Weak global cues drag benchmarks lower for second straight day

Tuesday’s trading session turned out to be a disappointing for the Indian equity markets which got pounded by one third of a percent amid weak global cues. Traders remained wary ahead of October series expiry in the derivatives segment on Thursday and Fed policy meet. After a negative opening, the domestic bourses never looked in recovery mood and extended the northward journey for second day in a row, breaching their crucial support levels of 27,300 (Sensex) and 8,250 (Nifty). Sentiments remained down-beat on report that foreign institutional investors (FIIs) have reduced their holdings in 19 blue chip firms that are part of the 30-share benchmark Sensex during July-September quarter as they recast their portfolio on account of several domestic and global factors.

Traders also remained 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. Meanwhile, 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 has said that GDP growth and low oil prices will lead to higher fuel consumption over the next 18 months.

Global cues too remained sluggish with European counters making a weak start, moving further away from last week’s two-month high after a drop in the shares of BASF and Novartis weighed on markets. Asian equity indices edged lower on Tuesday after a four-week romp higher, as investors took cover ahead of central bank meetings in the United States and Japan later in the week.

Back home, investors failed to draw any sense of relief from Finance Minister Arun Jaitley’s statement that there is no cause for concern on fiscal deficit and the government will meet its target for the current fiscal despite certain challenges on the disinvestment front. Selling in metal counters too weighed down sentiments after latest data showed that profits earned by Chinese industrial companies fell 0.1% in September 2015 over September 2014. On the flip side, aviation related stocks remained on buyers’ radar after InterGlobe Aviation, the owner of India's largest passenger airline IndiGo raised Rs 832.03 crore from a clutch of anchor investors on its IPO starting today, 27 October 2015.

The NSE’s 50-share broadly followed index Nifty dipped by around thirty points to end below its psychological 8,250 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by around one hundred and ten points to finish below the psychological 27,300 mark. Broader markets, however, somehow managed to keep their head above water. The market breadth remained in favour of decliners, as there were 1,259 shares on the gaining side against 1,450 shares on the losing side while 147 shares remain unchanged.

Finally, the BSE Sensex declined by 108.52 points or 0.40% to 27253.44, while the CNX Nifty lost 27.65 points or 0.33% to 8232.90.

The BSE Sensex touched a high and a low 27296.30 and 27209.52, respectively. The BSE Mid cap index was up by 0.16%, while Small cap index was up by 0.15%. 

The top gaining sectoral indices on the BSE were Auto up by 0.38% and FMCG up by 0.10%, while Consumer Durables down by 1.43%, Capital Goods down by 0.70%, PSU down by 0.66%, Oil & Gas down by 0.66% and Metal down by 0.48% were the losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 2.44%, Sun Pharma up by 1.88%, Wipro up by 1.04%, HDFC Bank up by 0.88% and Bajaj Auto up by 0.57%. On the flip side, Lupin down by 5.25%, ONGC down by 3.07%, HDFC down by 2.87%, GAIL India down by 2.24% and BHEL down by 1.42% were the top losers.

Meanwhile, in a bid to ramp up engagement, India and African countries deliberated on possible deliverables at a summit between the two sides which is aimed at lifting the overall ties to a new high with particular focus on trade, security and development cooperation. On the first day of the India- Africa summit on 26th October 2015,  the top officials of India and a number of African countries discussed about a specific framework to boost ties besides deliberating on a 'political document'.

The countries are negotiating two documents; the first is going to be a political document which will talk of the political partnership between India and Africa which will touch upon global and regional issues. The second one is going to be framework document of cooperation which will talk about the development partnership of Africa, line of credit by India to African nations.

At present, India’s trade with Africa stands at $75 billion and it has granted whopping $7.4 billion for various developmental and capacity building projects in the past four years where India has implemented a total of 137 projects in 41 African countries. India- Africa summit will see participation of over 400 business delegates from Africa besides all major Indian chambers of commerce. Representatives from 54 African nations, including heads of state and government of some 40 countries, and the powerful African Union are expected to participate in the four-day long summit.

The CNX Nifty touched a high and low 8241.95 and 8217.05 respectively.

The top gainers on Nifty were Maruti Suzuki up by 3.01%, Sun Pharma up by 2.50%, Ultratech Cement up by 2.11%, BPCL up by 1.42% and Asian Paints up by 1.39%. On the flip side, Lupin down by 5.44%, ONGC down by 3.49%, GAIL India down by 2.87%, HDFC down by 2.71% and Bank of Baroda down by 2.12% were the top losers.

European Markets were trading in the red; France’s CAC was down by 0.16%, UK's FTSE was down by 0.36% and Germany’s DAX was up by 0.04%. 

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.