Post Session: Quick Review

Indian markets extended their declining streak on Tuesday with both the benchmarks Sensex and Nifty struggling to get a foothold after a four-week global rally ran out of steam. Traders remained cautious ahead of the US Federal Reserve's policy panel meet on October 27-28. Though, investors across the globe are pricing no chance of a rate hike this week, but could react to how the Fed's statement interprets recent soft US economic data and events in global financial markets. On the domestic front, while some volatility was seen ahead of the derivatives contract expiry on Thursday, traders grew concerned after Minister of State for Finance Jayant Sinha said that government's plan to cut its stake in state-run companies is 'challenging' as many of the companies are in the commodities sector where valuations have been hit by a downturn. It had been earlier reported that the government's divestment department wants to more than halve its divestment target for the current financial year to March to about Rs 30,000 crore.

On the global front the mood remained cautious and after mostly a lower closing of the US markets the Asian markets followed the trend with the major indices in the region closing lower for the day. Though, the Chinese market which led the rout in early morning made a smart recovery and ended modestly in green. The Japanese market suffered loss of about a percent as the yen strengthened for a second day on declining appetite for riskier assets and speculation the Bank of Japan will refrain from adding stimulus this week. The European markets too made a soft start declining for the second day in a row, as investors await the outcome of two major global central bank meetings.

Back home, the dampened sentiments of the Indian equity markets could not revive till last and ended with major bourses losing around half a percent. There were mixed set of earnings announcements and while some weaker numbers kept pressurizing the markets, some good performers restricted any sharp fall. Axis Bank Q2 profit rose by 19% amid stable asset quality. The bank’s NIM grew by 15.2% to Rs 4,062 crore compared to Rs 3,524.9 crore in same period. Maruti Suzuki posted a big jump of 42% in its net profit in the September quarter, driven by higher sales and margins and lower raw material costs. On the other hand, pharma major Lupin’s September quarter profit slumped by 35% to Rs 409 crore. The broader markets outperformed and ended with modest gains. On the sectoral front there was mixed reaction among the oil companies, while the upstream oil companies remained in somber mood despite Moody’s Investors Services projecting Indian economy’s growth at 7 per cent in the current fiscal and 7.5 per cent in the next one stating that improving economic growth along with low oil prices will support higher consumption of refined petroleum products in India over the next 18 months, on the other the oil marketing companies showed some strength for the day.

There was some buzz from the primary markets too, which seemed to have weighed on the trading, with traders putting their money on initial offers too. The initial public offering (IPO) of InterGlobe Aviation, the promoter of low-cost carrier IndiGo, received good response on the first day, with the qualified institutional investor (QIB) quota getting oversubscribed within the first hour. QIB portion was oversubscribed 2.72 times at market closing.

The BSE Sensex ended at 27244.61, down by 117.35 points or 0.43% after trading in a range of 27209.52 and 27296.30. There were 10 stocks in green against 19 stocks in red on the index, while one stock remained unchanged. (Provisional)

The broader indices though outperformed the benchmarks and ended in green; the BSE Mid cap index was up by 0.12%, while Small cap index gained 0.16%. (Provisional)

The two gaining sectoral indices on the BSE were Auto up by 0.41%, FMCG up by 0.02%, while Consumer Durables down by 1.21%, Oil & Gas down by 0.67%, PSU down by 0.67%, Metal down by 0.63%, Capital Goods down by 0.54% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Maruti Suzuki up by 2.88%, Sun Pharma Inds. up by 2.19%, Wipro up by 1.34%, HDFC Bank up by 0.82% and Cipla up by 0.59%. On the flip side, Lupin down by 5.43%, ONGC down by 3.11%, HDFC down by 2.75%, GAIL India down by 2.70% and Tata Steel down by 1.48% were the top losers. (Provisional)

Meanwhile, amid volatility in the stock markets, the department of disinvestment (DoD) wants that PSU stake sale target be more than halved to Rs 30,000 crore for the current financial year, stating that this target seems more reasonable given that there is no big stock to sell.

