Benchmarks end a lackluster session marginally in red

It turned out to be a lackadaisical performance from the benchmark indices on Wednesday as they failed to snap the session in the green territory and settled marginally below the neutral line.  The frontline gauges took a breather, a session after showcasing a scintillating performance as market participants remained on the sidelines lacking conviction amid the persistent worries over Thursday’s meeting of the European Central Bank. Anxiety among investors further increased after disappointing US services data reignited worries about growth in the world’s largest economy. However, the downside risks for the frontline indices was limited by reports that the government has begun the groundwork for creation of a secretariat to cater to the Goods and Services Tax (GST) Council, which will be constituted after Presidential assent for the Constitution Amendment Bill enabling implementation of the proposed tax. The government wants the institutional arrangements ready so that the GST Council can start deliberating the nuances of the law quickly. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 1439 crore on September 06, 2016. Investors were also optimistic  about the private report indicating that India is on the path of becoming a 'pivot' for high-tech world manufacturing even as global manufacturing growth is expected to remain low in 2016 due to weakened financial support for productive activities.  

Meanwhile, stocks related to agriculture and irrigation gained traction on report that India’s apex rural-development bank National Bank for Agriculture and Rural Development (NABARD) will manage a Rs. 77,000 crore corpus as part of a Central government push to complete 99 unfinished irrigation projects across the country by 2019 and bring water to 76.03 lakh hectares. Good buying was also observed in many banking stocks on the report that services sector data, which came out yesterday, showed there is still room for the Reserve Bank of India (RBI) to cut interest rates further. The easing of inflationary pressures leaves room for rate cut by the central bank. Today’s session was mostly stock specific with corporate news providing some direction. Jindal Poly Films came under pressure after its consolidated net profit fell 39.3% to Rs 98.84 crore on 7.9% decline in net sales to Rs 1777.03 crore in Q1 June 2016 over Q1 June 2015. On the other hand, IL&FS Engineering and Construction has rallied after the company won an order worth Rs 173.13 crore from GAIL. Bhel surged after the company reported 54.21% jump in net profit at Rs 77.77 crore in April-June period mainly because of positive topline (turnover) growth after three-and-half years.

On the global front, Asian markets ended mixed on Wednesday as weaker-than-expected US ISM services data, raised the question over the world’s biggest economy and its fundamentals. The Institute for Supply Management's index of non-manufacturing activity fell to 51.4, its lowest level since February 2010, from 55.5 the month before. Japanese stocks declined after exporters and other cyclical shares were hit by a rising yen on dashed expectations for a near-term interest rate increase. However, Chinese stocks ended marginally higher after China's State Council pledged to strengthen efforts to lift domestic demand with a more proactive fiscal policy. Meanwhile, European stocks darted between small gains and losses in early trade, with investors assessing a larger-than-expected drop in German industrial production before the European Central Bank issues its next policy decision on Thursday.

Back home, taking firm global cause, the local market started the session on optimistic note, with both the indices surging over their crucial 8950 (Nifty) and 29,050 (Sensex) levels.  However, profit-booking emerged at higher levels that ate all gains and took the benchmarks into the negative territory in early session.  Market, for rest of the session, exhibited consolidation and traded in tight range near neutrals line, as investors remained anxious and refrained from any buying activity on absence of positive triggers. Finally the NSE’s 50-share broadly followed index Nifty, took a cut of over quarter percent to settle above the crucial 8,900 support level, while Bombay Stock Exchange’s Sensitive Index, Sensex slipped by over fifty points and closed above the psychological 28,900 mark.

The market breadth remained optimistic, as there were 1404 shares on the gaining side against 1356 shares on the losing side, while 157 shares remained unchanged.

Finally, the BSE Sensex declined by 51.66 points or 0.18% to 28926.36, while the CNX Nifty dropped 25.05 points or 0.28% to 8,917.95. 

The BSE Sensex touched a high and a low 29067.84 and 28911.31, respectively. The broader indices made mixed closing; the BSE Mid cap index ended down by 0.11%, while Small cap index was higher by 0.41%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.21%, PSU up by 1.20%, Metal up by 1.06%, Realty up by 0.96% and Power up by 0.66%, while Consumer Durables down by 0.96%, Oil & Gas down by 0.36%, TECK down by 0.13%, IT down by 0.12% and FMCG down by 0.04% were the top losing indices on BSE.

The top gainers on the Sensex were SBI up by 2.74%, ONGC up by 2.51%, ICICI Bank up by 2.09%, Tata Steel up by 1.06% and Infosys up by 0.95%. On the flip side, Asian Paints down by 1.92%, HDFC down by 1.87%, Axis Bank down by 1.72%, NTPC down by 1.50% and TCS down by 1.49% were the top losers.

Meanwhile, in order to encourage innovation and to look after new ideas in the energy sector, Oil Minister Dharmendra Pradhan has recommended the public sector undertakings (PSUs) to create startup funds on the lines of private sector.  He said that with the start up funds they can create a synergy in innovation; biggest oil PSU ONGC has already offered Rs 100 crore for startups.

Minister said that methanol-based economy is a case of proven technology. It can create a lot of employment and entrepreneurship. He further said that the raw material (for producing methanol) should be coming from the Indian market. If they could monetize the agriculture waste and bio waste in urban areas to energy then there will be two benefits - Sizeable reduction of health expenditure and economy can be multi-fold. Recently, NITI Aayog has signed a Statement of Intent with the Methanol Institute of the US to further work on the technology.

Dharmendra Pradhan said that now India is importing Rs 4.5 lakh crore worth of hydrocarbons. Technology is there and blending of 85 per cent of ethanol in transportation fuel is possible. To reduce import dependency ministry is ready to offer Rs 1 lakh crore business to scientific community. Further, NITI Aayog has constituted an Expert Group to develop a roadmap for India to adopt ‘Methanol Economy’ after realizing the potential of methanol and DME (dimethyl ether) as a transportation fuel in road, shipping and rail. The group will explore various techno commercial angles to enhance production of methanol through natural gas, high ash content coal and through bio, agri and municipal solid waste.

The CNX Nifty traded in a range of 8,968.70 and 8,913.35. There were 20 stocks advancing against 31 decliners on the index.

The top gainers on Nifty were BHEL up by 15.74%, Bank of Baroda up by 3.30%, ONGC up by 2.91%, SBI up by 2.65% and ICICI Bank up by 1.94%. On the flip side, Yes Bank down by 2.42%, Asian Paints down by 2.13%, Gail down by 2.08%, Tech Mahindra down by 1.89% and HDFC down by 1.70% were the top losers.

The European markets were trading mostly in green; Germany’s DAX increased 24.1 points or 0.23% to 10,711.24 and France’s CAC increased 3.68 points or 0.08% to 4,533.64, while UK’s FTSE 100 decreased 1.31 points or 0.02% to 6,824.74.

The Asian markets made mostly a lower closing on Wednesday, as weaker than expected US ISM services data lowered the chances the Federal Reserve will hike rates this month. Japanese share market led declines amid a soaring yen, which hit its highest level against the dollar in more than a week after the release of weak US data and on doubts over BOJ policy easing. Meanwhile, Chinese stocks ended marginally higher after China's State Council pledged to strengthen efforts to lift domestic demand with a more proactive fiscal policy.