Benchmarks continue to trade in red in late morning session

Indian bourses continued to trade in red in the late morning session on sustained selling by funds and retail investors amid weak global cues. Local frontline index Nifty got drowned below the important psychological 7,850 level and the Sensex got annihilated by over one hundred and fifty points and slipped below the crucial 25,750 level. Investors around the world have turned increasingly jittery as the European Central Bank's stimulus package fell well short of markets' high expectations. Also, Janet Yellen’s hawkish stance on the US economy thus reinforcing the case for an interest rate hike in December 2015 would weigh on the sentiment across the bourses. Furthermore, depreciating rupee against the dollar also weighed on the local markets. Extending its losing streak for the third straight day, Indian rupee plunged by 34 paise to 66.99 against the US dollar in early trade on strong demand for the American currency from banks and importers amid sustained capital outflows. Sentiments remained subdued on Crisil’s latest report that India is unlikely to attain the ambitious target of doubling exports of goods and services to $900 billion by fiscal 2020 from $470 billion in FY15, mainly due to declining competitiveness of India Inc, infrastructure bottlenecks and labour market rigidity. However, investors got some support with the statement of Railway Minister Suresh Prabhu that Indian economy will grow at 7.5 per cent in the current fiscal year and the country's growth will accelerate in the coming years despite slowing world economy.

On the global front, Asian markets were trading in red as lower-than-expected European Central Bank's stimulus package announcement and smaller rate cut yesterday disappointed investors. Overnight, Wall Street's benchmark S&P 500 stock index had its biggest one-day percentage decline since September 28, dropping 1.4 per cent. US factory orders have jumped by 1.5% in October following a revised 0.8% decrease in September. Back home, selling pressure in Indian stock markets was broad-based with most sectoral indices, barring the Metal index, on the BSE trading in the negative. IT pack has come under pressure after torrential rains have marooned the city of Chennai- one of the IT hubs in the country. In scrip specific development, shares of Dabur India have dipped after the company said that it is expecting its juice sales to dip 10-15% cent in October-December (Q3FY16) quarter due to disruption of supplies from its plant in the Nepal. On the other hand, Sun Pharmaceutical Industries has rallied after the company’s subsidiary has received final approval from US Food and Drug Administration (US FDA) for its Abbreviated New Drug Application (ANDA) for generic version of Gleevec, Imatinib Mesylate tablets 100mg and 400mg.

The market breadth on BSE was positive, out of 2310 stocks traded, 990 stocks advanced, while 1187 stocks declined on the BSE.

The BSE Sensex is currently trading at 25714.96, down by 171.66 points or 0.66% after trading in a range of 25644.35 and 25810.06. There were 11 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.36%, while Small cap index down by 0.19%.

The only gaining sectoral index on the BSE was Metal up by 0.34%, while IT down by 0.99%, FMCG down by 0.96%, Bankex down by 0.94%, TECK down by 0.88% and Realty down by 0.62% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 4.59%, Tata Motors up by 0.79%, Lupin up by 0.79%, Tata Steel up by 0.75% and Cipla up by 0.40%. On the flip side, Mahindra & Mahindra down by 1.83%, HDFC down by 1.81%, Wipro down by 1.60%, ITC down by 1.57% and ICICI Bank down by 1.28% were the top losers.

Meanwhile, the Asian Development Bank (ADB) has pegged India’s economic growth at 7.4 per cent for the current fiscal 2015-16, but warned of exports contracting due to weakness in external demand and the downside risk which the economy is facing due to sluggish private investment and weak rural demand. In a supplement published to its September report on the development outlook, ADB retained this year’s economic growth at 7.4 per cent, and next year’s at 7.8 per cent.

In its report it pointed out that continued strength in India is supported by growth in industrial production, public capital expenditure, and retail sales. This is helping offset slowdowns seen for Bhutan, the Maldives, and Nepal”.

It said that leading indicators such as sales of commercial vehicles, car sales, and air passenger traffic were also gathering momentum. However, continued weakness in external demand will likely cause exports to contract this year. However, it also said that India’s economy faces a downside risks from sluggish private investment and rural demand weakened by slow wage growth and a muted increase in support prices for agricultural products.

ADB said that average inflation in the first 7 months, at 4.6 percent, is broadly in line with the forecast of 5.0 percent in 2015-16 as inflationary pressure are expected to pick up in the remaining months as crude oil prices increase and economic activity accelerates. Though, it warned of exports contracting due to weakness in external demand and the downside risk which the economy is facing due to sluggish private investment and weak rural demand.

The CNX Nifty is currently trading at 7808.40, down by 55.75 points or 0.71% after trading in a range of 7787.70 and 7819.25. There were 11 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 5.67%, Cairn India up by 2.71%, Tata Motors up by 0.70%, Tata Steel up by 0.67% and Lupin up by 0.61%. On the flip side, Zee Entertainment down by 2.83%, Bank of Baroda down by 2.28%, HDFC down by 1.80%, Wipro down by 1.80% and Mahindra & Mahindra down by 1.65% were the top losers.

Asian markets were trading in red, Nikkei 225 was down by 2.33%, Hang Seng down by 1.12%, Taiwan Weighted down by 0.5%, Shanghai Composite down by 1.19%, Jakarta Composite down by 0.65%, KOSPI Index down by 0.79% and FTSE Bursa Malaysia KLCI was down by 0.33%.