Benchmarks end choppy trade slightly in red

Indian equity benchmarks ended the choppy day of trade slightly in red on Friday, as investors remained cautious ahead of Bihar election verdict after exit polls showed a neck-to-neck fight between NDA and JDU-led grand alliance in Bihar. If the grand alliance of JDU-RJD-Congress gains an edge, market could see some temporary suffering. Sentiment remained subdued with RBI Governor Raghuram Rajan’s statement that the central bank is comfortable with the current level of policy rates till more room builds up, even as the government expressed hope for further cuts.

However, losses remained capped with the Prime Minister Narendra Modi’s statement that the economy had performed better on all parameters, including inflation and foreign investment in the past 17 months and laid stressed on effecting inclusive reforms to improve people’s lives, rather than only grabbing headlines. He also said the government’s efforts to bring back black money stashed abroad had detected as much as Rs 10,500 crore.

Global cues too remained sluggish, as European counters have made a weak start with traders eyeing the development in Greece, as today is the deadline for banks to submit plans detailing how they’ll raise the additional capital. Asian markets ended mostly in red as investors braced for US employment data that is expected to bolster the case for a Federal Reserve interest rate increase as early as next month.

Back home, foreign portfolio investors (FPIs) sold shares worth a net Rs 991.87 crore on November 5, 2015, as per provisional data released by the stock exchanges. Depreciation in Indian rupee too weighed down sentiments. The rupee weakened by another 5 paise to trade at a fresh one-month low of 65.80 against the US dollar at the time of equity markets closing at the Interbank Foreign Exchange due to sustained demand for the American currency from importers.

Banking stocks remained on buyers’ radar after PSU banks viz. State Bank of India (SBI) and Punjab National Bank (PNB) reported better-than-expected numbers. SBI has reported 25.11% rise in its net profit at Rs 3879.07 crore for the quarter ended September 30, 2015 as compared to Rs 3100.41 crore for the same quarter in the previous year, while PNB reported 7.94% rise in its net profit at Rs 621.03 crore for the quarter Q2FY16. Meanwhile, the power and power-related stocks remained buzzing after the government unveiled Ujwal Assurance Yojana (UDAY) to wipe out discoms' losses by FY19. As per the scheme, state governments will be urged to take over 75 per cent of discoms' debts. The scheme has placed various constraints on the ability of discoms to incur new losses.

The NSE’s 50-share broadly followed index Nifty ended marginally lower and managed to hold its crucial 7,950 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex edged lower around forty points to end above the psychological 26,300 mark. The broader markets too struggled to get any traction and ended the session with a cut of around half a percent. The market breadth remained in favour of decliners, as there were 1,034 shares on the gaining side against 1,627 shares on the losing side while 149 shares remain unchanged.

Finally, the BSE Sensex declined by 38.96 points or 0.15% to 26265.24, while the CNX Nifty lost 1.15 points or 0.01% to 7954.30. 

The BSE Sensex touched a high and a low 26438.86 and 26190.18, respectively. The BSE Mid cap index was down by 0.41%, while Small cap index was down by 0.60%.  

The top gaining sectoral indices on the BSE were IT up by 0.80%, TECK up by 0.67%, Bankex up by 0.64%, Oil & Gas up by 0.32% and PSU up by 0.32%, while Healthcare down by 2.84%, Power down by 1.01%, Auto down by 0.74%, Metal down by 0.40% and FMCG down by 0.14% were the losing indices on BSE.

The top gainers on the Sensex were SBI up by 3.86%, Reliance Industries up by 1.67%, Infosys up by 1.39%, Coal India up by 1.29% and Bharti Airtel up by 0.92%. On the flip side, Dr. Reddys Lab down by 14.65%, Tata Steel down by 2.44%, GAIL India down by 2.22%, Vedanta down by 1.97% and Tata Motors down by 1.87% were the top losers.

Meanwhile, the newly launched gold schemes would allow for channelization of the India’s unutilized gold reserves effectively and also help to push economic growth. Federation of Indian Chambers of Commerce & Industry (FICCI) has said that this can bring down the current account deficit through lower imports of the metal. A. Didar Singh, the Secretary General of FICCI has said that with the schemes being rolled out should be able to reduce gold imports as from past few years the country has witnessed an exponential increase in gold imports exerting tremendous pressure on current account.

India imports a staggering 1,000 tonnes of gold every year, draining out foreign exchange and putting pressure on the fiscal deficit. An estimated 20,000 tonnes of gold worth over Rs 52 lakh crore is lying with households and temples. The establishment of a Gold Board would allow for better management of gold imports, encourage exports, facilitate infrastructure development and would ensure that India's gold market functions effectively. Singh further said that creation of a strong infrastructure and standardization of price and quality will be essential in order to make the schemes successful.

In order to reduce the physical demand for gold and fish out idle 20,000 tonnes of the precious metal worth $800 billion lying with households and other entities, Prime Minister Narendra Modi has launched three ambitious schemes. Under the Gold Monetisation Scheme (GMS), 2015 there will be option for resident Indians to deposit their precious metal and earn an interest of up to 2.5 per cent while under the Sovereign Gold Bonds Scheme, investors can earn an interest rate of 2.75 per cent per annum by buying paper bonds. Modi has also unveiled the first ever Indian gold coin and bullion, bearing national emblem Ashok Chakra on one side and Mahatma Gandhi's image engraved on the other side. Initially, the coins will be available in denominations of 5 and 10 grams. A 20 gram bullion will also be available through 125 MMTC outlets.Under sovereign gold bonds scheme, Indian residents including individuals, HUFs, trusts, universities and charitable institutions can buy the bonds. The Gold Bond scheme will offer investors a choice to buy bonds worth 2 grams of gold, up to a maximum of 500 grams and tenor of the bond will be for a period of eight years with exit option from 5th year to be exercised on the interest payment dates.

The CNX Nifty touched a high and low 8002.65 and 7926.15 respectively.

The top gainers on Nifty were Bank of Baroda up by 5.80%, SBI up by 4.28%, PNB up by 2.47%, Kotak Mahindra Bank up by 2.21% and Coal India up by 1.75%. On the flip side, Dr. Reddys Lab down by 14.55%, Bosch down by 3.09%, Tata Steel down by 2.75%, Tata Motors down by 2.44% and Vedanta down by 1.91% were the top losers.

European Markets were trading mostly in the red; France’s CAC was down by 0.78% and Germany’s DAX was down by 0.26%, while UK’s FTSE was up by 0.03%.

The Asian markets made mostly a lower closing on Friday, with of the indices in the region opting a cautious stand ahead of the US jobs report. However, the Chinese and Japanese shares continued to rally on recent remarks by President Xi Jinping and further weakness in the yen respectively. Shanghai Composite posted strong gains for the third day running after it entered a bull market on Thursday, rising 20% since August 26, while the Japanese market posted its highest close since Aug. 21 with traders still holding out hope that the Bank of Japan will introduce more stimulus soon, even though the central bank held its monetary policy steady last week. On the other hand the Hong Kong market declined by about a percent and Taiwanese market was down by about two percent.