Post Session: Quick Review

Indian markets got a muted start of the F&O expiry week and the Sensex and Nifty struggled to retain their crucial psychological levels, with weakness in FMCG and metal stocks putting pressure on the overall market movement for the day. Barring the final hours of volatility the trade remained mostly range-bound with benchmarks moving near the neutral line. Markets lacked any direction from the very beginning with Asian peers too showing a subdued trend. Traders remained concerned with global rating agency Standard & Poor’s statement that India's rating could come under stress if government fails to pursue reforms agenda and overshoots fiscal deficit target. It has ruled out a rating upgrade for the country in the next 12-18 months but said that in case the government is able to get the Goods and Services Tax (GST) bill passed in the forthcoming Winter Session of Parliament, it would be a credit positive.

On the global front too, the mood remained muted and though most of the Asian markets ended in green, the gains were modest led by the slump in commodity with industrial metals and oil leading losses, as the dollar cemented gains. The European markets too made a soft start after posting their biggest weekly advance in four weeks, despite economic activity in the euro area hitting a 4 1/2-year high this month. A composite index of services and manufacturing rose to 54.4 from 53.9 in October.

Back home, the markets witnessed some selling especially in banking stocks, though there was subsequent recovery too that restricted any serious damage to the markets but still the benchmarks could not make it a green close and ended marginally in red, with investors turning cautious ahead of the expiry of derivative contracts in a holiday-shortened week. The weakness in rupee on fresh demand for the US currency from importers and banks, too weighed on the sentiments.  Banking stocks remained buzzing with Finance Minister Arun Jaitley meeting with public sector bankers for a review of their performance so far. The major thrust areas of review was said to be Priority Sector lending, Quarter-2 results, Financial Literacy, PMMY and Insurance and Pension schemes. However, oil & gas stocks moved higher after Qatar agreed to waive $ 1 billion penalty on India for breaking a long-term LNG contract, and has also consented to change the pricing formula to reflect the slump in global energy rates. Auto stocks too continued witnessing strong buying following the seventh pay panel's better-than-expected recommended hike. Hero MotoCorp around 3%, Bajaj Auto up by over 2% and M&M up by about half a percent were among the major gainers.

There were some scrip specific action based on Sensex reshuffling announcements, metal stocks- Vedanta and Hindalco lost 3-4 per cent, these two stocks will be shifted out of the BSE benchmark Sensex index from December 21. On the other hand, Asian Paints and Adani Ports and Special Economic Zone, which will be replacing Vedanta and Hindalco in the Sensex  surged by over 2 per cent.

The BSE Sensex ended at 25819.92, down by 48.57 points or 0.19% after trading in a range of 25747.01 and 25958.04. There were 12 stocks in green against 17 stocks in red, while one stock remained unchanged on the index. (Provisional)

The broader indices outperformed the benchmarks and ended in green; the BSE Mid cap index was up by 0.35%, while Small cap index gained 0.46%. (Provisional)

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.26%, Realty up by 0.86%, Oil & Gas up by 0.80%, Auto up by 0.71% and TECK up by 0.05%, while Metal down by 1.25%, FMCG down by 1.16%, PSU down by 0.18%, Capital Goods down by 0.08%, Power down by 0.02% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were GAIL India up by 4.82%, Hero MotoCorp up by 2.98%, Bajaj Auto up by 2.29%, Dr. Reddys Lab up by 1.67% and Lupin up by 1.44%. On the flip side, Hindalco down by 3.49%, Vedanta down by 2.90%, Tata Steel down by 2.44%, ITC down by 1.86% and Sun Pharma Inds. down by 1.23% were the top losers. (Provisional)

Meanwhile, global rating agency Standard & Poor’s, despite government’s various measures of putting back the economy on track, has expressed concern over slowdown in the pace of reforms and said that India’s rating could come under stress if the Government fails to pursue reforms agenda and overshoots fiscal deficit target.

The global credit rating agency which would formally review India’s ratings in November 2016, has ruled out a rating upgrade for the country in the next 12-18 months but said that in case the Government is able to get the Goods and Services Tax (GST) bill passed in the forthcoming Winter Session of Parliament, it would be a credit positive and its passage would indicate that government's reform initiative is picking pace with a strong momentum

It said that GST will bring in a simple tax regime and a business friendly environment. Passage of GST bill will be credit positive for India. It would indicate that the Government’s reform initiative is picking up pace with a strong momentum. The agency will keep a close watch on the upcoming Budget to see how the government plans to maintain the deficit target and go ahead with the reforms. It added that reforms like land acquisition bill and GST have been stuck due to political logjam in Parliament.

S&P further said that it could consider a rating upgrade if fiscal deficit is brought down, debt to GDP ratio is below 60 percent and savings are properly channelized, but also cautioned that ratings could come under stress if it see that government is backing away from reform commitment and fiscal deficit is not in control. As per the revised roadmap, fiscal deficit is to be brought down to 3.9 percent of GDP in 2015-16, 3.5 percent in 2016-17 and 3 percent by 2017-18. The deficit in 2014-15 was 4 percent of GDP.

The CNX Nifty ended at 7847.55, down by 9.00 points or 0.11% after trading in a range of 7825.20 and 7877.50. There were 22 stocks on gainers side against 27 stocks on losers side, while one stock remained unchanged on the index. (Provisional)

The top gainers on Nifty were GAIL India up by 4.98%, Hero MotoCorp up by 3.05%, Asian Paints up by 2.61%, Idea Cellular up by 2.53% and Zee Entertainment up by 2.45%. On the flip side, Hindalco down by 3.63%, Vedanta down by 2.95%, Tata Steel down by 2.39%, ITC down by 2.03% and Bank Of Baroda down by 1.37% were the top losers. (Provisional)

European markets were trading in red, France’s CAC was down by 37.77 points or 0.77% to 4,873.20, UK’s FTSE 100 declined by 37.64 points or 0.59% to 6,296.99 and Germany’s DAX was lower by 31.86 points or 0.29% to 11,087.97.

The Asian markets closed mostly lower on Monday, as investors continued to weigh the outlook for global monetary policies. Japan’s stock exchange was closed on account of ‘Labour Thanksgiving Day’ holiday. Japan’s government plans to raise the minimum wage and introduce other steps to revitalize the economy, but the draft of stimulus measures appeared to break no new ground on reforms that needed to end decades of stagnation. Prime Minister Shinzo Abe’s government will also offer some financial support to people living off their pensions to bolster consumer spending. Raising wages is an urgent task for policymakers as Tokyo is keen to ramp up consumer spending, which is seen as crucial to boosting domestic demand and pulling the economy out of 15 years of deflation. Indonesia President Joko Widodo’s administration has dropped plans to introduce a seventh stimulus package aimed at propping the economy and instead will review previous policy changes. The package’s focus was to be on village funds as the government aims to increase the purchasing power of consumers in rural areas and to accelerate infrastructure development in small villages. South Korea’s average disposable household income grew a slim 0.2 percent in real terms in the third quarter over a year earlier, the slowest in nearly two years.