Barometer indices fail to maintain gains; end on a flat note

Indian stock markets showed a volte-face on Wednesday, as what started on a promising note ended as a dismal show. The optimism in domestic markets petered out completely by the end of trade and the benchmarks even drifted to the negative territory, through ended on a flat note. The start was promising and the trade remained firm till noon as markets across the region gained after the Bank of Japan decided to adopt a target for long-term interest rates in an overhaul of its massive stimulus programme. But the indices lost their nerve and catapulted in afternoon trade as cautious investors booked profits ahead of the US Federal Reserve interest rate decision which is due later in the day. On the domestic front, sentiments remained subdued on the report that foreign portfolio investors (FPIs) sold shares worth a net Rs 1147 crore on September 20, 2016. Furthermore, the Foreign Institutional Investors (FIIs) remained net seller of Rs 2031.81 crore in index futures and options (F&O) segments in the last session. Weakness in rupee against the dollar also weighed on the sentiment. Indian rupee depreciated by 4 paise to trade at 67.06 against the US dollar at the time of equity markets closing, due to fresh buying of the American currency by banks and importers. However, investors got some comfort with economic affairs secretary Shaktikanta Das’ statement that the finance ministry has promised to look into some taxation issues raised by foreign investors, some of which may be addressed in the budget next year.

Meanwhile, Railway stocks edged higher after the Cabinet approved merging Railway Budget with the general Budget and doing away with distinction of plan and non-plan expenditure. Good buying was also seen in stocks related to infra sector as the government announced the names of 27 more cities that will be developed under the centre’s ‘Smart City Mission’. In scrip specific development, Indoco Remedies rallied after the pharmaceutical company announced it has acquired the manufacturing facility of Micro Labs located at Baddi. Furthermore, Monsanto India surged after German pharma and chemical major Bayer group announced an open offer to buy up to 4.49 million shares representing 26% of the paid-up capital of the agrochemicals Company at Rs 2,481.60 per share.

On the global front, leading the region higher Japan’s index Nikkei 225 gained around two percent after the Bank of Japan tweaked its stimulus package, setting a target interest rate for government bonds and pledging to overshoot its elusive inflation goal. With the global economy showing few signs of rebounding and investors fretting about the limits of major central banks' easing, the BOJ's move came as a welcome relief for markets. The inventors’ focus now shifts to the U.S. Federal Reserve policy decision later in day, with weaker-than-expected economic data prompting investors to call off bets on a rate hike. Meanwhile, European markets started the session on firm note as the region’s financial institutions spiked nearly 2 percent on hopes that the European Central Bank (ECB) would take a cue from the BoJ and follow through with more easing measures.

Back home, after getting a cautious start, the local benchmarks showed some strength in morning trades, but the sentiments turned pessimistic in afternoon trades and indices started drifting lower, as investors turned cautious ahead of US Federal Reserve meet to decide on the world’s largest economy’s monetary policy, the key indices thereafter failed to show any kind of fervor. Finally the NSE’s 50-share broadly followed index Nifty, added single digit gains to settle above the crucial 8,750 support level, while Bombay Stock Exchange’s Sensitive Index, Sensex slipped by around fifteen points but managed to close above the psychological 28,500 mark. Moreover, the broader markets finished on a flat note in tandem with their larger peers. On the BSE sectoral space, the Consumer Durables index remained the top gainer in the space and settled with about a percent gains followed by the rate sensitive Metal and IT pockets, which too went home with moderate gains. On the flipside, FMCG counter languished at the bottom of the table with cuts of over half a percent, while the PSU and rate sensitive Banking index settled with moderate cuts of around quarter a percent.

The market breadth remained optimistic, as there were 1417 shares on the gaining side against 1312 shares on the losing side, while 199 shares remained unchanged.

Finally, the BSE Sensex declined by 7.79 points or 0.03% to 28515.41, while the CNX Nifty gained 1.25 points or 0.01% to 8,777.15. 

The BSE Sensex touched a high and a low 28689.36 and 28462.33, respectively. The broader indices made mixed closing; the BSE Mid cap index ended down by 0.07%, while Small cap index was higher by 0.19%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.85%, Metal up by 0.53%, TECK up by 0.43%, IT up by 0.29% and Auto up by 0.25%, while FMCG down by 0.58%, PSU down by 0.30%, Power down by 0.22%, Bankex down by 0.19% and Capital Goods down by 0.14% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 1.05%, Hindustan Unilever up by 1.00%, Axis Bank up by 0.85%, Bharti Airtel up by 0.69% and Wipro up by 0.64%. On the flip side, Power Grid down by 1.46%, ITC down by 1.26%, SBI down by 1.14%, ICICI Bank down by 0.86% and ONGC down by 0.68% were the top losers.

Meanwhile, Government's Standing finance committee (SFC) has cleared nine highway projects in five states including Telangana, Andhra Pradesh, Karnataka, Nagaland and Uttar Pradesh for upgradation and construction of 414 km worth Rs 2,600.31 crore. All the projects would be built on engineering, procurement and construction (EPC) mode.

The project includes rehabilitation and upgradation of 49 km stretch of Allahabad-Mirzapur section of National Highway (NH) 76 in Uttar Pradesh at a cost of Rs 241 crore. Beside,  construction of two-lane Pilibhit-Puranpur on NH 730 at Rs 177 crore and upgradation of Banda-Allahabad of NH 76 at Rs 219 crore. The two projects in Karnataka cover widening of Chittapur cross to the start of Yadgir bypass of NH 150 at a cost of Rs 315 crore and widening of Maharashtra border to Bidar section on NH 50 for Rs 397 crore.

In Nagaland, the 34.171 km Dimapur to Kohima project would be built at a cost of Rs 326 crore under the Inter State Connectivity scheme. Of the remaining three, two are with respect to Telangana and one Andhra Pradesh.

The CNX Nifty traded in a range of 8,826.85 and 8,757.30. There were 27 stocks advancing against 24 decliners on the index.

The top gainers on Nifty were Bharti Infratel up by 4.65%, Eicher Motors up by 3.20%, Hindalco up by 2.58%, YES Bank up by 1.16% and Tata Steel up by 1.04%. On the flip side, Bank of Baroda down by 1.62%, Power Grid down by 1.54%, Ambuja Cement down by 1.20%, ITC down by 1.15% and ONGC down by 1.13% were the top losers.

The European markets were trading in green; UK’s FTSE 100 increased 25.49 points or 0.37% to 6,856.28, Germany’s DAX increased 108.15 points or 1.04% to 10,502.01 and France’s CAC increased 50.62 points or 1.15% to 4,439.22.

The Asian markets ended mostly higher on Wednesday, with Japanese stocks leading regional gains, after the Bank of Japan announced an overhaul of its massive monetary stimulus program. Japan's central bank kept its key interest rate unchanged at -0.1 percent and announced substantial changes to its monetary policy framework, including adopting quantitative and qualitative easing with yield curve control across different maturities. The central bank abandoned its monetary base target, but introduced an interest-rate target for 10-year government bonds to achieve its 2 percent inflation target at the earliest possible time. The US Federal Reserve is widely expected to leave interest rates unchanged, but investors will remain focused on the accompanying policy statement and Fed Chair Janet Yellen’s press conference for signs of change in tone about the economy or future rate hikes. Chinese shares ended higher, driven by surge in major steelmakers as investors bet on the next target of government-led restructuring after the disclosure of merger plans between Baoshan Iron and Steel and Wuhan Iron and Steel.