Benchmarks end lower; Sensex breaches 27,400 mark

Indian equity benchmarks ended the choppy day of trade with a cut of around half a percent as investors opted to remain on sidelines ahead of derivatives expiry later this week and US Federal Reserve Meeting, which is scheduled to start from tomorrow. Earlier, markets made a positive start tracking firm global cues, but profit booking at higher levels dragged benchmarks lower. Traders remained cautious, as an Assocham study has 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.

Disappointment over some of the corporate earnings too weighed down sentiments. Bharti Airtel has reported results 54.96% fall in its net profit at Rs 2223.70 crore for the quarter ended September 30, 2015 as compared to Rs 4937.30 crore for the same quarter in the previous year. Its total income has decreased by 4.91% to Rs 15911.90 crore for the quarter under review. Meanwhile, Asian Paints declined around 5% after India’s largest paint company missed volume growth and margins estimates. Asian Paints reported a consolidated net profit of Rs 399 crore on sales of Rs 3,730 crore in Q2, which was below street’s expectation. IIFL Holdings has posted 74.43% fall in its net profit at Rs 23.39 crore for the quarter ended September 30, 2015 as compared to Rs 91.46 crore for the same quarter in the previous year.

Weak opening in European counters too dampened the sentiments with CAC, DAX and FTSE were trading lower in early deals as euphoria about the prospect of further central bank policy easing faded, with investors warning against over-confidence ahead of another week of interest rate decisions. However, Asian markets ended the session mostly in green ater China unexpectedly cut interest rates and lenders’ reserve requirements to support its ailing economy.

Back home, depreciation in Indian rupee too dampened the sentiments. Rupee was trading at 64.93 per dollar at the time of equity markets closing compared with its previous close of 64.83 per dollar due to strong dollar demand from importers. Selling in Oil & gas counter mainly played the spoil sport for Indian equity markets 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.

On the flip side, stocks related to capital goods space 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.

The NSE’s 50-share broadly followed index Nifty declined by over thirty points to end below the psychological 8,300 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by around one hundred and ten points to end below its crucial 27,400 mark. Broader markets also struggled to get any traction during the trade and ended the session with a cut of over half a percent. The market breadth remained in favor of decliners, as there were 978 shares on the gaining side against 1,735 shares on the losing side while 151 shares remain unchanged.

Finally, the BSE Sensex declined by 108.85 points or 0.40% to 27361.96, while the CNX Nifty lost 34.90 points or 0.42% to 8260.55.

The BSE Sensex touched a high and a low 27618.14 and 27318.20, respectively. The BSE Mid cap index was down by 0.52%, while Small cap index was down by 0.72%.

The top gaining sectoral indices on the BSE were Power up by 0.46%, Capital Goods up by 0.38%, IT up by 0.24% and Auto up by 0.14%, while PSU down by 0.99%, Oil & Gas down by 0.95%, Consumer Durables down by 0.87%, Metal down by 0.70% and Realty down by 0.69% were the losing indices on BSE.

The top gainers on the Sensex were BHEL up by 3.72%, Vedanta up by 2.40%, Bajaj Auto up by 2.14%, Tata Steel up by 1.38% and Hero MotoCorp up by 0.97%. On the flip side, Coal India down by 2.40%, HDFC down by 2.09%, Bharti Airtel down by 1.91%, Reliance Industries down by 1.34% and Lupin down by 1.25% were the top losers.

Meanwhile, the Union government has issued revised energy norms under the new urea policy for existing 25 gas based urea plants in the country. This move is likely to save about Rs 800 crore in fertilizer subsidy. The new norms have been issued as per the new urea policy which was cleared by the Cabinet in May this year where the policy has the objective of maximising indigenous urea production and promoting energy efficiency in urea units to reduce the subsidy burden on the government.

As per the norms, all the gas-based urea manufacturing plants are divided into three groups and a specific energy norm is fixed for each plant. Under the first group, plants can consume 5.5 g.cal of gas per tonne of urea, plants under second group can use 6.2 g.cal of gas and those in third group can consume 6.5 g.cal of gas.

Gas constitutes of about 65-70 per cent of the cost of production of urea and cost of gas used is reimbursed by the Government in the form of subsidy. Fertiliser subsidy stood at about Rs 70,000 crore during the last fiscal.

The CNX Nifty touched a high and low 8336.30 and 8252.05 respectively.

The top gainers on Nifty were BHEL up by 3.41%, Bajaj Auto up by 2.46%, Vedanta up by 2.20%, Tata Steel up by 1.65% and HCL up by 1.44%. On the flip side, Asian Paints down by 4.62%, Yes Bank down by 3.34%, Coal India down by 2.57%, HDFC down by 2.33% and Ultratech Cement down by 2.04% were the top losers. 

European Markets were trading mostly in the red; France’s CAC was down by 0.46% and UK's FTSE was down by 0.19%, while Germany’s DAX was up by 0.32%.

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%.