Post Session: Quick Review

Indian markets suffered some profit booking on Monday despite making a good start, Sensex and Nifty struggled amid profit-taking on higher levels and both the benchmarks came off from over two-month highs hit in the previous session. The Nifty could not hold on to 8300 levels, after reclaiming it in early trade. Traders were a bit concerned about an Assocham study which said that inflation may have dropped significantly from last year, but most Indians still find prices of goods and services consumed on a daily basis growing beyond their comfort level. Selling was spread across the board and not only the blue-chips but the broader markets too suffered losses for the day.  

On the global front, following the last session jubilation of the US markets, the Asian indices traded near a two-month high on Monday as traders assessed China’s latest round of monetary easing before central banks in the US and Japan meet later this week. Meanwhile, China began its policy-setting plenum today, with investors awaiting next year’s official growth targets after the PBOC’s sixth interest-rate cut since November. The European markets though made a mildly lower start, as the German business confidence fell for the first time in four months in October, signaling that a slowdown in global demand is taking its toll on Europe’s largest economy.

Back home, markets kept reeling in red for most part of the day and selling got intensified in final hours with some disappointing earnings like Asian Paints and Bharti Airtel dampening the mood further. While most of the sectors suffered losses for the day, Capital goods stocks outperformed today after the government unveiled a draft policy to increase the share of capital goods contribution from present 12 per cent to 20 per cent of total manufacturing activity by 2025. Some buying was also seen in select metal stocks after reports said that the government is considering doubling the import duty on aluminum from the current level of 10 per cent. On the same time, Oil & gas stocks came under pressure with market heavyweight Reliance Industries and state-run ONGC making soft closing amid weak global crude prices. Also there were some reports that oil prices could drop sharply lower as refined product storage sites come close to filling, stoking a glut that has already seen crude prices fall by more than half since June 2014. Reliance Industries ended down by over a percent, while ONGC lost about a percent for the day.

The BSE Sensex ended at 27362.22, down by 108.59 points or 0.40% after trading in a range of 27349.46 and 27618.14. There were 15 stocks in green against equal number of stocks in red on the index. (Provisional)

The broader indices too ended in red; the BSE Mid cap index was down by 0.47%, while Small cap index lost 0.70%. (Provisional)

The top gaining sectoral indices on the BSE were Capital Goods up by 0.42%, Power up by 0.40%, IT up by 0.36%, Auto up by 0.10%, while PSU down by 1.00%, Consumer Durables down by 0.90%, Oil & Gas down by 0.89%, Metal down by 0.67%, Bankex down by 0.65% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were BHEL up by 3.48%, Vedanta up by 2.25%, Bajaj Auto up by 2.08%, Tata Steel up by 1.46% and GAIL India up by 1.04%. On the flip side, Coal India down by 2.31%, HDFC down by 2.14%, Bharti Airtel down by 2.01%, Reliance Industries down by 1.24% and Lupin down by 1.22% were the top losers. (Provisional)

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 ended at 8263.25, down by 32.20 points or 0.39% after trading in a range of 8253.90 and 8336.30. There were 23 stocks on gainers side against 27 stocks on decliners’ side on the index. (Provisional)

The top gainers on Nifty were BHEL up by 3.31%, Vedanta up by 2.55%, Bajaj Auto up by 2.47%, HCL Tech. up by 1.58% and Tata Steel up by 1.50%. On the flip side, Asian Paints down by 4.66%, Yes Bank down by 3.36%, Coal India down by 2.38%, Ultratech Cement down by 2.12% and Bharti Airtel down by 1.98% were the top losers. (Provisional)

The European markets were trading mostly in red, while Germany’s DAX increased 25.67 points or 0.24% to 10,820.21, France’s CAC was down by 28.18 points or 0.57% to 4,895.46 and UK’s FTSE 100 lost15.95 points or 0.25% to 6,428.13.

The Asian equity markets ended mostly in green on Monday, as markets welcomed China’s decision to cut borrowing costs again and remove a cap on savings rates ahead of this week’s policy meeting. On Friday the People’s Bank of China cut interest rates by 0.25 percentage points and lowered the reserve ratio requirement -- the amount of cash banks must keep in reserve. Chinese Premier Li Keqiang stated that China’s economy does not need to grow seven percent this year, after data last week showed that economy grew at the slowest pace since the financial crisis. China’s most recent GDP figures added to fears over the health of the global economy, and some expressed concern they had been manipulated to understate the gravity of the situation. Till now Chinese government has set 7 percent as the target amid the continued slowdown. Recent IMF forecast said China’s growth is expected to slow from 7.3 percent in 2014 to 6.8 percent this year and 6.3 percent in 2016 as the country struggles with its shift from export oriented economy to the one driven by consumption. Indonesia Finance Minister Bambang Brodjonegoro stated that the country’s financial system including its fiscal, monetary and financial sectors, are in quite good shape despite domestic and external challenges. Previously, the tax office reported that it collected only 53 percent of its full-year target at the end of September, or Rp 686 trillion ($49.8 billion) -- excluding excise and duties -- from the Rp 1,294 trillion target. Singaporean Industrial Production rose to an annual rate of -4.8%, from -7.1% in the preceding month whose figure was revised down from -7.0%.