Benchmarks end lower ahead of CPI, IIP data

Monday turned out to be a disappointing session for the Indian equity indices which got pounded by over half a percentage with frontline gauges breaching their crucial support levels of 27,000 (Sensex) and 8,150 (Nifty). Markets made a gap-up opening after IT bellwether Infosys reported better-than-expected Q2 numbers, but soon choppiness crept in and key gauges entered into red terrain as  Infosys reduced its full-year US dollar revenue growth guidance. The company said that for the fiscal year ending March 31, 2016, revenues are likely to rise by 6.4% - 8.4%, down from a previous estimate of 7.2% - 9.2% in dollar terms. Investors remained on sidelines ahead of consumer price index (CPI) and industrial production data scheduled to be unveiled after market hours today. The all-India general CPI inflation was nearly flat 3.66% in August 2015 compared with 3.69% (revised) reading in July 2015, while industrial production rose at 4.22% in July 2015 compared with growth of 4.36% in June 2015.

However, losses remained capped upto certain extent as some support came with Chief Economic Advisor Arvind Subramanian’s statement that growth in collection of indirect taxes in the first half of the current fiscal shows robust GDP expansion. Indirect tax collection increased 35.8 percent in the April-September period of the 2015-16 fiscal to Rs 3.24 lakh crore. Meanwhile, the IMF has recommended that the country should launch next phase of economic reforms and improve its business climate for achieving faster and more inclusive growth.

In the global front, European counters were trading mostly in red in early deals ahead of pickup in the number of US companies reporting their latest numbers for the recent quarter, as well as a host of CPI inflation numbers in the coming days, from the UK, China, US and Europe. However, All the Asian markets ended in green, with some even surging by over a percent and extending the biggest weekly gain in almost four years, as investors hunted for bargains in industrials and basic materials, fuelled by a rebound in commodities while the dollar struggled as hopes of a Fed rate rise this year faded.

Back home, selling in software and technology counters mainly weighed down sentiments, led by Infosys which lost around 4%. On the flip side, buying witnessed in metal pack with CNX Metal index rising more than 10% on the back of surge in global commodity prices.

The NSE’s 50-share broadly followed index Nifty declined by around fifty points to end below the psychological 8,150 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over one hundred and seventy points to finish below its psychological 27,000 mark. Broader markets however managed to end the session slightly in green. The market breadth remained in favor of decliners, as there were 1,309 shares on the gaining side against 1,422 shares on the losing side while 118 shares remain unchanged.

Finally, the BSE Sensex declined by 178.96 points or 0.66% to 26900.55, while the CNX Nifty lost 46.10 points or 0.56% to 8143.60.

The BSE Sensex touched a high and a low 27305.04 and 26855.75, respectively. The BSE Mid cap index was up by 0.17%, while Small cap index was up by 0.05%.

The top gaining sectoral indices on the BSE were Metal up by 1.38%, Power up by 0.95%, Capital Goods up by 0.36%, Oil & Gas up by 0.21% and Auto up by 0.23%, while IT down by 2.08%, TECK down by 1.87%, Healthcare down by 0.96%, FMCG down by 0.77% and Realty down by 0.36%,were the losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 7.00%, Hindalco up by 5.98%, GAIL India up by 2.49%, Tata Motors up by 1.83% and BHEL up by 1.76%. On the flip side, Infosys down by 3.88%, Lupin down by 2.16%, Cipla down by 1.71%, Sun Pharma down by 1.58% and HDFC down by 1.44% were the top losers.

Meanwhile, after projecting Indian growth in current year to 7.3 percent, slightly lower from 7.5 percent forecasted in the 2015 April  at WEO, the International Monetary Fund (IMF) has recommended the country to launch next phase of economic reforms and improve its business climate for achieving faster and more inclusive growth.

IMF has said that in India, while several policy actions have been taken recently, further steps in relaxing longstanding supply bottlenecks, especially in the energy, mining, and power sectors, as well as labour and product market reforms, and improving the business climate are crucial to achieving faster and more inclusive growth. It said that the growth recovery has continued, supported by a pickup in domestic demand, on the back of strengthening industrial production and fixed investment.

It further added that the ongoing economic recovery is underpinned by robust domestic demand and with the revival of consumer and business sentiment; the incipient recovery of investment is expected to contribute more to growth going forward. Though, it also said that although lower oil prices are supportive of domestic demand, weakened exports as well as headwinds from weaknesses in India’s corporate and bank balance sheets will weigh on the economy.

Earlier, in its Asia and Pacific Regional Economic Outlook Update released in Peru, Lima on the sidelines of the annual fall meeting of the IMF and World Bank, the IMF had projected a slight drop in India's growth rate from 7.5 percent to 7.3 percent in 2015 and maintained the same growth rate of 7.5 percent for 2016 as it projected in this previous report in April.

The CNX Nifty touched a high and low 8244.50 and 8128.20 respectively.

The top gainers on Nifty were Vedanta up by 6.37%, Hindalco up by 4.59%, GAIL India up by 2.54%, Tata Motors up by 2.08% and BHEL up by 1.78%. On the flip side, Infosys down by 3.81%, Bank of Baroda down by 3.35%, Cipla down by 1.82%, Lupin down by 1.78% and Sun pharma down by 1.68% were the top losers. 

European Markets were trading mostly in the red; France’s CAC was down by 0.50% and Germany’s DAX was down by 0.46%, while UK's FTSE was up by 0.14%.

The Asian equity markets ended in green on Monday, with the Indonesian index extending gains for a sixth-day due to optimism about economic stimulus. Japan stock exchange was closed on account of ‘Health-Sports Day’ holiday. Indonesia President Joko Widodo has last week announced the third installment of his ambitious economic stimulus package, cutting energy prices and offering concessions to business in an attempt to kick-start growth in Southeast Asia’s largest economy. The deputy governor of the People’s Bank of China told an annual meeting of the International Monetary Fund and World Bank in Peru that China’s stock market has experienced several rounds of corrections. The governor added that the corrections have had limited direct impact on China’s economy as Beijing has taken a series of measures to avoid systemic risks. Meanwhile, investors also seem to be betting on the possibility of further stimulus measures when Beijing meets later this month to discuss the 13th five-year plan.   Malaysian Industrial Production fell to a seasonally adjusted annual rate of 3.0%, from 6.1% in the preceding month.