Benchmarks end lower for fifth straight session

Extending their losing streak for fifth straight session, Indian equity benchmarks ended the choppy day of trade in the red terrain with a cut off over half a percent as investors continued to sell off risky assets amid US Federal Reserve’s statement putting into play a rate hike this year. Selling in last leg of trade mainly dragged the markets below their crucial 26,700 (Sensex) and 8,100 (Nifty) levels. Earlier markets traded with traction as some support came with World Bank retaining its India growth forecast for 2015-16 saying it will continue to grow, faded amid intense selling pressure. In its latest ‘India Development Update’ World Bank expects India's economic growth to be at 7.5% in 2015-16, followed by a further acceleration to 7.8% in 2016-17 and 7.9% in 2017-18. Traders drew some sense of relief after rating agency India Ratings in a report said that the US Federal reserve's intention to hike rates in December was positive for markets and would remove uncertainty. Some support also came in with the Reserve Bank of India’s notification that non-resident Indians (NRIs) can opt to invest in the National Pension System (NPS), the move will help boost dollar inflows into the country.

However, markets took u-turn and entered into red terrain in last leg of trade as disappointing results from ITC and Larsen & Toubro raised concerns about the health of the corporate sector. Stocks of ITC edged lower by over four percent after the company’s total income has decreased by 0.82% to Rs 9303.43 crore for the quarter under review, however the company has reported 0.25% rise in its net profit at Rs 2431.25 crore for the quarter ended September 30, 2015. Though L&T Q2 numbers were mostly in line with estimates but the company cut its order inflow guidance to 5-7 per cent, from 15 per cent earlier dragged the stocks below four percent. Traders also remained concerned ahead of the outcome of the Bihar election results.

Selling extended with European counters exhibiting weak trade in early deals despite Spanish GDP numbers, which showed a slight easing on growth in the third quarter to a still-impressive 0.8 per cent - by far the best in Europe. Asian markets ended mostly in red. However, Japanese markets bucked trend, as investors looked past a Bank of Japan decision to refrain from adding to monetary easing and focused on earnings.

Back home, banking stocks remained on buyers’ radar, supported by good Q2 numbers from Yes Bank and ICICI Bank which came up in-line with street’s expectations. Aviation stocks too edged higher, after the government released the new draft aviation policy for inputs from stakeholders before finalisation. The policy dwells on upgrade of airports, better regional connectivity, easing of norms for flying abroad, further liberalisation in open skies regime, development of cargo business, chopper services, attracting investments in maintenance sector, ground handling and security.

The NSE’s 50-share broadly followed index Nifty declined by around fifty points to end below the psychological 8,100 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over one hundred and eighty points to end below its crucial 26,700 mark. Broader markets too struggled to get any traction during the trade and ended the session with a cut of around half a percent. The market breadth remained in favor of decliners, as there were 998 shares on the gaining side against 1,615 shares on the losing side while 194 shares remain unchanged.

Finally, the BSE Sensex declined by 181.31 points or 0.68% to 26656.83, while the CNX Nifty lost 45.95 points or 0.57 % to 8065.80. 

The BSE Sensex touched a high and a low 26942.29 and 26585.20, respectively. The BSE Mid cap index was down by 0.13%, while Small cap index was down by 0.78%.   The top gaining sectoral indices on the BSE were Bankex up by 0.92%, Power up by 0.45%, Consumer Durables up by 0.42% and Heathcare up by 0.37%, while Capital Goods down by 2.65%, FMCG down by 2.34%, Realty down by 1.39%, Auto down by 1.20% and Metal down by 0.93% were the losing indices on BSE.

The top gainers on the Sensex were NTPC up by 3.83%, ICICI Bank up by 2.04%, Dr. Reddys Lab up by 1.32%, Axis Bank up by 1.18% and Sun Pharma up by 1.06%. On the flip side, Vedanta down by 6.41%, ITC down by 4.30%, Larsen & Toubro down by 4.11%, Mahindra & Mahindra down by 3.72% and BHEL down by 2.16% were the top losers.

