Post Session: Quick Review

After moving higher for the last six sessions, Indian market rally got a halt on Thursday, though there wasn’t a sharp fall but the local markets after a cautious start kept on receding lower through the day, weighed down by weakening trend in the overseas markets where gold retreated from over one-week high as Chinese markets reopened after a long break and investors awaited minutes from the Federal Reserve's last meeting for clues on the timing of an interest rate increase. Traders also turned a bit cautious ahead of the second quarter corporate result season, starting officially next week. As a Crisil Research report said that for the fifth consecutive quarter, India Inc is expected to report single-digit growth in revenues, mainly because of fragile consumption demand, especially in the rural areas, weakness in investment-linked sectors, and the meltdown in global commodity prices.

The global cues remained mixed, as the US markets moved higher, while the Asian markets made mostly a lower closing on profit taking after rising for the last six days, though the Chinese market surged by around three percent coming after a long weekend. The European markets too made a soft start on reports that German exports slumped the most since the height of the 2009 recession in a sign that Europe's largest economy is vulnerable to risks from weakening global trade. Foreign sales declined 5.2 percent in August from the previous month.

Back home traders sentiments were also weighed down by International Monetary Fund (IMF) marginally lowering India’s growth rate from the previous 7.5 per cent to 7.3 per cent this year due to a difficult external environment. Though, the ‘Fiscal Monitor’ released ahead of the Fund's annual meeting showed India's total fiscal deficit, which would include that of the states as well, gliding down to 6.1 per cent of GDP from expected 7.2 per cent of GDP in the current financial year. However, the banking stocks were under pressure and witnessed profit taking, as the simultaneously released Global Financial Stability Report (GFSR) noted the downturn in India's credit cycle and the rise in stressed loans. Though, the Centre asked the states to increase power tariff gradually over a long period against the backdrop of burgeoning debt of power distribution firms. Power Minister Piyush Goyal said “We are trying to introduce an innovative way how can these tariffs be increased gradually over a longer period of time rather than burdening people with very massive jumps.” The Power Minister also said the Centre in close coordination with states is working for a permanent solution to this problem. The loan recast will also help banks clean up and reduce the pressure on their balance sheets with the power sector. Back on street, the losses were broad based and the markets kept struggling as banks, capital goods, pharma and FMCG remained in somber mood till the end. Metal counters witnessed good buying on hopes of demand recovery in China with government's measures.

The BSE Sensex ended at 26853.41, down by 182.44 points or 0.67% after trading in a range of 26762.36 and 27120.11. There were 10 stocks in green against 20 stocks in red on the index.(Provisional)

The broader indices too suffered losses; the BSE Mid cap index slumped by 1.04%, while Small cap index declined by 0.19%.(Provisional)

The gaining sectoral indices on the BSE were Metal up by 0.36%, Consumer Durables up by 0.16%, while Oil & Gas down by 1.07%, FMCG down by 1.04%, Bankex down by 0.77%, Power down by 0.61%, Capital Goods down by 0.56% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Vedanta up by 2.09%, Tata Steel up by 1.56%, Dr. Reddys Lab up by 0.59%, Tata Motors up by 0.59% and Hindalco up by 0.37%. On the flip side, Reliance Industries down by 2.61%, GAIL India down by 2.59%, ITC down by 1.99%, ICICI Bank down by 1.45% and Sun Pharma Inds down by 1.20% were the top losers. (Provisional)

Meanwhile, in order to target the companies that are aligned with the India growth story for fetching foreign funds, Finance Ministry is looking to tweak the disinvestment strategies and wants to bring in front of the queue the companies particularly in the sectors such as infrastructure and defence where a substantial amount of foreign investment is expected.  Further the government may defer divestments in struggling sectors such as metals and commodities commanding poor valuations due to China slowdown, as the government looks to raise a record amount from disinvestment this year. 

Economic affairs secretary Shaktikanta Das recently said that an internal strategy for disinvestment has been discussed and the government will maximize the disinvestments receipts for the current financial year. Firms such as Engineers India Ltd (EIL), Bharat Electronics Ltd (BEL) and Container Corp. of India (Concor) are likely to be advanced on divestment schedule.

Reportedly the department of disinvestment had bundled stocks of 10 state runs firms into two baskets and asking the merchant bankers to bid for managing the share sale of all the companies in a group. The first basket includes Oil India, Concor, National Mineral Development Corporation (NMDC), Metals and Minerals Trading Corporation of India (MMTC) and India Tourism Development Corporation (ITDC) where the government has not yet appointed merchant banker. However, the second basket comprises of NTPC, EIL, BEL, National Aluminium Co (Nalco) and Hindustan Copper where merchant bankers have been appointed.

The government has started the road shows for four foreign locations which includes US and Britain, with the aim to attract buyers for the proposed disinvestment powers for India’s largest utility National Thermal Power Corporation Limited (NTPC) and defence company BEL. Under the road show the government could raise around Rs 5,300 crore from a 5 per cent stake sale in NTPC at current valuations. A 5 per cent stake sale in Concor and BEL may fetch a total of around Rs 3,000 crore. The government's holdings in Concor and BEL are 61 are 61.79 per cent and 75.02 per cent, respectively.

The CNX Nifty ended at 8132.45, down by 44.95 points or 0.55% after trading in a range of 8105.85 and 8196.75. There were 20 stocks on gainers side against 29 stocks on losers side on the index. (Provisional)

The top gainers on Nifty were Ultratech Cement up by 2.30%, Vedanta up by 2.26%, Adani Ports &Special up by 2.05%, Tata Steel up by 1.67% and HCL Tech. up by 1.40%. On the flip side, Reliance Industries down by 2.65%, GAIL India down by 2.49%, ITC down by 2.28%, NTPC down by 1.60% and ICICI Bank down by 1.47% were the top losers. (Provisional)

The European markets were trading mixed, UK’s FTSE 100 gained 7.35 points or 0.12% to 6,343.70, France’s CAC declined by 14.36 points or 0.31% to 4,652.98 and Germany’s DAX lost 9.48 points or 0.1% to 9,960.92.

The Asian equity markets ended mixed on Thursday, ahead of the release of minutes from the Federal Reserve’s latest policy meeting, with Shanghai stocks closing on firm note after Chinese markets reopened today following an extended holiday. China’s sovereign rating can withstand slower growth and greater volatility going forward. Moody’s currently rates China ‘Aa3’ with a stable outlook, and is forecasting GDP growth at 6.8 percent in 2015 and 6.3 percent in 2016. This is in line with forecasts from the International Monetary Fund. Japan’s Core Machinery Orders fell to -5.7% compared to -3.6% in the preceding month. Japan’s Economy Watchers Current Index fell to a seasonally adjusted 47.5, from 49.3 in the preceding month. South Korea’s foreign exchange bank deposits fell for a fifth straight month in September to their lowest level in over a year as yuan deposits continued to decline. Foreign exchange bank deposits stood at $59.19 billion as of end-September, down $0.50 billion from August. This was the lowest level since end-June last year. Hong Kong’s home prices rose for a fifth consecutive month to hit a record high in August, overcoming concerns an expected interest rate hike in the United States may dampen demand in one of the world’s most expensive property markets. An official index of overall private home prices for August edged up 1.1 percentage points month-on-month to 305 points. That’s 16.8 per cent higher than the year before and a fifth straight monthly gain.