Benchmarks continue weak trade; Nifty below 8700 mark

Indian equity benchmarks continued their weak trade in the late morning session on account of selling in frontline blue chip counters tracking rise in crude oil prices in overnight trade. The sentiments were under pressure after Indian rupee fell against the US dollar on account of buying of American currency by banks and importers. Reports of OPEC members considering more production cuts than expected and a drop in US weekly crude inventories pushed crude oil prices to a four-month high. Investors will keenly await data from Japan’s leading index, Britain’s industrial production and US non-farm payrolls later in the day. Additionally, world finance leaders decried a growing populist backlash against globalization and pledged to take steps to ensure trade and economic integration benefited more people currently left behind. Their comments at the start of the International Monetary Fund and World Bank fall meetings signaled frustration with persistently low growth rates and the surge of public anger over free trade and other pillars of the global economic system.

The downside was however capped with support from IMF’s statement that India’s strong reform push in 2016 is welcome and should continue apace. Adoption of the goods and services tax is poised to boost India’s medium-term growth. It added that as shown by India, progress on reforms could ignite business investment (including already strong FDI inflows), further boosting domestic demand. Meanwhile, the Commerce Minister Nirmala Sitharaman lauded the increase in foreign direct investment (FDI) in India but said it will be meaningful only when it translates into increased job creation. Sitharaman said the government was now working towards adding infrastructure capabilities in tier-III cities and rural areas for the benefits of increased foreign investment to percolate down. Traders were seen piling up positions in Auto, Power and FMCG stocks, while selling was witnessed in Consumer Durables, Capital Goods and IT sector stocks. In scrip specific development, Fiem Industries was trading in green on inking a ‘Technology License and Assistance Agreement’ (TAA) with Aisan Industry Co., Japan and Toyota Tsusho Corporation, Japan for manufacturing of ‘Canister’.

On the global front, Asian shares fell with a plunge in sterling in the Asian day causing concern ahead of US jobs data seen as a crucial part of the picture for chances of a rate hike by the Fed in December. The yen gained in Asia on safe-haven demand as the British pound fell sharply on growing concerns over the terms of a break from the European Union following comments by the government earlier this week the formal move would come by March of next year. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,700 and 28,100 levels respectively. The market breadth on BSE was positive in the ratio of 1206:983, while 152 scrips remained unchanged.

The BSE Sensex is currently trading at 28054.62, down by 51.59 points or 0.18% after trading in a range of 28043.29 and 28155.68. There were 12 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.02%, while Small cap index was up by 0.09%.

The top gaining sectoral indices on the BSE were Auto up by 0.23%, Power up by 0.11% and FMCG up by 0.03%, while Consumer Durables down by 0.47%, Capital Goods down by 0.45%, IT down by 0.42%, TECK down by 0.36% and Oil & Gas down by 0.28% were the losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 1.57%, Tata Steel up by 1.03%, Mahindra & Mahindra up by 0.96%, Axis Bank up by 0.86% and Lupin up by 0.75%.

On the flip side, Asian Paints down by 1.70%, Bajaj Auto down by 1.33%, HDFC down by 1.25%, Cipla down by 1.04% and Dr. Reddy’s Lab down by 0.99% were the top losers.

Meanwhile, India’s biggest auction of telecom spectrum, closed just after five days and 31 rounds of bidding with bids worth about only Rs 65,789 crore being received for 965 Mhz of spectrum, out of total 2,354.55 Mhz put for auction and against expectation of Rs 5.6 lakh crore. This was about 40 per cent of the total worth of spectrum that was placed on the block, leaving nearly 60 percent of airwaves, including premium 4G bands, unsold. In comparison, the spectrum auction last year had lasted for 19 days and attracted bids worth Rs 1.1 lakh crore. 

During the course of the five days there were no takers for the premium 700Mhz and 900 Mhz bands, mainly because of high reserve price set by the government. The 700MHz band alone was expected to fetch Rs 4 lakh crore for the government.  Companies winning spectrum in frequency bands above 1Ghz -- 1800 Mhz, 2100 Mhz, 2300 Mhz and 2500 MHz -- will have to make 50 percent upfront payment, while the rest can be paid in 10 years after a two-year moratorium, this means that the government would get about Rs 32,000 crore in upfront payment.

On the final day total bids had dipped a bit to about Rs 63,325 crore at the end of the 26th round as compared to the previous closing. Each round on final day was of 45-minute duration, unlike 60 minutes on the previous days. The bidding activity took place only in few circles with interest continuing to be largely around 1800 MHz and 2300 MHz that can be used by operators to provide 4G services. Industry also showed interest in 2100 Mhz (3G/4G) band, 2500 Mhz (4G) band and 800 Mhz (2G/4G) bands.

Seven operators were in the fray includes Reliance Jio, Bharti Airtel, Vodafone, Idea Cellular, Tata Teleservices, Reliance Communications and Aircel. Vodafone emerged as the highest bidder with bids worth over Rs 20,000 crore, followed by Airtel at Rs 14,244 crore. Newcomer Reliance Jio won airwaves across key 4G bands for Rs 13,672 crore. Idea procured 349.2 MHz of spectrum for Rs 12,798 crore securing additional airwaves in 1800 MHz, 2100 MHz, 2300 MHz and 2500 MHz bands.

The CNX Nifty is currently trading at 8690.20, down by 19.35 points or 0.22% after trading in a range of 8684.20 and 8723.70. There were 18 stocks advancing against 33 stocks declining on the index.

The top gainers on Nifty were Tata Motors - DVR up by 2.51%, Tata Motors up by 1.60%, Zee Entertainment up by 1.55%, Tata Steel up by 0.97% and Mahindra & Mahindra up by 0.95%.

On the flip side, Bharti Infratel down by 2.26%, BPCL down by 1.79%, Asian Paints down by 1.64%, HDFC down by 1.42% and Bajaj Auto down by 1.25% were the top losers.

The Asian markets were trading in red; Hang Seng decreased 131.61 points or 0.55% to 23,820.89, Nikkei 225 decreased 55.87 points or 0.33% to 16,843.23, Jakarta Composite decreased 27.72 points or 0.51% to 5,381.62, Taiwan Weighted decreased 22.68 points or 0.24% to 9,261.63, KOSPI Index decreased 10.23 points or 0.5% to 2,055.07 and FTSE Bursa Malaysia KLCI decreased 1.56 points or 0.09% to 1,665.17.

China stock exchange was closed on account of ‘National Day’ holiday.