Benchmarks end the F&O expiry session on a negative note

Benchmark equity indices ended in the negative terrain on Thursday’s derivatives’ expiry session, on the back of a sudden bout of selling in late trades. Investors remained on the sidelines and refrained from any buying activity on the day of the expiry of January contracts. Further, traders remained cautious expecting the RBI might leave its key interest rate steady at 6.75 percent next week, given that the US Fed maintained its status quo on key lending rates. During its FOMC (Federal Open Market Committee) meet, the US Fed gave a bearish outlook on global markets and cautioned against future financial shocks. The upward movement was also restricted by low volumes and continuous selling by foreign investors. Depreciation in Indian rupee too dampened sentiments. Extending losses for the third session the rupee depreciated by 4 paise to 68.07 against the greenback following month-end demand from importers and banks.

On the global front, Asian markets ended mostly in green on Thursday as investors dipped their toes back into equities and demand for safe haven assets such as the yen and sovereign bonds faded. The stock markets across Europe swung both ways in early session, as investor sentiment weighed by worse-than-estimated earnings from companies like Roche Holding AG and Hennes & Mauritz AB, while energy shares gained.

Back home, the benchmark got off to a somber opening, as participants remained cautious,  besides, overnight weakness in the US equities and a mixed trend in other Asian peers after the US Federal Reserve kept the monetary policy unchanged citing weak economic growth, also dented the sentiment. Thereafter, the indices kept oscillating in a narrow range near neutral line throughout the morning trade. The bourses capitalized the momentum and spurted in afternoon trades on the back of broad based bottom fishing in undervalued stocks. But some final hour profit booking followed by mild short covering ensured that the key gauges extend the consolidation period for third straight session. Eventually, the NSE’s 50-share broadly followed index - Nifty settled with modest losses of fifteen points, ending below the psychological 7,450 levels, while Bombay Stock Exchange’s Sensitive Index - Sensex shed twenty two points and closed above the psychological 24,450 mark. Moreover, the broader markets succumbed to the selling pressure despite showing positive moves early on and settled with moderate cuts. On the BSE sectoral space, the high beta Capital Goods index remained the top laggard in the space and settled with around two percent laceration followed by the Banking and Consumer Durable pockets which went home with around a percent cuts. On the flipside, buying was evident in FMCG and Oil & Gas counters which climbed 1.50% and 0.88% respectively, while the Power index too went home with around half a percent gains. The market breadth remained pessimistic as there were 1238 shares on the gaining side against 1312 shares on the losing side while 184 shares remained unchanged.

Finally, the BSE Sensex declined 22.82 points or 0.09% to 24469.57, while the CNX Nifty ended down by 13.10 points or 0.18% to 7,424.65.

The BSE Sensex traded in a range of 24587.20 and 24400.52. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices made a negative closing; the BSE Mid cap index ended down by 0.36%, while Small cap index ended down by 0.04%.

The top gaining sectoral indices on the BSE were FMCG up by 1.50%, Oil & Gas up by 0.88%, Power up by 0.43% and PSU up by 0.35%, while Capital Goods down by 1.72%, Bankex down by 0.91%, Consumer Durables down by 0.82%, TECK down by 0.47% and Auto down by 0.42% were the top losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 3.02%, Mahindra & Mahindra up by 2.06%, ITC up by 1.95%, Reliance Industries up by 1.76% and Sun Pharma Inds. up by 1.62%. On the flip side, Larsen & Toubro down by 2.72%, Bharti Airtel down by 2.32%, Axis Bank down by 2.06%, BHEL down by 1.97% and Adani Ports &Special down by 1.86% were the top losers.

Meanwhile, Indian economy is expected to get better in next six months, however lack of investment appetite in the private sector in the backdrop of lower capacity utilisation, excess supply and continuous pressure on profitability are the key areas of concern for the next few quarters, according to the Assocham-Bizcon survey. Assocham asserted that the India Inc. hopes to see better sales volume and improved capacity utilization in the next two quarters but does not expect any uptick in investment and corporate earnings even as the overall macro situation would change for better.

As per the Assocham-Bizcon survey, nearly 63 percent of the survey respondents felt the state of economy would be better in the coming six months. In terms of the domestic investment, 58.3 percent respondents felt there has been no change in the investment plans at the level of individual companies. Further, 62.5 percent respondents in the survey have said that the January-March quarter of 2016 would not see much change in investment levels. As many as 41.7 percent of respondents felt there was a decline in sales volume during October-December 2015 and expected better volumes during January to March 2016, while 45.8 percent expect their sales volumes to increase in future. In terms of future of capacity utilisation, 66.7 percent said the industry will be engaged at higher levels. Besides, 54.2 per cent said there was no change in the cost of credit during October to December 2015.

Sharing concerns brought out by the respondents in terms of pressure on profitability and lack of investment, Assocham secretary general D.S. Rawat has said that global deflationary situation creeping into India in several sectors is hitting investor sentiment. He added that the consumer confidence can return only if there are more job opportunities through higher investment into productive areas of the economy like construction, infrastructure and manufacturing.

The CNX Nifty traded in a range of 7,468.85 and 7,409.60. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 5.64%, Cairn India up by 4.51%, Power Grid up by 4.05%, Hindustan Unilever up by 3.01% and Zee Entertainment Enterprises up by 2.60%. On the flip side, Idea Cellular down by 4.47%, Larsen & Toubro down by 3.03%, Bharti Airtel down by 2.96%, PNB down by 2.45% and Adani Ports and Special Economic Zone down by 2.37% were the top losers.

European markets were trading mostly in green; UK’s FTSE 100 increased 2.86 points or 0.05% to 5,993.23 and France’s CAC gained 7.66 points or 0.17% to 4,388.02, while Germany’s DAX was down by 33.43 points or 0.34% to 9,847.39.

Asian equity markets ended mostly higher on Thursday, despite a poor lead from Wall Street after the Federal Reserve warned of slowing growth. Hong Kong shares closed higher after the People's Bank of China pumped the largest amount of cash into the financial system in nearly three years in a bid to prevent a possible cash crunch ahead of the week-long Lunar New Year starting on February 8. However, China stocks slumped again to a fresh one-year low as panic selling resumed. Japanese stocks fell in choppy trade, with volatility in oil prices and fears of a global slowdown continuing to hurt sentiment, while cautious investors looked forward to the conclusion of the Bank of Japan's policy meeting on Friday.