Markets trade flat with negative bias in range-bound session

In the extremely range-bound session of trade, Indian equity benchmarks altering between positive and negative territory, were now trading flat with bit of negative bias on back of selling in frontline blue chip counters. Sentiments remained down-beat with the report that India is expected to clock 7.4 per cent growth rate this fiscal with a downside risk amid weak exports, slow pace of structural reforms and investment spending. Investors also remained concerned on the another report that overall inflation has fallen strikingly in last few months, but its benefits have not been equally distributed with the rate of price rise running higher in rural areas than in urban centres because of structural bottlenecks. However, sentiments got some support with the report that the Finance Ministry has called a meeting to discuss with stakeholders various regulatory and financing issues facing the infrastructure sector in the country. Further, Foreign portfolio investors (FPI) have poured more than Rs. 19,000 crore in the Indian capital markets in October so far, their highest level in six months, also supported the upside.

On the global front,  Asian stock markets rose Monday after China cut interest rates and expectations grew that other major central banks will maintain or expand already extensive monetary stimulus. Further, US stocks ended higher following strong earnings from Microsoft, Google parent Alphabet and Amazon. Back home, Indian rupee depreciated by 16 paise to 64.99 against the US currency in early trade due to strong demand for the dollar from importers.

Back on street, stocks from Capital Goods, Auto and FMCG counters were supporting the markets’ uptrend, while those from Oil & Gas, Realty and Metal counters were adding to the underlying cautious undertone. In scrip specific development, shares of Force Motors have surged after the company reported a strong 65% year on year (YoY) jump in its net profit at Rs 42.48 crore for the second quarter ended September 30, 2015 (Q2).  On the other hand, shares of Asian Paints has dipped after the company reported a lower than expected 15% YoY rise in consolidated net profit at Rs 399 crore for the quarter ended September 30, 2015 (Q2), due to single digit growth in net sales.

The market breadth on BSE was negative, out of 2263 stocks traded, 895 stocks advanced, while 1266 stocks declined on the BSE. 

The BSE Sensex is currently trading at 27456.87, down by 13.94 points or 0.05% after trading in a range of 27450.96 and 27618.14. There were 18 stocks advancing against 12 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.35%, while Small cap index down by 0.45%.

The top gaining sectoral indices on the BSE were Capital Goods up by 0.68%, Auto up by 0.60%, FMCG up by 0.12%, Power up by 0.08% and IT up by 0.05%, while Oil & Gas down by 0.69%, Realty down by 0.62%, Metal down by 0.60%, PSU down by 0.52% and Bankex down by 0.50% were the top losing indices on BSE.

The top gainers on the Sensex were BHEL up by 2.53%, Bajaj Auto up by 2.07%, Maruti Suzuki up by 1.38%, Hero MotoCorp up by 1.16% and Tata Motors up by 0.93%. On the flip side, Bharti Airtel down by 2.33%, Coal India down by 1.79%, Reliance Industries down by 1.05%, Cipla down by 0.86% and HDFC Bank down by 0.69% were the top losers.

Meanwhile, the Department of Heavy Industries has drafted a National Capital Goods Policy with an aim to increase the share of capital goods contribution from present 12 per cent to 20 per cent of total manufacturing activity by 2025. The government has proposed a long term, stable and rationalised tax and duty structure to promote the capital goods sector. This is one of the most critical sector for achieving the vision of “Make in India” as the sector has multiplier effect on other sectors of economy.

It is for the first time that a policy on capital goods is being framed and the Department aims to draw up the policy by mid-November, after which it will sent to the Union Cabinet for approval. This National Policy on Capital Goods is envisaged to unlock the potential for this promising sector and establish India as a global manufacturing powerhouse. The policy is currently seeking comments and suggestions from various stakeholders before October 31.

The draft policy proposes uniform customs duty on imports of all capital goods related products, stressing on creation of an ecosystem for globally competitive capital goods sector to achieve total production in excess of Rs 5 lakh crore by 2025 from the current Rs 2.2 lakh crore. The policy aims to increase domestic employment from the current 15 lakh to at least 50 lakh by 2025 thus providing additional employment to over 35 lakh people.  Further it also proposes allowing up to 50 per cent CENVAT credit to manufacturers using such products as raw material or intermediates for further processing or using such goods in the manufacturing of finished goods.

With a view to provide equal opportunities, the policy pitches for adoption of uniform Goods and Services Tax (GST)  regime ensuring effective GST rate across all capital goods sub-sectors competitive with import duty after set-off. It also pitches for providing incentives for venture-funding and risk capital to start-up. Besides, the draft makes a case for providing incentives for domestic and global mergers and acquisitions. On availability of industrial financing, the draft pitches for subvention fund for setting up capital goods units and to allow External Commercial Borrowings under automatic route for all capital goods.

The CNX Nifty is currently trading at 8276.95, down by 18.50 points or 0.22% after trading in a range of 8275.40 and 8336.30. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were BHEL up by 2.29%, Bajaj Auto up by 2.06%, HCL Tech up by 1.53%, Maruti Suzuki up by 1.23% and Hero MotoCorp up by 1.18%. On the flip side, Asian Paints down by 4.61%, Bharti Airtel down by 2.60%, Coal India down by 2.02%, Yes Bank down by 1.92% and Cairn India down by 1.55% were the top losers.

Asian markets were trading mostly in green, KOSPI Index was up by 0.11%, Shanghai Composite up by 0.87%, Jakarta Composite up by 0.77%, Taiwan Weighted up by 0.61%, Hang Seng up by 0.28%, Nikkei 225 was up by 0.87%.  On the flip side, FTSE Bursa Malaysia KLCI was down by 0.12%.