Benchmarks end lower on global worries and inflation concerns

Indian equity benchmarks ended Friday’s session in red territory with a cut of around a percent, losing more than what they had gained on the special Muhurat trading session, as sentiments were weighed down by selling in Capital Goods, Auto and FMCG stocks amid weak global cues. After a gap-down opening, markets remained sluggish throughout the session. The indices even went on to test important psychological 25,550 (Sensex) and 7,750 (Nifty) levels. Apart from blue chips, broader indices too were weak with both mid cap and small cap indices ending down by around a percent each. The overall sentiment remained down-beat from beginning of the trade on the back of disappointing macroeconomic data with the industrial growth falling to a four-month low of 3.6 per cent in September, dampened by a slower expansion in the mining sector, as compared to downwardly revised 6.3 per cent growth in August and the Consumer Price Index-based (CPI) inflation for October rising to five per cent - the highest in three months as compared to 4.41 per cent in September. Further, Investors also failed to get any sense of relief with the Fitch Ratings’ report that indicated liberalisation of foreign direct investment (FDI) rules in 15 sectors is a significant structural macroeconomic reform that will support investment and real GDP growth over the long term.

Markets despite in red traded in a range taking support with the statement of the International Monetary Fund (IMF) that it broadly supports the series of economic reforms undertaken by India, which is moving in the right direction. Further, traders also got some support with the statement of Prime Minister Narendra Modi that India will no longer resort to retrospective taxation, while acknowledging that such steps were adversely affecting the mood of existing and potential investors.

On the global front, weak opening in European counters too dampened the sentiments with CAC, DAX and FTSE trading lower in early deals, as investors remained cautious ahead of the release of third-quarter economic growth data from the euro zone and as declining commodity prices continued to weigh on market sentiment. Moreover, Asian shares ended mostly lower after commodity prices plunged to multi-year lows on worries that slower global growth may worsen a supply glut.

Back home, appreciation in Indian rupee prevented the markets to go further down. The rupee was at 66.19 per dollar at the time of equity markets closing as compared to 66.31 per dollar level on Tuesday, on account of increased selling of the American currency by exporters. On the secoral front, shares of interest rate-sensitive sectors such as banking, real estate and autos traded lower on the back of disappointing macroeconomic numbers as investors became cautious and focus on the tone of the central bank. The fifth bi-monthly monetary policy of the RBI is scheduled on December 1, 2015. However, the metal pack on the BSE was one of the two which posted gains, supported by surge in Jindal Steels, JSW Steel and Coal India. In scrip specific development, shares of direct-to-home (DTH) companies including, Hathway Cable & Datacom and Dish TVtraded higher after the government hiked foreign direct investment (FDI) limit in various segments of the broadcasting industry and even completely removing the barriers in some verticals.

The NSE’s 50-share broadly followed index Nifty lost eighty points to end below the psychological 7,800 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by above two hundred and fifty points to finish below its psychological 25,650 mark. Broader markets too witnessed selling pressure and ended the session with a cut of around one percentage point. The market breadth remained in favor of decliners, as there were 934 shares on the gaining side against 1659 shares on the losing side while 151 shares remain unchanged.

Finally, the BSE Sensex declined by 256.42 points or 0.99% to 25610.53, while the CNX Nifty lost 62.75 points or 0.80% to 7762.25. 

The BSE Sensex touched a high and a low 25724.09 and 25540.73, respectively. The broader indices ended in red; the BSE Mid cap index was down by 1.37%, while Small cap index lost 0.76%.

The gaining sectoral indices on the BSE were Metal up by 0.67%, Consumer Durables up by 0.20%, while Capital Goods down by 1.97%, Auto down by 1.61%, FMCG down by 1.50%, TECK down by 1.36%, IT down by 1.32% were the losing indices on BSE.

The top gainers on the Sensex were Coal India up by 2.60%, Bharti Airtel up by 0.89%, Dr. Reddys Lab up by 0.88%, Axis Bank up by 0.80% and GAIL India up by 0.78%. On the flip side, Vedanta down by 4.23%, Cipla down by 3.76%, Hindalco down by 3.30%, ONGC down by 3.26% and Bajaj Auto down by 3.02% were the top losers.

