Benchmarks extend southward journey for third straight day

Extending their southward journey for third day in a row, Indian equity benchmarks ended Wednesday’s trade in the red on back of sustained selling by fund and retails investors ahead of a policy statement from the US Federal Reserve later in the day today. Besides, caution ahead of expiry of October month contracts in the derivatives segment tomorrow also influenced the trading sentiment. After a gap-down opening, markets traded sluggish throughout the session. The indices even went on to test important psychological 27,000 (Sensex) and 8,150 (Nifty) levels, however markets witnessed modest bounce back at those levels in the final moments on some reports that government is mulling hiking foreign direct investment (FDI) cap in public sector banks to 49% from the present 20%, it was also reported that government may consider raising FDI cap in media too.

Traders even overlooked the development of government setting up a high-level committee under a former Delhi High Court judge to suggest simplification of Income Tax laws, a report that could form basis for tinkering with the controversial retrospective applicability of tax. Traders also failed to get any sense of relief from World Bank’s report that India now ranks 130 out of 189 countries in the ease of doing business, moving up 12 places from last year.

On the global front, European counters were trading mostly in green in early deals, buoyed by a fresh batch of company earnings reports ahead of a Federal Reserve policy decision later in the day. However, Asian markets ended in red, taking cues from an overnight decline on Wall Street and capped by caution ahead of a policy statement from the US Federal Reserve due later in the day.

Back home, depreciation in Indian rupee too dampened the sentiments. Rupee was trading at 65.01 per dollar at the time of equity markets closing compared with its previous close of 64.96 due to month-end demand for the US currency from importers. Selling in banking counters mainly played spoil sport for Indian equity markets. Private lenders came under sharp selling pressure, tracking the selloff in Axis Bank shares, slumping nearly 7.5 per cent on concerns over its asset quality. Shares related to oil exploration and production space too edged lower on slide in global crude oil prices. On the flip side, the jewellary stocks remained in jubilant mood after a report that India regained its top position from China as the biggest overall consumer of gold in the first nine months this year with a total consumption of 642 tonnes.

The NSE’s 50-share broadly followed index Nifty declined by over sixty points to end below the psychological 8,200 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by above two hundred and ten points to end below its crucial 27,100 mark. Broader markets too struggled to get any traction and ended the session in red terrain. The market breadth remained in favor of decliners, as there were 1,165 shares on the gaining side against 1,486 shares on the losing side while 183 shares remain unchanged.

Finally, the BSE Sensex plunged by 213.68 points or 0.78% to 27039.76, while the CNX Nifty declined by 61.70 points or 0.75% to 8171.20.

The BSE Sensex touched a high and a low 27163.98 and 26919.96, respectively. The BSE Mid cap index was up by 0.55%, while Small cap index was up by 0.01%. 

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.63%, TECK up by 0.37% and IT up by 0.36%, while Bankex down by 2.53%, Power down by 1.48%, Realty down by 1.24%, PSU down by 0.76% and Auto down by 0.65% were the losing indices on BSE.

The top gainers on the Sensex were Cipla up by 1.64%, Bharti Airtel up by 1.62%, ONGC up by 1.41%, Tata Motors up by 0.74% and Hindustan Unilever up by 0.74%. On the flip side, Axis Bank down by 7.36%, ICICI Bank down by 4.30%, SBI down by 2.67%, NTPC down by 2.19% and Lupin down by 1.83% were the top losers.

Meanwhile, the World Bank has ranked India at 130th place out of 189 countries in ease of doing business in its latest report “Doing Business 2016, Measuring Regulatory Quality and Efficiency”. This position is up 12 places from its original ranking last year and four places from its rank on a revised list. The rise in the 2016 ranking was primarily on account of improvement in two areas - ease of starting a business and securing an electricity connection.

India's distance to frontier (DTF) score used to compile the rankings improved to 54.68 in 2016 from 53.97 in 2015. The cut-off date for the ranking was June 1, implying that the improvement has been achieved in a short span on one year of new government taking over. In 2015 ranking, the last one of previous government, India had slipped a few notches to 142. The World Bank report has stated that India is one of the countries that have made the most improvement, capturing the initiative of the government in a separate section.

The World Bank ranks countries on 10 parameters viz, starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority shareholders, paying taxes, enforcing contracts, trading across borders and resolving insolvency. For India, the ranking covers data from Delhi and Mumbai, with weights of 53 per cent and 47 per cent, respectively. The report noted two areas of improvement that the utility in Delhi made the process for getting an electricity connection simpler and faster by eliminating the internal wiring inspection by the Electrical Inspectorate.  The utility in Mumbai reduced the procedures and time required to connect to electricity by improving internal work processes and coordination. The report stated that the biggest improvement of India was recorded in getting electricity connection. On this parameter, India's ranking soared from 137th to 70th in the 139 country ranking. In terms of starting a business, India's ranking improved to 155 from 158 last year, essentially on account of elimination of minimum capital requirement, which was 111.2 per cent of income per capita till last year. Enforcing contracts also improved its rank to 178 from 186. In case of protecting minority shareholders India again scored a high rank of 8 though down one rug from 7 last year.

However, India's performance worsened in terms of trading across borders, with its rank falling from 126th to 133rd.The government is taking steps to make it easier to pay taxes but its ranking on this parameter fell from 156th to 157th. In a number of measures such as registering property and getting credit, the country slipped from last year. On the global front, Singapore retained the top spot in the rankings, followed by New Zealand, Denmark and South Korea. While China's ranking improved from 90th to 84th, Pakistan fell 10 positions to 138th from 128th last year.

The CNX Nifty touched a high and low 8209.10 and 8131.80 respectively.

The top gainers on Nifty were Cipla up by 2.52%, Kotak Mahindra Bank up by 1.95%, Tech Mahindra up by 1.88%, Ambuja Cement up by 1.53% and ONGC up by 1.41%. On the flip side, Axis Bank down by 7.20%, ICICI Bank down by 3.82%, Adani Ports &Special down by 3.24%, Indusind Bank down by 3.20% and Yes Bank down by 3.00% were the top losers.

European Markets were trading in the green; France’s CAC was up by 0.68%, UK's FTSE was up by 0.44% and Germany’s DAX was up by 0.75%.

The Asian equity markets ended in red on Wednesday, barring Nikkei on expectations that the Bank of Japan (BoJ) could introduce further stimulus measures at its policy meeting to be held later this week. The International Monetary Fund stated that Japan should stick to its plan to raise the sales tax from 8 percent to 10 per cent in April 2017 in order to deliver fiscal sustainability.  Japan’s retail sales fell to a seasonally adjusted annual rate of -0.2%, from 0.8% in the preceding month. Amid a continued economic slowdown, China’s unemployment rate for the first time in recent years has increased amid reports of layoffs by both state-owned enterprises and private sector firms due to over capacity and falling demand but the government has played it down. The registered unemployment rate in China’s cities stood at 4.05 percent at the end of September, slightly up from 4.04 percent in June. Activity in China's manufacturing sector likely picked up slightly in October but remained subdued, fuelling hopes that the world’s second-largest economy may be bottoming out after a burst of stimulus measures. The official manufacturing Purchasing Managers’ Index (PMI) likely edged up to 50.0 in October from 49.8 in September.