Benchmarks make gap-down opening on Bihar verdict

Indian equity markets made a huge gap-down opening and are now trading with a cut of around one and half a percentage points, reacting to the Bihar state election outcome, where the ruling party in the centre has conceded crushing defeat. Sustained selling in all the key heavyweights along with broader indices dragged BSE Sensex and CNX Nifty  below their crucial 26,000, for the first time since September 30, and 7,850 mark respectively. Further, depreciation in Indian rupee against dollar too weighed down sentiments. The rupee weakened by 72 paise or 1 per cent to 66.47 against the US dollar in early trade today, at the Interbank Foreign Exchange, amid concerns that the BJP's massive defeat in Bihar could stall economic reforms. However, downside remained capped on report that foreign portfolio investors (FPIs) bought shares worth a net Rs 219.17 crore on November 6, 2015, as per provisional data released by the stock exchanges. 

In the scrip specific development, Essar Oil has rallied 15% on the NSE on reports that the capital market regulator Securities Exchange Board of India (Sebi) gave more time to the promoter to finalise the delisting offer.

On the global front, the US markets ended mostly in green on Friday. Asian markets were trading mostly in red, tracking the mixed cues from Wall Street as better-than-expected U.S. jobs raised expectations of an interest rate hike by the Federal Reserve in December. Weak trade data released by China on Sunday and lower commodity prices also dampened investors’ sentiment.

Back home, all the sectoral indices on the BSE were reading in the red led by Realty, Healthcare, Power and Capital Goods. The market breadth on BSE was negative in the ratio of 474: 1228, while 51 scrips remained unchanged

The BSE Sensex is currently trading at 25888.93, down by 376.31 points or 1.43% after trading in a range of 25656.90 and 25888.93. There was just 1 stock advancing against 29 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.76%, while Small cap index lost 0.81%.

The top losing sectoral indices on the BSE were Realty down by 2.20%, Healthcare down by 1.89%, Power down by 1.69%, Capital Goods down by 1.32% and Metal down by 1.29%, while there were no gainers. 

The only gainer on the Sensex was SBI up by 1.69%. On the flip side, Sun Pharma Inds. down by 4.45%, Dr. Reddys Lab down by 3.57%, Bharti Airtel down by 2.26%, HDFC down by 1.99% and Cipla down by 1.92% were the top losers.

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 is currently trading at 7829.50, down by 124.80 points or 1.57% after trading in a range of 7771.70 and 7834.60. There were 2 stocks advancing against 48 stocks declining on the index.

The only gainers on Nifty were SBI up by 1.79% and PNB up by 0.60%. On the flip side, Sun Pharma down by 4.00%, Dr. Reddys Lab down by 3.73%, Idea Cellular down by 2.98%, Ambuja Cement down by 2.53% and Power Grid Corpn. down by 2.44% were the top losers.

Asian markets were trading in mostly red, Taiwan Weighted decreased 59.43 points or 0.68% to 8,634.14, Jakarta Composite decreased 58.03 points or 1.27% to 4,508.52, KOSPI Index decreased 9.1 points or 0.45% to 2,031.97 andFTSE Bursa Malaysia KLCI decreased 3.24 points or 0.19% to 1,682.46.

On the flip side, Hang Seng increased 39.02 points or 0.17% to 22,906.35, Shanghai Composite increased 58.39 points or 1.63% to 3,648.42 and Nikkei 225 increased 347.5 points or 1.8% to 19,613.10.