Post Session: Quick Review

Indian equity benchmarks suffered setback and got pounded by over half a percent. The lackluster trade in red continued throughout the day but final hour of selling ended the session near intraday low. The benchmarks made a weak opening in absence of any upside triggers and tracking regional counterparts. The choppy trade was witnessed despite Fed’s decision to hold fire which brought market relief. The sentiments were under pressure after rupee weakened against the dollar at the Interbank Foreign Exchange market on fresh demand for the American currency from importers. Globally, some of investment banks have started to cut exposure to Indian equities citing expensive valuations. The global investment banks acknowledged India to be a bright spot among emerging market peers, but the valuation looks expensive. If earnings fail to bounce back, chances of a steep correction will increase. The domestic brokerage houses are also maintaining cautious approach as there is no evidence of any economic recovery out there at the moment, especially on the capex side. There is nothing to suggest that capex will return in next six months or in the next financial year. The street failed to draw some support with the centre and states, moving towards rolling out GST from April 1, agreeing on a timetable for deciding on the tax rate and completion of legislative work, but differences remained on the turnover limit for exemption from the new tax.

On the global front, Asian markets ended mostly higher, while Japan stock market ended in red as losses in the Finance & Investment, Warehousing and Transportation Equipment sectors led shares lower. The MNI China business sentiment index came at 55.8 in September 2016, marginally up from 54.1 in August, driven by a faster increase in new orders and further strengthening in confidence among manufacturing companies. European stocks slid lower despite the release of mostly positive economic reports from Germany and France, as investors still awaited upcoming data for the entire euro zone.

Back home, selected export oriented stocks remained on buyers’ radar, as the government has extended fiscal incentives to more items such as marine products at higher rates under a scheme with a view to boost exports, which remain in the negative zone. The total support extended by the government under the Merchandise Exports from India Scheme (MEIS) has been enhanced to Rs 23,500 crore per annum from the present Rs 22,000 crore.

The BSE Sensex ended at 28640.21, down by 132.92 points or 0.46% after trading in a range of 28627.38 and 28825.09. There were 11 stocks advancing against 19 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.26%, while Small cap index was up by 0.01%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 0.75%, Oil & Gas up by 0.69% and Metal up by 0.22%, while Bankex down by 1.43%, Power down by 0.62%, FMCG down by 0.44%, TECK down by 0.40% and IT down by 0.35% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Reliance Industries up by 1.36%, Dr. Reddy’s Lab up by 0.99%, TCS up by 0.94%, HDFC up by 0.60% and Cipla up by 0.48%. (Provisional)

On the flip side, Axis Bank down by 5.90%, Lupin down by 2.64%, ICICI Bank down by 1.78%, Power Grid down by 1.51% and Infosys down by 1.44% were the top losers. (Provisional)

Meanwhile, India’s diesel exports are expected to remain near a 3 year high in September, as monsoon rains reduced the need for fuel used in irrigation pumps. Reportedly, India will be exporting 2.85 million tonnes of diesel in September similar volumes compared with August. According to government data, Augusts’ volume was the highest since September 2013, when India shipped out 3.37 million tonnes. As per Indian-refiner, diesel demand has not been that good during this monsoon season and has generally been flattish.

Reflecting the trend state-owned Indian Oil Corp (IOC) exported diesel for the first time in more than five years and the ramp-up of a new refinery could also temporarily keep exports high after the monsoon draws to a close this month.  IOC exported its first low-sulphur diesel cargo in more than five years in August and followed up by offering a second cargo. While the first cargo was sold at a deep discount due to a low flash point making it more difficult to blend, any additional spot cargo will weaken an already oversupplied diesel market in Asia.

The increase in shipments from the world's No. 3 oil consumer has driven the profit margin for refining diesel in Asia to a seasonal six-year low. Refineries in India are also running at near maximum capacity due to healthy refining margins driven by low feedstock prices. The refinery is expected to boost IOC`s diesel output by 200,000 tonnes next month, which will reduce its offtake of the fuel from private refiners by a similar amount. This in turn could drive up exports from private refiners like Essar Oil and Reliance Industries.

The CNX Nifty ended at 8825.15, down by 42.30 points or 0.48% after trading in a range of 8820.30 and 8885.20. There were 13 stocks advancing against 38 stocks declining on the index. (Provisional)

The top gainers on Nifty were Reliance Industries up by 1.16%, Dr. Reddy’s Lab up by 0.97%, TCS up by 0.97%, HCL Tech up by 0.78% and HDFC up by 0.76%. (Provisional)

On the flip side, Axis Bank down by 5.96%, ACC down by 3.17%, Lupin down by 2.72%, Ambuja Cement down by 2.67% and Aurobindo Pharma down by 2.40% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 10.4 points or 0.15% to 6,901.00, Germany’s DAX decreased 9.53 points or 0.09% to 10,664.65 and France’s CAC decreased 13.27 points or 0.29% to 4,496.55.

The Asian markets ended mostly higher on Friday, boosted by central banks' decision to continue their easy-money policies. Further, encouraging data from China and Japan too supported market sentiment. Reports showed that a gauge of Chinese business investment improved in September, suggesting strengthening confidence among manufacturing companies. The MNI business sentiment index stood at 55.8 in September, up from a marginally revised 54.1 in August. The latest survey from Nikkei showed that Japan's manufacturing industry expanded for the first time in seven months in September. Japanese shares fell modestly, with a firmer yen and profit booking in financials weighing on markets. Further, Chinese shares fell in thin trading as property stocks succumbed to selling pressure after recent sharp gains.