Benchmarks continue weak trade in late afternoon session

Indian equity markets continued its weak trade in the late afternoon session on account of selling in frontline blue chip counters. Investors have turned cautious ahead of the winter session of parliament which begins next week and RBI’s policy review schedule on December 2, 2014. Traders were seen piling positions in IT, TECK and FMCG sector while selling was witnessed in Realty, Consumer Durables and Power sector stocks. Sugar stocks were trading under pressure after Food Minister Ram Vilas Paswan stated that there are no plans as of now to extend sugar export subsidy in 2014-15 season. In scrip specific development, ING Vysya Bank and Kotak Mahindra Bank were trading firm after touching 52-week high on reports that Kotak Mahindra Bank is in final stages to acquire ING Vysya Bank. Amtek Auto, Bosch, Engineers India, Strides Arcolab and Wockhardt were trading in green after their inclusion in the derivatives market with effect from November 28.

On the global front, the Asian markets were trading mostly in red while the European markets were trading on pessimistic note. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,400 and 28,000 levels respectively. The market breadth on BSE was negative in the ratio of 1120:1744 while 96 scrips remained unchanged.

The BSE Sensex is currently trading at 27938.29, down by 94.56 points or 0.34% after trading in a range of 27915.23 and 28118.53. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.55%, while Small cap index down by 0.83%.

The gaining sectoral indices on the BSE were IT up by 0.59%, TECK up by 0.13%, FMCG up by 0.13% while, Realty down by 2.17%, Consumer Durables down by 2.05%, Power down by 1.45%, Capital Goods down by 1.38%, Metal down by 1.19% were the losing indices on BSE.

The top gainers on the Sensex were Cipla up by 2.55%, SBI up by 1.43%, Infosys up by 0.57%, Wipro up by 0.49% and TCS up by 0.48%. On the flip side, BHEL down by 3.05%, Sesa Sterlite down by 2.93%, Tata Motors down by 1.49%, Tata Steel down by 1.45% and HDFC Bank down by 1.45% were the top losers.

Meanwhile, in an encouraging development for the country, the Organization for Economic Cooperation and Development (OECD) pointed that economy is coming out of its worst slowdown in a quarter-century and implementation of new reforms held the key for putting the economy on a strong and sustainable growth path of 8%.

The Paris-based think-tank pegged India’s growth rate, which languished at below 5% for the last two fiscal due to high interest rates, stubborn inflation and weak investment to grow by 6.6% in 2015-16, up from its last forecast of 5.7% growth in May and to edge higher to 6.8% in 2016-17.

It, however, emphasized to achieve 8% growth rate, the economy would have to undertake sweeping reform measures, like switching subsidy spending to social and physical infrastructure, bringing in tax reforms, cleaning up the banking system to free up funds for infrastructure and reducing structural barriers for job creation by bringing in labour reforms among other things.

The Paris-based think-tank also pushed for early implementation of the goods and services tax (GST) to improve public finances and also stressed on the need for India to improve the quality of its fiscal consolidation both by the Centre and the states.

In yet another positive, the OECD, in its latest forecast, pegged inflation to fall to 5.4% in 2015-16 and nudge higher to 5.6% the following fiscal year, after 6.9% in 2014-2015. In May, it forecast that inflation would remain above 6 percent over the next few years.

Notably, OECD in its key recommendations suggested that India to Improve the macroeconomic framework by introducing flexible inflation targeting, pursuing fiscal consolidation and implementing a national value-added tax and strengthening banking oversight. OECD also added that it could boost manufacturing jobs by simplifying labour laws, improving access to education, accelerating approvals for infrastructure projects and improving the business climate.

The CNX Nifty is currently trading at 8362.85, down by 19.45 points or 0.23% after trading in a range of 8353.15 and 8410.10. There were 16 stocks advancing against 34 stocks declining on the index.

The top gainers on Nifty were Kotak Mahindra Bank up by 6.54%, Cipla up by 2.33%, SBI up by 1.67%, Cairn India up by 1.67% and Tech Mahindra up by 0.97%. On the flip side, Jindal Steel & Power down by 4.24%, Zee Entertainment down by 3.35%, BHEL down by 3.07%, DLF down by 2.90% and NMDC down by 2.81% were the top losers.

The Asian markets were trading mostly in red; Jakarta Composite decreased 40.88 points or 0.8% to 5,087.06, Hang Seng decreased 23.67 points or 0.1% to 23,349.64, Straits Times decreased 13.87 points or 0.42% to 3,320.69, KOSPI Index decreased 8.83 points or 0.45% to 1,958.04 and FTSE Bursa Malaysia KLCI decreased 5.68 points or 0.31% to 1,818.71.

On the other hand, Shanghai Composite increased 1.67 points or 0.07% to 2,452.66, Nikkei 225 increased 12.11 points or 0.07% to 17,300.86 and Taiwan Weighted increased 115.63 points or 1.29% to 9,078.87.

The European markets were trading mostly in red; Germany’s DAX decreased 67.92 points or 0.72% to 9,404.88, France’s CAC decreased 39.13 points or 0.92% to 4,227.06 and UK’s FTSE 100 decreased 26.06 points or 0.39% to 6,670.54.