Benchmarks snap three days winning streak

Tuesday’s turned out to be a choppy day of trade for the domestic markets, where key indices ended the volatile session marginally in red due to profit-booking by investors after recent gains. Immense volatility characterized trading whereby benchmark equity indices kept altering between green and red terrain throughout the session. Selling which came during late hours of trade mainly dragged the benchmarks lower. Sentiments remained dampened after global rating agency Standard & Poor's kept India's sovereign rating at the lowest investment grade of 'BBB-minus' and a 'stable' outlook, saying factors such as its sound external position were offset by low income and weak public finances. The agency added it does not expect to change its rating this year or in 2016 based on its current set of forecasts. S&P said any rating improvement would require reforms that 'markedly improve' the government's fiscal position and bring net general government debt below 60 percent of GDP.

However, losses remained capped as some support came with the monthly SBI Composite Index that has stated that country's manufacturing sector growth improved in October largely driven by the manufacturing sector, but mining and electricity are still acting as a drag on the economic activity. Meanwhile, traders were eyeing the Finance Ministry two-day interactive meetings on October 20-21 with foreign portfolio investors (FPIs) and domestic market participants, aimed at ensuring ease of doing business in the financial market.

On the global front, European counters were trading in red as traders remained cautious ahead of a European Central Bank meeting that could open the door for more monetary easing. Asian markets ended mostly in green as investors opted to buy beaten down but fundamentally strong stocks. However, upside remained capped after commodity prices languished in the wake of China growth woes.

Back home, depreciation in Indian rupee too dampened the sentiments. Rupee was trading at 64.99 per dollar at the time of equity markets closing compared with its previous close of 64.80. Stocks related to metal counter continued to remain under pressure for second day in a row after a raft of subdued economic data in China. Shares of oil exploration firms too edged lower after global crude oil prices skidded yesterday, 19 October 2015. On the flip side, IT stocks edged higher after Europe's biggest software company SAP said it could top full-year financial targets in the fourth quarter, its most important period of the year, as it confirmed the strong third-quarter results it pre-announced last week. Power stocks too remained on buyers’ radar after Moody's Investor Services said in a report that decline in power producers' consumption of costly imported coal is a credit positive for them

The NSE’s 50-share broadly followed index Nifty dipped by over ten points, but managed to end above the psychological 8,250 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by around seventy points but managed to hold its psychological 27.300 mark. Broader markets outperformed benchmarks and ended the session with a gain of around half a percent. The market breadth remained in favor of advances, as there were 1,427 shares on the gaining side against 1,326 shares on the losing side while 182 shares remain unchanged.

Finally, the BSE Sensex declined by 58.09 points or 0.21% to 27306.83, while the CNX Nifty lost 13.40 points or 0.16% to 8261.65.

The BSE Sensex touched a high and a low 27432.07 and 27216.40, respectively. The BSE Mid cap index was up by 0.53%, while Small cap index was up by 0.18%.

The top gaining sectoral indices on the BSE were Power up by 1.36%, IT up by 1.00%, TECK up by 0.75%, Consumer Durables up by 0.46% and Auto up by 0.30%, while Metal down by 1.80%, Oil & Gas down by 0.72%, Realty down by 0.66%, Healthcare down by 0.33% and PSU down by 0.24% were the losing indices on BSE.

The top gainers on the Sensex were TCS up by 1.60%, Maruti Suzuki up by 1.22%, Tata Motors up by 1.19%, Infosys up by 1.18% and Axis Bank up by 0.39%. On the flip side, Vedanta down by 6.42%, Tata Steel down by 2.96%, Hindalco down by 2.37%, Mahindra & Mahindra down by 2.23% and Cipla down by 2.13% were the top losers.

Meanwhile, showing some signs of recovery, the SBI Composite Index, an indicator for manufacturing activity in the country has registered a month-on-month increase to 50.8 in October 2015 from 48.4 in September 2015. However, the yearly SBI composite index for October stood at 53.6 compared with last month index of 53.9. The SBI research report though pointed that mining and electricity are still acting as a drag on the economic activity and the upturn was majorly driven by manufacturing.

According to SBI sectors like power, steel, green energy, hydrocarbon and telecom will see a strong credit demand in the coming quarters. At the same time, personal loan segment, especially housing and vehicle loan are likely to see an uptick. Besides, the positive trends in capital goods sector suggest possible pick-up in economic momentum. Index of Industrial Production (IIP) is also driven majorly by manufacturing as revealed by higher ex-mining and ex-electricity growth. As SBI’s index predicts the industrial growth two months in advance, the bank’s research division expects 7 per cent growth in IIP for either the month of September or October 2015, or possibly both.

The SBI Composite Index captures two components of the manufacturing cycle namely month-on-month and year-on-year growth on a scale of 0 to 100. An index value of 42 to 46 means (moderate decline), 46 to 50 (low decline), 50 to 52 (low growth), while 52 to 55 means (moderate growth) and above 55 high growth.

The CNX Nifty touched a high and low 8294.05 and 8229.20 respectively.

The top gainers on Nifty were Bosch up by 2.12%, Tata Power up by 1.94%, Power Grid up by 1.61%, TCS up by 1.38% and Infosys up by 1.29%. On the flip side, Vedanta down by 6.43%, Cairn India down by 3.79%, Tata Steel down by 3.20%, Hindalco down by 2.65% and M&M down by 2.60% were the top losers.

European Markets were trading in the red; France’s CAC was down by 0.89%, Germany’s DAX was down by 0.55% and UK's FTSE was down by 0.41%.   

The Asian equity markets ended mostly in green on Tuesday, with Japanese market closing higher, as a weaker yen lifted exporters’ stocks. The Bank of Japan maintained its upbeat assessment for all nine of the country’s regional economies and stressed that the pain from China’s slowdown was limited for now, suggesting that it saw no immediate need to expand monetary stimulus further. But four regions, including western and central areas home to big Japanese auto and electronics goods exporters, offered a gloomier view on output than three months ago, underscoring the fragile nature of Japan’s recovery. The slowdown in China, which suffered the weakest growth since 2009 in the July-September period, has yet to hit exporters in western Japan that much, pointing to a pickup in shipments of smart-phone parts and car batteries.  In a quarterly report issued, the BOJ maintained its view that Japan’s regional economies were recovering, with strength in capital expenditure and consumption offsetting weakness in external demand. Indonesia’s inflation rate is forecast to decelerate this month on the back of a declining trend in staple food prices. Up to the second week of October, Bank Indonesia’s survey has reported deflation. This is one of the supporting factors that Indonesia’s annual inflation rate will range around 4 percent or even better than 4 percent by the end of the year. Juda Agung, executive director of economic and monetary policy at Bank Indonesia, separately estimated a 0.09 percent deflation for October compared to the month before, due to lower staple food prices, namely for poultry and red onions. Hong Kong Unemployment Rate remained unchanged at a seasonally adjusted 3.3% compared to the preceding month.