Benchmarks plummet ahead of IIP numbers

Resuming their southward journey, Stock markets in India capitulated by around a percent on Friday, after showing signs of relief in yesterday’s session, as jittery investors lacked conviction to build positions ahead of key economic data - industrial production (IIP) numbers for October - to be released later in the day. Though, the Indian industrial output is forecasted to rise 7.8% annually in October, its strongest pace in more than three years and much faster than the 3.6% seen in September. The benchmark indices suffered hefty bouts of profit booking especially in rate sensitive counters and got dragged around the psychological 7,600 (Nifty) and 25,000 (Sensex) levels.

Investors failed to draw any sense of relief with United Nations’ (UN) projection that India to record a 7.3 percent economic growth in 2016 and 7.5 percent in 2017. It also stated that India will continue to be the fastest growing economy in the world in 2016 and 2017 amid volatile global financial conditions that will see diminished trade flows and stagnant investment. Sentiments also remained dampened over a possible delay in the passage of the key GST Bill.

Markets extended losses after European counters made an awful start with CAC DAX and FTSE were trading with a cut of around half a percent in early deals led by the commodities stock on oil slump. Asian markets ended the session mostly in red as lower crude prices kept markets on edge after a broad rout in commodities heightened fears about receding global growth.

Back home, sentiments remained down-beat on the back of depreciation in Indian rupee against dollar. The rupee was trading at 66.87 at the time of equity markets closing versus its previous close of 66.71. Selling in banking counter too played spoil sport for the markets, as the rating agency Fitch has said that credit growth of banking sector may moderate further in the current financial year as worsening asset quality coupled with capital constraints were acting as impediments. Meanwhile, RBI Governor Raghuram Rajan said the central bank’s policy was to supply markets with ‘plentiful’ liquidity and said it could ‘perhaps’ do more open market purchases of bonds, depending on long-term liquidity needs.

Stocks related to Auto space too remained under pressure after the National Green Tribunal (NGT) said that no new diesel vehicles should be registered in Delhi, and directed the Centre and the Delhi government not to buy any diesel vehicles for their departments. There was some buzz in the cement stocks after Competition Appellate Tribunal setting aside Rs 6,316.59 crore penalty imposed on 11 cement firms by CCI on cartelisation charges asked the fair trade regulator to hear the matter afresh. The Tribunal also allowed the cement manufacturers to withdraw the 10 per cent penalty amount already deposited with the CCI.

The NSE’s 50-share broadly followed index Nifty declined by over seventy points to end below the psychological 7,650 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by around two hundred and ten points to end below its crucial 25,100 mark. Broader markets too struggled to get any traction during the trade and ended the session with a cut of around a percent. The market breadth remained in favor of decliners, as there were 992 shares on the gaining side against 1,666 shares on the losing side while 201 shares remain unchanged.

Finally, the BSE Sensex plunged by 207.89 points or 0.82% to 25044.43, while the CNX Nifty declined by 72.85 points or 0.95% to 7610.45.   

The BSE Sensex touched a high and a low 25316.14 and 24930.43, respectively. The BSE Mid cap index was down by 1.18%, while Small cap index was down by 0.81%.

The top gaining sectoral indices on the BSE were Metal up by 0.23% and IT up by 0.14%, while Realty down by 2.52%, Bankex down by 2.25%, Auto down by 1.71%, Consumer Durables down by 1.46% and Power down by 1.44% were the top losing indices on BSE. 

The top gainers on the Sensex were Tata Steel up by 3.41%, Hindalco up by 0.73%, Cipla up by 0.66%, Hindustan Unilever up by 0.60% and Infosys up by 0.57%. On the flip side, ICICI Bank down by 3.60%, Tata Motors down by 2.92%, Axis Bank down by 2.22%, SBI down by 2.09% and Larsen & Toubro down by 1.99% were the top losers.

Meanwhile, the Union Cabinet in its meeting chaired by Prime Minister Narendra Modi has given approval for the largest foreign investment in India’s railway sector to set up India's first 500-km-long bullet train project connecting Mumbai to Ahmedabad, with the help of Japanese funds and technology. The cost will be Rs 98,000 crore. The formal announcement is expected during Japanese Prime Minister Shinzo Abe's visit that begins from December 11, 2015 where the deal is likely to be signed.

The decision comes on the back of the recommendations of a panel headed by NITI Aayog Vice-Chairman Arvind Panagariya, which chose the low-cost funding proposed by Japan International Cooperation Agency (JICA) at less than one per cent interest rate apart from a commitment for technology transfer and local manufacturing for a specified period.  Further the panel in its recommendation had cited the accident-free record of the Japan`s high-speed trains.

JICA has offered to fund 80 per cent of the cost of the Mumbai-Ahmedabad project and had submitted a feasibility study in July on the 505-km (315-mile) Mumbai-Ahmedabad corridor offering to cut travel time to two hours from the current seven to eight hours. The Japanese loan of over Rs 78,000 crore will come with a 50-year tenure, along with a moratorium of 15-years.

Earlier in September, China was given the contract for a similar feasibility study for the 2,200-km Delhi-Chennai corridor. Also, an India-China consortium is conducting a separate feasibility study for the 1,200-km Delhi-Mumbai corridor. Apart from improving speed on existing tracks, China is also training Indian Railways engineers in heavy haulage and setting up a rail university.

The CNX Nifty touched a high and low 7703.05 and 7575.30 respectively. 

The top gainers on Nifty were Tata Steel up by 3.56%, Hindalco up by 0.86%, Infosys up by 0.79%, Vedanta up by 0.72% and Hindustan Unilever up by 0.63%. On the flip side, PNB down by 4.69%, ICICI Bank down by 3.49%, Yes Bank down by 3.34%, Tata Motors down by 2.72% and Grasim Industries down by 2.70% were the top losers.   

European Markets were trading mostly in red; France’s CAC was down by 0.46%, Germany’s DAX was down by 0.60% and UK’s FTSE was down by 0.39%.    

Asian equity markets ended mostly in red on Friday as plunging crude oil prices and a tumble in China's yuan to almost 4-1/2-year lows added to worries about receding global growth. A supply glut in oil markets and cooling growth in China, the world's biggest commodities consumer, have pressured many asset markets ahead of a widely expected hike to US interest rates by the Federal Reserve next week. Chinese shares ended lower ahead of a spate of economic data scheduled to be released on Saturday, including retail sales, industrial production, and fixed asset investment. Hong Kong shares dropped to a 2-month low, capping a dismal week as investors stayed sidelined on weak China economic data. However, Japanese shares ended higher, buoyed by overnight gains on Wall Street and fresh weakness in the yen.