Markets end lower on global growth concerns; Nifty breaches 7,800 mark

Pressurized by feeble global cues, Indian equity benchmarks ended the Thursday’s session in red terrain. Though, markets staged a smart recovery in latter part of the trade to pare most of their losses. Sentiments remained dampened with FM Arun Jaitley stating that the government is trying to bring the domestic tax system at par with global standards and will list of possible corporate tax exemptions that would be phased out to help a reduction in the rate from 30% to 25%. The statement came even as he said that the government had laid out a clear roadmap and had substantially put the whole idea of retrospective taxation to rest. Investors also remained concerned after the met department said that rainfall is 14% deficient so far and the overall monsoon is likely to be 82% against the earlier estimated 88%, it added that El Nino could be a reason of early monsoon withdrawal. There was some concern in the market with the downgrading of Brazil’s sovereign rating by S&P, though it’s not likely to have any major bearing on India, however, several Indian companies that have significant exposure to the Brazilian market.

However, markets got some support with positive indirect tax collection data. The indirect tax collection growth slowed a bit in August compared to July but remained robust on account of a sharp pick-up in excise duty collection on account of additional revenue measures. Indirect taxes-excise duty, service tax and customs duty - rose 36.7 per cent in August to Rs 54,396 crore over the same month in 2014. Some support also came with NITI Aayog Vice Chairman Arvind Pangaria’s statement that RBI has room to cut interest rate by 0.5-1% and that investment sentiment is turning around. He also said that would not write off the possibility of  8% GDP growth rate this year.

Global cues mainly played the spoilsport for domestic markets with European counters witnessing blood bath amid renewed investor concern about a potential increase in US interest rates after a data on American job openings bolstered the case for higher US interest rates. Asian markets ended mostly in red as Japan machinery orders unexpectedly shrank, deflating investors' appetite for riskier assets.

Back home, depreciation in Indian rupee too dampened the sentiments. Rupee was trading at 66.46 per dollar at the time of equity markets closing as compared with its previous close of 66.40 per dollar. Sentiment also weighed down on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 452.13 crore yesterday, as per provisional data released by the stock exchanges. Selling in metal space too weighed down sentiments after lacklustre Chinese economic data added to heightened worries about slackening global growth. Jewellery stocks too ended lower on profit booking after yesterday’s rally triggered by the government's approval for introduction of Gold Monetization Scheme. There was some pick-up in the late trade led by the banking stocks that showed a smart bounce back but that could not wipe all the losses of the markets.

The NSE’s 50-share broadly followed index Nifty declined by over thirty points to end below the psychological 7,800 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by around hundred points to end below its crucial 25,700 mark. Broader markets too struggled to get any traction during the trade and ended the session mixed. The market breadth remained in favor of decliners, as there were 1,123 shares on the gaining side against 1,478 shares on the losing side while 113 shares remain unchanged.

Finally, the BSE Sensex declined by 97.41 points or 0.38% to 25622.17, while the CNX Nifty lost 30.50 points or 0.39% to 7788.10.

The BSE Sensex touched a high and a low 25733.70 and 25287.50, respectively. The BSE Mid cap index was up by 0.65%, while Small cap index was down by 0.40%.

The top gaining sectoral indices on the BSE were Capital Goods up by 0.92%, Auto up by 0.70% and FMCG up by 0.02%, while Consumer Durables down by 1.76%, TECK down by 0.79%, Metal down by 0.77%, PSU down by 0.76% and IT down by 0.74% were the losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 2.71%, BHEL up by 1.74%, Bajaj Auto up by 1.47%, Larsen & Toubro up by 1.31% and ICICI Bank up by 1.15%. On the flip side, Hindalco down by 2.61%, HDFC down by 1.89%, ONGC down by 1.71%, Wipro down by 1.71% and SBI down by 1.71% were the top losers.

Meanwhile, the Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval for off-shore wind power generation policy. With this approval, the Ministry of New & Renewable Energy (MNRE) has been authorized as the Nodal Ministry for use of offshore areas within the Exclusive Economic Zone (EEZ) of the country. On the other side, the National Institute of Wind Energy (NIWE) has been authorized as the Nodal Agency for development of offshore wind energy in the country and to carry out allocation of offshore wind energy blocks, coordination and allied functions with related ministries and agencies. The policy will help the country move forward towards attaining energy security.

Under the policy, there will be an energy mapping of the country, while locating potential sites for offshore wind energy will be identified. The approval paves way for offshore wind energy development including, setting up of offshore wind power projects and research and development activities, in waters, in or adjacent to the country, up to the seaward distance of 200 Nautical Miles (EEZ of the country) from the base line. Union Power and New and Renewable Energy Minister Piyush Goyal has said that with the help of auctioning sites for erecting power generation units, the government would attract private players. Besides, the government will also take sub-approvals from defence, space and shipping ministry before going in for auction. Thus with auction more private players will be attracted and thereby reduce the cost.

With the introduction of the National Offshore Wind Energy Policy, the Government is attempting to replicate the success of the onshore wind power development in the offshore wind power development. Meanwhile, the policy will provide equal opportunities to all investors/beneficiaries, domestic and international and also will be applicable throughout the country depending upon offshore wind potential availability.

The minister has further said that “we have assessed the capacity of offshore wind power. There is a potential of generating 1, 06,000 MW power through offshore wind source on from Gujarat's coastline alone, while 60,000 MWs on Tamil Nadu's coastline. The preliminary assessments along the 7,600 km long Indian coastline have indicated prospects of development of offshore wind power.” Currently, a 50 megawatt (MW) power generation unit is being setup in the country on experimental basis.

 The CNX Nifty touched a high and low 7819.85 and 7678.50 respectively.

The top gainers on Nifty were Tata Power up by 2.93%, Tata Motors up by 2.70%, Bosch up by 2.61%, BPCL up by 2.18% and Bajaj Auto up by 2.11%. On the flip side, NMDC down by 3.07%, Hindalco down by 2.80%, HCL down by 2.65%, Power Grid down by 1.67% and Dr, Reddy down by 1.39% were the top losers.

European Markets were trading in the red; France’s CAC was down by 0.36%, Germany’s DAX was down by 0.22% and UK's FTSE was down by 0.56%.

The Asian markets barring KLSE Composite and KOSPI Composite closed in red on Thursday. Chinese Premier Li Keqiang stated that change in the world’s second-largest economy is burdened with difficulties and uncertainty, but sought to reassure an international audience that the country does not threaten the global economy. Chinese leaders are overseeing a transition in the country’s growth model from the emphasis on exports and investment that saw it boom to a more sophisticated one in which consumer spending plays the dominant role. China’s manufacturers slashed prices at the fastest rate in six years in August as commodity prices fell and demand cooled, signaling stubborn deflation risks in the economy and adding to expectations for further stimulus measures. The producer price index (PPI) fell 5.9 percent in August from the same period last year, its 42nd consecutive month of decline and the biggest drop since the depths of the global financial crisis in late 2009. The market had expected a decline of 5.5 percent after a drop of 5.4 percent in July. The consumer price index (CPI) rose 2 percent from a year earlier to a one-year high, but the gain was due largely to soaring food prices, not an improvement in economic activity. Japan’s Corporate Goods Price Index fell to a seasonally adjusted annual rate of -3.6%, from -3.0% in the preceding month.