Meanwhile, surging for the third straight month, the retail or the Consumer Price Index (CPI) inflation for the month of October rose 5 percent, accelerating from a 4.41% in September and 4.62 percent in October last year, on the back of costlier pulses and other food items. Higher demand for consumer durables and food items during the festival season beginning in October also contributed to inflation.

As per the data released by the Ministry of Statistics and Programme Implementation, the Consumer Price Index (CPI) on Base 2012=100 for Rural, Urban and Combined for the Month of October 2015 stood at 5.54%, 4.28% and 5.00% respectively, as against 5.05%, 3.61% and 4.41% respectively in September 2015.  Meanwhile,  Consumer Food Price Index (CFPI) for all India Rural, Urban and Combined for the month of October 2015 stood at 5.18%, 5.47% and 5.25% respectively.

The General Indices (Provisional) for the month of October 2015 for Rural, Urban and Combined are 127.7, 124.2 and 126.1 respectively.  The CFPI for Rural, Urban and Combined for the same month are 132.0, 133.1 and 132.4 respectively.

Retail Inflation for the month under review declined mainly on account of food inflation. The overall consumer food inflation during the month rose to 5.25 percent in October, according to the government data. The vegetable and fruits price inflation stood at 2.42 percent and 1.98 percent respectively in October. Meanwhile, the inflation in pulses and products category rose to a staggering 42.20 percent in October, which pushed up the overall index for food and beverages to 5.34 percent. Inflation in cereals and products was also higher at 1.46 percent. Besides, the price rise in spices category was higher at 9.82 percent and for non-alcoholic beverages at 4.31 percent. Inflation in sugar and confectionery category remained in negative zone at (-) 10.47 percent. However for protein rich items such as meat and fish, the rate of price rise has slowed to 5.01 percent. Likewise, rate of retail price rise in milk and its products was 4.79 percent. Further, eggs also turned cheaper at 0.59 percent during the month.

The Reserve Bank of India (RBI) predicts inflation will accelerate to 5.8% by January 2016.The RBI takes into account retail inflation while formulating monetary policy.

The CNX Nifty touched a high and low 7775.10 and 7730.90 respectively.

The top gainers on Nifty were Coal India up by 2.88%, Kotak Mahindra Bank up by 2.14%, PNB up by 2.01%, BPCL up by 1.87% and Tata Steel up by 1.00%. On the flip side, Cairn India down by 5.46%, Vedanta down by 4.12%, Cipla down by 3.95%, Zee Entertainment down by 3.65% and Hindalco down by 3.61% were the top losers.

European Markets were trading lower; UK’s FTSE 100 decreased 41.77 points or 0.68% to 6,136.91, France’s CAC decreased 21.72 points or 0.45% to 4,834.93 and Germany’s DAX decreased 19.87 points or 0.18% to 10,762.76.

The Asian markets closed mostly lower on Friday, as the weak cues overnight from Wall Street and the fall in commodity prices to multi-year lows increased risk aversion. Indonesia’s President Joko Widodo’s administration had called off the plan to reveal its seventh economic stimulus package, as the president’s tight schedule meant that discussions with key ministers had to be delayed. The seventh stimulus package was to be on increasing the purchasing power of consumers and accelerating infrastructure development in rural areas and villages. Japan’s industrial production rose to a seasonally adjusted 1.1%, from 1.0% in the preceding month while Japanese tertiary industry activity index fell to a seasonally adjusted -0.4%, from 0.2% in the preceding month whose figure was revised up from 0.1%. Singaporean Retail Sales fell to a seasonally adjusted 4.6%, from 6.6% in the preceding month whose figure was revised up from 6.1%. Hong Kong GDP rose to a seasonally adjusted annual rate of 0.9%, from 0.4% in the preceding quarter.

Malaysia posted its slowest economic growth and smallest current account surplus in over two years, with third quarter data offering little relief for a country whose currency has lost 20 percent of its value this year. The ringgit is Asia’s worst performer, having been hit hard by weak global prices for Malaysia’s gas and commodity exports, subdued demand from China, and a scandal at an indebted state fund that has raised questions over Prime Minister Najib Razak’s leadership and weakened investor sentiment. Malaysian GDP fell to a seasonally adjusted 4.7%, from 4.9% in the preceding month.