by 1.37%, BHEL up by 1.05% and Hero MotoCorp up by 0.84%. On the other hand, Jindal Steel & Power down by 5.85%, NMDC down by 5.35%, Tata Motors down by 4.94%, Hindalco Industries down by 4.53% and Tata Steel down by 4.27% were the top losers.

European markets were trading in red, France’s CAC 40 was down by 0.42%, United Kingdom’s FTSE 100 was down by 0.51% and Germany’s DAX was down by 0.72%.

Asian markets ended in red on Friday, after a warning by the European Central Bank about that region’s economic outlook sparked a rout in US shares. Taiwan market remained shut for the trade today for National Day. The Bank of Japan agreed that exports remained weak and a few of them were cautious about a sustainable rise in exports, the minutes of the bank’s September 3-4 policy meeting released showed. Despite sluggish exports and factory output, the nine-member board still believed that the positive domestic cycle from income to spending was in place in both the household and corporate sectors, and that Japan’s economy was likely to continue its moderate recovery trend, overcoming the drag from the April sales tax hike. Data released before the September meeting showed that industrial production rose only 0.2% on month as the sales tax hike continued to dampen domestic demand and overseas demand remained generally sluggish. The BoJ board decided by a unanimous vote to leave the bank’s policy target unchanged.

Japanese Household Confidence rose to a seasonally adjusted annual rate of 39.9. Malaysian Industrial Production rose to a seasonally adjusted annual rate of 6.5%, from 0.5% in the preceding month. Philippines Industrial Production fell to a seasonally adjusted annual rate of 5.1%, from 7.7% in the preceding month.