For the fiscal year 2015-16, the government has targeted to raise Rs 69,500 crore through disinvestment, 180 per cent higher than the total amount garnered from PSU share sales in the previous fiscal. Out of the total budgeted target, Rs 41,000 crore is to come from minority stake sale in PSUs and the remaining Rs 28,500 crore from the strategic stake sale. In order to achieve the target the growth rate in disinvestment, proceeds would need to be around 180 per cent which is much higher than the tax revenue growth rate of 16 per cent and that of government bonds of 10 per cent

The government has a pipeline of over 20 PSUs for disinvestments in 2015-16. These include 10 per cent stake sale each in Oil India (OIL), National Aluminium Company (Nalco), National Mineral Development Corporation (NMDC), and five per cent each in National Thermal Power Corporation(NTPC), Oil and Natural Gas Corporation (ONGC) and Bharat Heavy Electricals (BHEL). Besides, plans are afloat for a 10 per cent stake sale in Coal India. However, volatile market conditions have dented the prospects of a stake sale, with the recent disinvestments of IOC and PFC facing rough weather.

For the current financial year, with seven months to be over, the government has been able to sell stake only in four companies including Power Finance Corporation (PFC), Rural Electrification Corporation (REC), Dredging Corp and Indian Oil Corporation (IOC) to net Rs 12,600 crore.

For five consecutive financial years, the government has missed its disinvestment target. During last financial year out of the total target of Rs 58,425 crore, the government raised around Rs 25,000 crore. The Rs 58,425-crore target included Rs 43,425 crore from minority stake sale and Rs 15,000 crore from residual stake sale in erstwhile PSUs.

The CNX Nifty ended at 8235.35, down by 25.20 points or 0.31% after trading in a range of 8217.05 and 8241.95. There were 17 stocks on gainers side against 33 stocks on decliners’ side on the index. (Provisional)

The top gainers on Nifty were Maruti Suzuki up by 2.82%, Sun Pharma Inds. up by 2.55%, Ultratech Cement up by 2.38%, Asian Paints up by 1.44% and Wipro up by 1.38%. On the flip side, Lupin down by 5.03%, ONGC down by 3.37%, HDFC down by 2.87%, GAIL India down by 2.77% and Bank Of Baroda down by 2.27% were the top losers. (Provisional)

European markets were trading lower, UK’s FTSE 100 decreased 21.82 points or 0.34% to 6,395.20, Germany’s DAX was lower by 4.59 points or 0.04% to 10,796.75 and France’s CAC was down by 3.83 points or 0.08% to 4,893.30.

The Asian equity markets ended mostly in red on Tuesday, as investors awaited monetary policy announcements from central banks and the outcome of China's economic planning meeting. The People’s Bank of China stated that is not using QE, or quantitative easing, to boost the economy but will instead adjust interest rates and bank reserve requirement ratio to fight deflationary pressure and capital outflow. Profits earned by Chinese industrial companies fell 0.1 percent in September from a year earlier, leveling after a record 8.8 percent collapse in August. Industrial profits - which cover large enterprises with annual revenue of more than 20 million yuan ($3.15 million) from their main operations - fell 1.7 percent in the first nine months of the year compared with the same period a year earlier. Indonesian banks are resilient and capable enough to weather ongoing currency volatility and growth contractions in the global and national economy, according to a recent report from rating agency Moody’s Investors Service. The persistent downward pressure on the local currency has spurred some concerns over local lenders and their large exposure to overseas debts - which has doubled in the past five years to $170 billion by June 2015. Japan’s Corporate Services Price Index (CSPI) fell to a seasonally adjusted annual rate of 0.6%, from 0.8% in the preceding month whose figure was revised up from 0.7%. Hong Kong Trade Balance fell to a seasonally adjusted -36.4B, from -25.1B in the preceding month.