Indian benchmarks end a lackluster session with modest cut; broader markets outclass blue-chips

Indian benchmarks failed to extend the gaining momentum on Friday as jittery investors chose to take some profits off the table amid hawkish comments from New York Fed President William Dudley and San Francisco Fed President John Williams over US interest-rate increases. Apart from the global concerns, markets also witnessed some disappointing developments on the domestic front which did not augur well with investor’s sentiments such as Indian rupee, which weakened for the second consecutive session against the US dollar. Market participants also remained cautious ahead of the announcement of a new governor for the Reserve Bank of India (RBI) expected anytime now. However, losses remained capped as Moody’s Investors Service retained India’s growth forecast at 7.5% for 2016 and stated that the outlook for emerging markets economies stabilized on account of the modest recovery in commodity prices, better capital flows and a better near-term outlook for growth in China. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 162.17 crore on August 18, 2016.

Meanwhile, good buying was observed in selected metal stocks as India has slapped anti-dumping duty on certain cold-rolled flat steel products from four nations including China and South Korea to guard domestic industry from cheap imports. Oil producing majors also gained some traction after Brent crude topped $50 for the first time in six weeks as major producers prepared to discuss a possible output freeze. Further, many stock specific actions popup during the session like Coal India came under pressure after the reports that the government's proposed 5-10% stake-sale in the company and is likely to happen in Q4 of FY17. sharp selling was also witnessed shipping Corporation of India after the company reported a sharp 73% year on year (YoY) decline in net profit at Rs 56 crore for the quarter ended June 30, 2016. However, state Bank of India (SBI) & its listed associate banks mainly State Bank of Travancore (SBT) and State Bank of Bikaner & Jaipur (SBBJ) have rallied after SBI approved the share swap ratios for the merger of five associate banks and Bharatiya Mahila Bank with itself.

On the global front, Most Asian markets drifted lower on Friday as investors turned cautious ahead of a key speech by the Fed chief next week. Market participants were closely watching for the Fed’s next move after meeting minutes this week indicated policymakers felt another interest rates hike was warranted but left out any hint on timing. However, Japanese markets closed modestly higher as the yen came off its highest level against the dollar in three years, easing pressure on shares of the country’s export manufacturers.

Back home, the local benchmark got off to a soft start as the indices showed signs of consolidation in early trade, amid weak Asian cues. Thereafter, the frontline indices oscillated in an extremely tight range through the morning session as market participants remained sideways in the absence of any significant trigger at domestic front. The key gauges suffered a setback in afternoon trades as sudden bouts of profit booking emerged in the local markets immediately after a somber European market opening. However, late short covering in selected blue-chip stocks ensured that local bourses go home with small losses. Finally, the NSE’s 50-share broadly followed index - Nifty settled with trivial losses of six points above the psychological 8,650 levels, while Bombay Stock Exchange’s Sensitive Index - Sensex shed forty six points and closed above the psychological 28,100 mark. However, broader markets showed some resilience by outclassing their larger peers by a big margin as investors carried forward their value hunting in beaten down shares from the midcap and small cap space.

The market breadth remained optimistic, as there were 1469 shares on the gaining side against 1242 shares on the losing side, while 179 shares remained unchanged.

Finally, the BSE Sensex slumped by 46.44 points or 0.17% to 28077.00, while the CNX Nifty dropped 6.35 points or 0.07% to 8,666.90. 

The BSE Sensex touched a high and a low 28212.30 and 28026.12, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 0.52%, while Small cap index was higher by 0.45%.

The top gaining sectoral indices on the BSE were Metal up by 1.00%, Consumer Durables up by 0.94%, PSU up by 0.80%, Oil & Gas up by 0.68% and Bankex up by 0.45%, while Realty down by 0.70%, TECK down by 0.51%, Auto down by 0.50% and IT down by 0.50% were the top losing indices on BSE.

The top gainers on the Sensex were SBI up by 4.15%, Tata Steel up by 1.32%, Cipla up by 0.72%, Hindustan Unilever up by 0.61% and Larsen & Toubro up by 0.52%. On the flip side, Coal India down by 1.36%, TCS down by 1.24%, Lupin down by 1.06%, Wipro down by 0.80% and Sun Pharma down by 0.77% were the top losers.

Meanwhile, India has expressed eagerness to jointly develop iron ore and coal mines in Russian territory to bolster bilateral trade, economic ties and sought technical inputs on producing high-grade cold-rolled, grain-oriented steel, typically used in power transmission equipment.

An India-Russia working group on industrial cooperation and modernisation during its meeting has identified fields such as technology for production of CRGO steel in India, modernisation of steel manufacturing facilities in India and pharmaceutical industry for enhancing cooperation. They also identified specific areas of cooperation in the field of mining and metallurgy.

Commerce and Industry Ministry said that the Indian side expressed interest in joint development of coal fields and iron ore mines in Russia. They agreed to exchange information on such areas having potential for cooperation. It also said that in the civil aviation sector, Russia has declared its readiness to participate in the ‘Make in India’ programme to develop technological and production capabilities of India in this field and potential supplies of the jointly produced equipment to third countries.

Ministry further said as regards fertilizer sector, both sides expressed mutual interest in developing the long-term and mutually beneficial cooperation in the field of mineral fertilizers. It added the Russia reconfirmed their interest in receiving information about possible participation of Russian companies in the Delhi-Mumbai Industrial Corridor (DMIC). Besides, both sides have agreed to hold the next meeting of the working group in 2017 in Russia.

The CNX Nifty traded in a range of 8,696.60 and 8,647.10. There were 21 stocks advancing against 30 decliners on the index.

The top gainers on Nifty were Bank of Baroda up by 4.14%, SBI up by 4.07%, Hindalco up by 2.82%, Aurobindo Pharma up by 1.57% and Ambuja Cement up by 1.45%. On the flip side, Eicher Motors down by 1.89%, Bharti Infratel down by 1.71%, TCS down by 1.36%, Coal India down by 1.34% and Lupin down by 1.16% were the top losers.

The European markets were trading in red; UK’s FTSE 100 decreased 11.34 points or 0.17% to 6,857.62, Germany’s DAX decreased 73.54 points or 0.69% to 10,529.49 and France’s CAC decreased 37.44 points or 0.84% to 4,399.62.

Asian equity markets showed a mixed closing on Friday as a rally in crude prices was offset by hawkish comments from New York Fed President William Dudley and San Francisco Fed President John Williams over US interest-rate increases. Fed Chair Janet Yellen speaks at a meeting of global policy makers in Jackson Hole, Wyoming next week, with investors looking for clues over the timing of the next rate hike. Japanese shares closed modestly higher as the strong yen trend paused. Meanwhile, Chinese shares closed on a flat note after rising earlier in the week on hopes of additional stimulus as a slew of data underscored persisting weakness in the world's second-largest economy.