Post Session: Quick Review

Indian markets witnessed a dismal day of trade on Monday in the aftermath of the Bihar state assembly election results. The major bourses made a sharp gap-down opening and remained in red throughout the day, making it 10 days of losses in last 11. The humiliating defeat for the BJP-led led NDA in the Bihar assembly election has made the markets worried about increased political opposition for key reforms such as the Goods and Services Tax (GST). Though, there was some recovery after the initial slump but it was not that strong that could lift the markets in green. The recovery was induced with finance minister Arun Jaitley’s statement, who attributing the NDA's defeat in Bihar assembly elections to ‘huge index of opposition unity’, said that it will not impact the economic reforms process. He also said that he hope that Bihar, which is a consuming state, would support the legislation the pending Goods and Services Tax (GST) bill in the parliament. Credit rating agency Fitch too said that Prime Minister Narendra Modi led National Democratic Alliance's (NDA) loss in the Bihar state election is unlikely impact the medium term economic outlook in India.

On the global front, most of the Asian markets ended in red as odds on the Federal Reserve hiking benchmark rates at its next meeting in December increased after the payrolls data signaled the US labor market is on a solid footing. However, the Chinese and Japanese markets posted strong gains as the Chinese exports posted fourth monthly drop and raised hopes of more stimulus. Overseas shipments dropped 6.9 percent in October in dollar terms. The weakness in yen supported the Japanese market after the dollar jumped to a more than six-month high after data showed the US economy created more jobs than expected in October. The European markets made a mixed start after snapping the previous session on a similar note. 

Back home, markets lacked any kind of support from either the global or domestic front and kept trading in a tight range despite recovery. Traders seem to have taken the correction opportunity for short-covering and value-buying at lower levels, which gave a push to the markets in final hours. Also, the markets have been declining for almost last two weeks and traders considered it to bottomed out and a time for fresh entry. Some recovery was also contributed by a survey from industry body Assocham which has said that majority of Indian businesses are optimistic about the state of the economy improving in the next two quarters, although the last six months have not witnessed much of a change at the ground level. Trade turned volatile in last moment with major bourses once again witnessing selling, though it was contained after some bouts. The broader markets showed a better recovery and ended higher for the day, on the sectoral front too, while the consumer durables and auto remained in festivity mood, the FMCG and oil & gas stocks joined them late. PSU oil marketing companies too moved higher, as the minister of state for petroleum and natural gas Dharmendra Pradhan said that government is considering a proposal to remove cooking gas subsidy for those earning above a certain threshold. HPCL and BPCL were trading up by around half a percent.  Aviation stocks too surged and ended with considerable gains.

The BSE Sensex ended at 26119.45, down by 145.79 points or 0.56% after trading in a range of 25656.90 and 26193.17. There were 10 stocks in green against 20 stocks in red on the index. (Provisional)

The broader indices outperformed the benchmarks and ended in green; the BSE Mid cap index was up by 0.44%, while Small cap index up by 0.83%. (Provisional)

The gaining sectoral indices on the BSE were Consumer Durables up by 2.33%, Auto up by 1.31%, FMCG up by 1.22%, Oil & Gas up by 0.06%, while Realty down by 2.24%, Capital Goods down by 0.78%, TECK down by 0.73%, Power down by 0.60%, Bankex down by 0.49% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Motors up by 3.90%, Maruti Suzuki up by 2.81%, Vedanta up by 1.36%, ITC up by 1.23% and SBI up by 1.03%. On the flip side, Sun Pharma Inds. down by 5.60%, BHEL down by 4.54%, Dr. Reddys Lab down by 3.30%, Wipro down by 2.06% and GAIL India down by 1.96% were the top losers. (Provisional)

Meanwhile, industry body, the Associated Chambers of Commerce & Industry of India (ASSOCHAM), in its latest Business Confidence survey has said that majority of India Inc feels optimistic about the state of economy improving in the next two quarters at the industry and firm level, though the last six months have not witnessed much of a change at the ground level. It said that “In the coming six months, there seems to be growing optimism in terms of the economic performance with 80 per cent respondents feeling that the state of the Indian economy would be better.”

Regarding the tentative recovery in the last six months, the survey said that while there were signs of economic recovery underway, the situation is still far from robust. The underlying economic activity, remains weak on account of the sustained decline in exports, rainfall deficiency and weaker than expected momentum in industrial production and investment activity. Another reason for the positive outlook stems from the macro-economic stability that will help bring down further interest rates, less volatility in the foreign exchange market and ease of doing business.

Riding on hopes of some decisive actions expected after the Bihar elections, the industry respondents remain optimistic about improvement in the sentiment, though at the present moment, broad demand and investment activity remains subdued. However, when it comes to the period between June and September this year, the coverage period of the Biz Con Survey, majority of the industry feels (60.0 per cent) that the present economic situation is more or less same vis-à-vis the situation six months back. Also, in terms of the domestic investments it is believed by the majority of the respondents (56.0 percent) that there has been no change in the firm investment plans. The sentiment seems to grow even more going forward with 60.0 percent respondents of the view that October to December 2015 quarter also would not see much change in the investment levels. 

Industries feel further that though sales volume would pick up going forward, a commensurate change may not be visible on the profitability. That means, the power with the producer to improve margins on increasing sales would remain limited. It also said that, as many as 68 per cent of the respondents expect that during October to December 2015 their sales volume will further increase.

The CNX Nifty ended at 7906.10, down by 48.20 points or 0.61% after trading in a range of 7771.70 and 7937.75. There were 18 stocks on gainers side against 32 stocks on losers side on the index. (Provisional)

The top gainers on Nifty were Tata Motors up by 3.91%, Bank Of Baroda up by 2.60%, Maruti Suzuki up by 2.30%, Asian Paints up by 2.04% and PNB up by 1.77%. On the flip side, Sun Pharma Inds. down by 5.74%, BHEL down by 4.13%, Cairn India down by 3.98%, Dr. Reddys Lab down by 3.71% and Idea Cellular down by 3.30% were the top losers. (Provisional)

European markets were showing mixed trend, UK’s FTSE 100 increased 19.4 points or 0.31% to 6,373.23, while France’s CAC was down by 6.09 points or 0.12% to 4,978.06 and Germany’s DAX declined by 2.79 points or 0.03% to 10,985.24.

The Asian markets closed mostly lower on Monday, while equity markets in China and Japan scaled their highest levels in more than two months. Yang Weimin, Vice Minister of the Office of the Central Leading Group on Financial and Economic Affairs stated that China is making 6.5% a floor or minimum level for annual economic growth in 2016 through 2020, adding that the figure would be a base for setting a target for the five-year period. Weimim added that the economic growth target has not been fixed yet, as that is an objective that needs to be approved by the National People’s Congress.  Chinese Trade Balance rose to 61.64B, from 60.34B in the preceding month. Japan’s Average Cash Earnings rose to a seasonally adjusted 0.6%, from 0.4% in the preceding quarter whose figure was revised down from 0.5%. Taiwanese Trade Balance rose to a seasonally adjusted annual rate of 6.12B, from 5.25B in the preceding month. Malaysian Industrial Production rose to a seasonally adjusted annual rate of 5.1%, from 3.0% in the preceding month.