Benchmarks make gap-down opening on weak IIP data

After gaining in the special Muhurat Trading session, Indian equity markets have made a gap-down opening and are now trading with a cut of around a percent, on the back of disappointing macroeconomic data with industrial growth falling to a four-month low of 3.6 per cent in September and the Consumer Price Index-based (CPI) inflation for October rising to five per cent - the highest in four months. Further, Weakness in the other Asian peers too weighed on the sentiments. Besides, foreign portfolio investors (FPIs) sold shares worth a net Rs 11.93 crore on November 11, 2015, as per provisional data released by the stock exchanges that too added to negative milieu. At present, Sensex and Nifty were trading below the crucial 25,650 and 7,800 levels respectively.  Apart from blue chips, broader indices too were weak with both mid cap and small cap indices trading down by around a percent each.

On the global front, the US markets ended lower as materials and energy stocks sank due to lower commodity prices and investors weighed the prospect of an increase in interest rates next month.  Asian markets were trading mostly in red on weak cues from Wall Street and the fall in commodity prices to multi-year lows increased risk aversion.

Back home, all the sectoral indices on the BSE were trading in red led by IT, TECK, Capital Goods and FMCG. The market breadth on BSE was negative in the ratio of 487: 1083 while 81scrips remained unchanged

The BSE Sensex is currently trading at 25631.79, down by 235.16 points or 0.91% after trading in a range of 25590.96 and 25724.09. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.29%, while Small cap index lost 0.80%.

The top losing sectoral indices on the BSE were IT down by 1.32%, TECK down by 1.23%, Capital Goods down by 1.18%, FMCG down by 1.00% and Consumer Durables down by 0.95%, while there were no gainers.

The top gainers on the Sensex were Coal India up by 1.26%, Tata Motors up by 0.77%, Dr. Reddys Lab up by 0.75% and Bajaj Auto up by 0.53%. On the flip side, Vedanta down by 2.74%, TCS down by 2.01%, Hindalco down by 1.74%, Cipla down by 1.60% and ONGC down by 1.56% were the top losers.

Meanwhile, after the government on November 10 opened up 15 sectors including real estate, defence, civil aviation and news broadcasting in a bid to push up reforms, Fitch Ratings has lauded the sweeping reforms and said that 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.

The rating agency further said that “We forecast Indian real GDP growth to come in at 7.5 per cent this year and accelerate to 8.0 per cent in 2016 and 2017,” and added that implementation of these reforms and boosting investment is an important credit factor for India, both to bolster growth and to reduce external vulnerabilities.

Fitch also hailed the government's package to revive discoms, announced on November 5, which it said underscores the reform momentum. It added that the heavily indebted discoms of states that opt for the package will see 75 percent of their outstanding debt transferred to the states while the remaining 25 percent will be issued as state-guaranteed disco bonds. As per the rating agency, this could lead to higher general government debt of up to 2 percent of GDP, but this is not sufficiently significant to have an effect on India's ratings, especially with the potential positive longer-term effects of the reforms. The reforms, it said, create an incentive structure for state governments to reduce losses at discoms by requiring the state governments to assume a certain share of losses at these entities.

Fitch said the FDI and discom announcements highlight how the government can make reform progress using its regulatory and executive powers. Earlier, the government announced key changes to FDI regime, include raising the limit for FDI approvals from the Foreign Investment Promotion Board (FIPB) to Rs 5,000 crore from Rs 3,000 crore, increasing foreign-investor limits in several sectors including private banks, defence and non-news entertainment media as well as allowing property developers to sell completed projects to foreign investors without lock-in periods.

The CNX Nifty is currently trading at 7756.80, down by 68.20 points or 0.87% after trading in a range of 7741.20 and 7764.55. There were 5 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were Coal India up by 1.52%, Tata Motors up by 0.74%, Bajaj Auto up by 0.56%,  Dr. Reddys Lab up by 0.37% and BPCL up by 0.30%. On the flip side, Vedanta down by 2.69%, Cairn India down by 2.60%, HCL Tech. down by 2.50%, Ambuja Cement down by 2.35% and Zee Entertainment down by 2.03% were the top losers.

Asian markets were trading mostly in red, Hang Seng decreased 477.44 points or 2.09% to 22,411.48, Nikkei 225 decreased 170.58 points or 0.87% to 19,527.19, Taiwan Weighted decreased 60.67 points or 0.72% to 8,367.42, Shanghai Composite decreased 42.08 points or 1.16% to 3,590.82, KOSPI Index decreased 20.61 points or 1.03% to 1,972.75 and FTSE Bursa Malaysia KLCI decreased 1.83 points or 0.11% to 1,661.37.

On the flip side, Jakarta Composite increased 17.62 points or 0.39% to 4,479.84.