Benchmarks end lower; Sensex end below 28,000 mark

Indian equity benchmarks ended Thursday’s trade in red terrain with a cut of around quarter of a percent as investors remained on sidelines ahead of Wholesale Price Index (WPI) data for the month of October, to be released on November 14. Market traded near neutral lines for most part of the day’s trade but declined sharply in red in late trade as the government hiked the excise duty on petrol and diesel prices by Rs 1.50 per litre. However, losses remained capped on report that foreign institutional investors were net buyers in Indian equities worth Rs 459.47crore on Wednesday, as per provisional stock exchange data.

Investors shrugged off positive macro development where Consumer price index (CPI) inflation in October fell sharply to 5.52 percent from 6.46 percent in September. On the same time the Index of Industrial Production for the month of September grew by 2.5 percent on the back of strong performance by the manufacturing sector that expanded after two months of contraction. Moreover, market participants failed to draw any sense of relief from Paris based Organisation for Economic Cooperation and Development’s (OECD) statement that India is the ‘only major economy’ that is projected to see a pickup in growth momentum whereas mixed trends are predicted for the developed world.

On the global front, European markets staged a modest rebound and were trading higher in early deals as a boost from strong results from telecoms firm Iliad and financial group KBC was curbed by new gloomy updates in the utilities sector. Asian markets ended mixed amid signs that policy makers in China and Japan will do more to support economic growth. Though, Japanese benchmark hit fresh seven-year highs as investors lapped up on report that Prime Minister Shinzo Abe appears to have decided to call an early election amid mounting expectations he would postpone a planned sales tax hike.

Back home, depreciation in Indian rupee dampened the sentiments. Rupee was trading at 61.56 per dollar at the time of equity markets closing compared with its previous close of 61.49. Meanwhile, public sector oil marketing companies (OMCs) declined after petrol, diesel excise duty hike. The government hiked excise duty on branded diesel to Rs 5.25 per litre from Rs 3.75 per litre, while excise on branded petrol was increased to Rs 3.85 per litre from Rs 2.35 per litre.  Additionally, excise duty on unbranded diesel went up to Rs 2.96 per litre from Rs 1.46 per litre and that on unbranded petrol was increased to Rs 2.70 per litre from Rs 1.20 per litre. Moreover, shares of the frontline banks ended lower on profit booking after rallying nearly 14% in past one month. On the flip side, shares of sugar manufactures remained in demand after the Uttar Pradesh cabinet on Wednesday decided not to increase sugarcane prices for the 2014-15 crushing season.

The NSE’s 50-share broadly followed index Nifty lost over twenty points but managed to hold the psychological 8,350 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped by around seventy points to end below the psychological 28,000 mark. Broader markets too struggled to get any traction and ended the session with a cut of over quarter of a percent. The market breadth remained in favour of decliners, as there were 1314 shares on the gaining side against 1733 shares on the losing side while 106 shares remain unchanged.

Finally, the BSE Sensex declined by 68.26 points or 0.24%, to 27940.64, while the CNX Nifty lost 25.45 points or 0.30% to 8,357.85.

The BSE Sensex touched a high and a low of 28098.74 and 27822.70, respectively. The BSE Mid cap index was down by 0.31%, while the Small cap index was down by 0.22%.

The top gainers on the Sensex were Infosys up by 1.77%, Dr. Reddys Lab up by 1.01%, Cipla up by 0.91%, Wipro up by 0.69% and Bharti Airtel up by 0.68%. On the flip side, Sesa Sterlite down by 2.50%, Tata Power down by 2.47%, ONGC down by 2.03%, GAIL India down by 1.58% and Axis Bank down by 1.49% were the top losers in the index.

On the BSE Sectoral front IT up by 0.99%, TECK up by 0.74%, Healthcare up by 0.56% and Consumer Durables up by 0.36% were the only gainers, while Oil & Gas down by 1.63%, Realty down by 1.44%, PSU down by 1.32%, Infrastructure down by 0.78% and Metal down by 0.76% were the top losers in the space.

Meanwhile, in a move to bring major investments in railway infrastructure, Indian railway has indentified 17 special areas where 100% Foreign Direct investments (FDI) would be permitted. According to the guidelines approved by the government under its FDI policy, 100% FDI would be permitted in facilities like cleaning up trains and installation of bio-toilets in passenger coaches and setting up of mechanized laundry facilities. A committee constituted by Railway Ministry, to finalise the policy has also suggested a set of business models to attract investments in railway sector, is facing a severe cash crunch to the tune of Rs 30,000 crore every year. 

Besides bio-toilets, cleaning operation and mechanized laundries, the areas identified by the committee for FDI include construction, maintenance and operation facilities to supply non-conventional sources of energy to the Railways, installation and maintenance of bio-toilets in passenger trains, setting up of technical training institutes, testing facilities and laboratories and providing technological solutions to improve safety.

Furthermore, the committee has suggested three business models for high-speed train projects including projects where there are limits on operations and a firm wants to invest in upgrading the existing rail network for speed above 120 km per hour or semi-high speed network. In dedicated freight lines, the Railways has permitted operations by investors, subject to certain conditions. The government has now allowed investment in dedicated freight lines on a Joint Venture and/or PPP model, with clear revenue sharing guidelines. All new suburban corridor projects are permissible when launched through PPP route by MoR. The developer can construct, maintain and operate the corridor within the concession period. It is expected that these new guidelines can attract upto Rs 90,000 crore FDI into Indian Railways.

Ever since its origin, Indian Railways had always been shut off from receiving any kind of FDI, considering security risks involved. However, in August this year, the government had eased FDI norms permitting 100 percent investment in rail projects, such as high-speed trains, suburban service, dedicated freight corridors, freight and passenger terminals. FDI is also being permitted for rail route electrification, signalling system and logistics parks.

The CNX Nifty touched a high and low of 8,408.00 and 8,320.35 respectively.

The top gainers on Nifty were HCL Technologies up by 2.78%, Infosys up by 2.26%, Power Grid Corporation of India up by 1.57%, Tech Mahindra up by 1.47% and Lupin up by 1.06%. On the flip side, BPCL down by 5.23%, Cairn India down by 3.27%, Tata Power Company down by 2.47%, Sesa Sterlite down by 2.05% and GAIL (India) down by 2.00% were the top losers.

European markets were trading in the green, United Kingdom’s FTSE 100 was up by 0.28%, France’s CAC 40 was up by 0.67% and Germany’s DAX was up by 0.85%.

Asian markets ended mixed on Thursday, amid signs that policy makers in China and Japan will do more to support economic growth. Chinese stocks rose in Hong Kong, propelling the benchmark index to its highest level in almost two months, after a report that central bank will inject cash into smaller banks. The People’s Bank of China is gauging city commercial banks’ demand for funds to support lending to small enterprises. Growth in China real estate investment slowed further in the first 10 months of 2014, but property sales showed some signs of improvement, indicating Beijing’s efforts to boost the ailing sector may be starting to have an effect. Property investment grew at its slowest pace in over five years between January to October, rising 12.4% from the same period a year earlier. That compared with a rise of 12.5% in the first nine months and was the slowest pace since July 2009.

Chinese Retail Sales fell to an annual rate of 11.5%, from 11.6% in the preceding month while Chinese Fixed Asset Investment fell to a seasonally adjusted 15.9%, from 16.1% in the preceding month. Chinese Industrial Production fell to 7.7%, from 8.0% in the preceding month. Japan’s industrial production rose to a seasonally adjusted 2.9%, from 2.7% in the preceding month.