Meanwhile, minister of Civil Aviation Pusapati Ashok Gajapathi Raju has unveiled the draft National Civil Aviation policy (NCAP 2015). In its draft, the centre aims to incentivize flights to smaller towns and allows creation of no-frill airports to boost regional numbers. The government has also proposed hiking foreign direct investment in domestic airlines to over 50% under the open skies policy based on a reciprocal arrangement from the partner country.

According to the draft civil aviation policy, the government proposes to levy a 2% additional levy on all domestic and international tickets to fund its bid to boost regional aviation connectivity. The policy comes as airline passenger numbers increased 20% a year to 38.8 million in the first half of 2015, leaving India’s major airports, which account for four-fifths of traffic, saturated. One of the policy’s primary aims is ensuring a tariff of no more than Rs 2,500 a ticket for each flying hour to destinations with “un-served and under-served” airports and airstrips under the Regional Connectivity Scheme (RCS) that will come into effect from 1 April 2016. It also contains a host of incentives and other benefits to airport developers and operators to make this happen. The policy has mooted various measures to boost regional connectivity including setting up of no-frills airports and providing viability gap funding for airlines. The viability gap funding will be shared by the Centre and State in the ratio of 80:20. The policy set an ambitious target of increasing the sale of air tickets from the current annual figure of 7 crore to 30 crore by 2022 and 50 crore by 2027.

Further, on the 5/20 rule, the policy has proposed three alternatives: One, retain it; Two, remove it completely; Three, airlines be allowed to fly to SAARC nations if they have earned 300 domestic flying credits and for other countries, 600 domestic flying credits. A final decision on 5/20 rule will be taken by the Cabinet.  The draft policy also pushes Make In India in aeronautics.

The policy has been put up for public comments and then for inter ministerial consultations after which it will be sent for Cabinet approval.

The CNX Nifty touched a high and low 8146.10 and 8044.40 respectively.

The top gainers on Nifty were NTPC up by 3.67%, Kotak Mahindra Bank up by 3.54%, ICICI Bank up by 1.99%, Yes Bank up by 1.61% and Dr. Reddys Lab up by 1.51%. On the flip side, ITC down by 4.47%, Larsen & Toubro down by 4.27%, Vedanta down by 3.96%, Mahindra & Mahindra down by 3.89% and Bosch down by 2.98% were the top losers.

European Markets were trading in the red; France’s CAC was down by 0.23%, UK's FTSE was down by 0.28% and Germany’s DAX was down by 0.18%. 

The Asian equity markets ended mostly in red on Friday, while reporting their strongest monthly performance in years in October. The Bank of Japan held off on expanding its massive stimulus programme, preferring to preserve its dwindling policy options in the hope that the economy can overcome the drag from China’s slowdown without additional monetary support. But the central bank is likely to remain under pressure to expand its already massive asset-buying programme as slumping energy costs, weak exports, and a fragile recovery in household spending keep inflation well short of its 2 percent target. Core consumer prices fell 0.1 percent in the year to September, a second monthly drop, while household spending slid even as job availability hit a two-decade high. The BOJ maintained its pledge to increase base money, or cash and deposits at the central bank, at an annual pace of 80 trillion yen ($662 billion) through aggressive asset purchases. South Korean Industrial Production rose to a seasonally adjusted annual rate of 2.4%, from 0.1% in the preceding month whose figure was revised down from 0.3%.

Taiwan’s economy shrank for the first time in six years in the July-September quarter, dragged down by worse-than-expected exports and domestic spending. The drop of 1.01 percent from a year earlier missed forecasts by the Directorate General of Budget, Accounting and Statistics, which had predicted GDP growth of 0.10 percent year-on-year in the third quarter. It has also announced that it would pour Tw$4.08 billion ($125.5 million) into the economy between November and February to boost consumer spending.