Benchmarks end lower on Wednesday in absence of any positive trigger

Wednesday's session turned out to be a choppy day of trade for the domestic markets, where key indices got off to a positive start, but surrendered all their gains soon to languish into the negative terrain thereafter in the absence of any positive trigger. Though, some amount of recovery was witnessed in last leg of trade but it was not enough to pull benchmarks into positive trajectory. Traders remained concerned with Reserve Bank of India (RBI)-sponsored survey of professional forecasters stating that the retail inflation is likely to rise to 5.5 per cent in the last quarter of this fiscal and thereafter may moderate to 5.2 per cent by September 2016. Though, the forecasters expect real Gross Value Added at basic price (GVA) to increase by 7.4 per cent in 2015-16.

Traders overlooked Global ratings agency Moody's Investors Service’s statement that investment levels in India (Baa3 positive) are showing nascent signs of recovery, driven by an upturn in the capital replacement cycle, and increased public sector expenditure. Investors also failed to get any sense of relief from report that the FDI in the country grew by 13 percent to $16.63 billion during the April-September period of the current fiscal, compared to $14.69 billion during April-September 2014. However, losses remained capped on report that India’ s fiscal deficit for the first seven months of the current financial year narrowed compared to the same period a year ago, on account of higher tax revenue collections and despite high capital spend by the government to push economic growth.

On the global front, European counters have made a positive start and were trading in green terrain, a day ahead of a key European Central Bank (ECB) meeting at which the ECB is expected to unveil new economic stimulus measures. Asian markets ended mostly in red after downbeat US manufacturing data raised questions about how aggressive the Federal Reserve would be when hiking interest rates, while the dollar retreated from 8-1/2-month highs.

Back home, investors are monitoring progress in the current session of Parliament as Prime Minister Narendra Modi's government seeks to pass its reform agenda, including a new goods and services tax. Selling in banking stocks too dampened sentiments, as the Reserve Bank of India Governor Raghuram Rajan has said that he expects bad debt-burdened banks to clean up their balance sheets by March 2017, warning the central bank would monitor whether concessions made to lenders were being misused.

Meanwhile, some software service exporters and auto firms such as TVS Motor fell as heavy flooding in the southern state of Tamil Nadu shut down factories and paralysed the airport. On the flip side, steel stocks witnessed some buying, after Steel Secretary Aruna Sundararajan said that the government is looking to extend safeguard duty to more steel products in addition to hot rolled coil (HRC) steel. The government had recently imposed a 20 percent safeguard duty on HRC for 200 days.

The NSE’s 50-share broadly followed index Nifty declined by over twenty points to end below the psychological 7,950 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over fifty points to end below its crucial 26,150 mark. Broader markets, however, managed to keep their head above water. The market breadth remained in favor of advances, as there were 1,486 shares on the gaining side against 1,296 shares on the losing side while 155 shares remain unchanged.

Finally, the BSE Sensex declined by 51.56 points or 0.20% to 26117.85, while the CNX Nifty lost 23.55 points or 0.30% to 7931.35. 

The BSE Sensex touched a high and a low 26256.42 and 26041.68, respectively. The BSE Mid cap index was up by 0.20 %, while Small cap index was up by 0.01 %.

The gaining sectoral indices on the BSE were Healthcare up by 0.87%, FMCG up by 0.70%, Metal up by 0.40%, Oil & Gas up by 0.21% and Realty up by 0.11%, while Bankex down by 1.03%, IT down by 0.86%, Capital Goods down by 0.71%, TECK down by 0.64%, PSU down by 0.61% were the losing indices on BSE.

The top gainers on the Sensex were Lupin up by 3.24%, Tata Steel up by 2.46%, Bajaj Auto up by 1.55%, Maruti Suzuki up by 1.41% and Cipla up by 1.35%. On the flip side, SBI down by 1.83%, Infosys down by 1.53%, BHEL down by 1.42%, ICICI Bank down by 1.21% and HDFC down by 1.15% were the top losers.

Meanwhile, giving some cheers to the government, which has recently relaxed foreign direct investment (FDI) norms in as many as 15 sectors including defence, single brand retail, construction development, civil aviation and LLPs to boost foreign inflow in the country, the FDI in the country grew by 13 percent to $16.63 billion during the April-September period of the current fiscal, compared to $ 14.69 billion during April-September 2014.

As per the data released by Department of Industrial Policy and Promotion (DIPP), during the first half of the financial year, India received maximum FDI of $ 6.69 billion from Singapore followed by Mauritius $3.66 billion, the Netherlands $1.09 billion and Japan $ 815 million.Sectors wise, the highest foreign investment during the first half of the fiscal was attracted by computer software and hardware of $ 3.05 billion, followed by trading $2.30 billion, services and automobile $ 1.46 billion each and telecommunications $ 659 million.

During financial year 2014-15, foreign fund inflows grew at 27 percent to $30.93 billion as against $ 24.29 billion in 2013-14. Foreign investments are considered crucial for India as they improve the country's balance of payments (BoP) situation and strengthen the rupee. Also, India needs around $1 trillion in the next five years to overhaul its infrastructure sector such as ports, airports and highways to boost growth.

The CNX Nifty touched a high and low 7979.30 and 7910.80 respectively. 

The top gainers on Nifty were Lupin up by 3.35%, Tata Steel up by 2.46%, Cipla up by 1.42% and Maruti Suzuki up by 1.38% and Reliance industries up by 1.32%. On the flip side, PNB down by 3.09%, SBI down by 2.26%, Bank of Baroda down by 2.17%, HCL down by 2.01% and Infosys down by 1.66% were the top losers.

European Markets were trading in green; France’s CAC was up by 0.41%, Germany’s DAX was up by 0.56% and while UK’s FTSE was up by 0.48%.   

The Asian markets closed mostly lower on Wednesday after US reported weak manufacturing data which raised questions about the US economy and the pace of expected interest rate rises by the Federal Reserve. Though the markets got a strong lead from Wall Street, Japanese shares were down in thin trade as investors avoided investing in cyclical shares before big market events this week such as the European Central Bank's policy meeting and the release of US jobs data. Hong Kong stocks rose, bolstered by financial and property shares as well as a sharp rebound in blue-chips in mainland China. China stocks posted their biggest one-day percentage rise in a month as investors rotated out of small caps into blue chips, with property shares surging for the second day on speculation that Beijing was about to announce a new incentive to boost the country's sagging property market.