Weak trade prevails in late morning session

Indian equity benchmarks continued their weak trade in the late morning session on account of selling in frontline blue chip counters. Subdued global markets and weak macroeconomic data dampened market sentiments in today’s trade. The sentiments were on pessimistic note reacting to Industrial production data, which contracted once again for the month of August. IIP dipped 0.7 percent in August due to a slump in manufacturing and mining, in the manufacturing space, capital goods brought about the maximum fall. Foreign portfolio investors (FPIs) sold shares worth a net Rs 547.26 crore on 10 October 2016, as per provisional data released by the stock exchanges. Some selling crept as rupee was trading lower against the American currency at the Interbank Foreign Exchange market as the dollar strengthened overseas. The increased demand for the US currency from importers and the greenback’s gains against other currencies overseas after minutes of the Federal Reserve’s last meeting pointed at an interest rate hike this year, put pressure on the rupee. The downside was capped with S&P Global Ratings, calling GST as the most important structural reform till date by the Modi government and stating that the passage of the indirect tax law gives it additional conviction of India clocking 8 percent growth in the next few years. Also, the Government’s revenue collection in April to September -- the first half of the current fiscal -- saw indirect tax-mop up growing at an impressive 26 percent. The total direct and indirect tax collections at the end of September stood at Rs 7.35 lakh crore, almost half the Rs 16.26 lakh crore target for 2016-17. Investors will be eyeing the IT bellwether TCS’ earnings scheduled to be announced later in the day. Traders were seen piling up positions in Oil & Gas and IT stocks, while selling was witnessed in Consumer Durables, Realty and Bankex sector stocks. In scrip specific development, Cipla was trading in green on receiving Establishment Inspection Report (EIR) from the United States Food and Drug Administration (USFDA) for its Indore facility indicating formal closure of the USFDA inspection conducted in July/August, 2015.

On the global front, Asian shares held near three-week lows and the greenback consolidated recent gains after minutes of the last US Federal Reserve policy meeting indicated a December rate increase was still on the cards. China’s September exports fell 10 percent from a year earlier, far worse than expected, while imports unexpectedly shrank 1.9 percent after picking up in August, suggesting signs of steadying in the world’s second-largest economy may be short-lived. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,650 and 27,900 levels respectively. The market breadth on BSE was negative in the ratio of 836:1477, while 88 scrips remained unchanged.

The BSE Sensex is currently trading at 27842.64, down by 239.70 points or 0.85% after trading in a range of 27801.65 and 28042.62. There were 7 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.62%, while Small cap index was down by 0.75%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.01%, IT up by 0.02%, while Consumer Durables down by 1.78%, Realty down by 1.69%, Bankex down by 1.22%, Auto down by 0.98%, Power down by 0.84% were the losing indices on BSE.

The top gainers on the Sensex were ONGC up by 2.77%, Infosys up by 1.88%, Cipla up by 1.25%, GAIL India up by 0.78% and Asian Paints up by 0.46%.

On the flip side, Tata Motors down by 2.54%, HDFC down by 2.30%, ICICI Bank down by 2.12%, Adani Ports & Special Economic Zone down by 2.01% and TCS down by 1.87% were the top losers.

Meanwhile, global Ratings agency S&P in its latest report titled 'Asia-Pacific steadies while China goes silent' has said that India’s Goods and Services Tax (GST) passage gives more weight to the country's target of 8 per cent economic growth projection in the next few years.   

The rating agency had recently said that India will clock a “steroid-free” growth of 8 per cent in coming years, adding that the GST passage is arguably the most important structural reform to date by the Modi government and will improve efficiency, cross-state trade and tax buoyancy.

S&P had stated in its ‘APAC Economic Snapshots - September 2016’ report, that India’s structural reforms agenda had maintained strong momentum and, most recently with the GST passage, should propel growth higher. It added that for India, they are still forecasting GDP growth at about 8 per cent over the next few years. Moreover, this is relatively high quality, steroid-free growth backed by a broadening consumption base.

Reserve Bank of India, too gave a positive growth outlook for the near future and said the country's growth projections seem brighter than last fiscal's and the economy is likely to expand at 7.6 per cent in 2016-17. However, Inflation remains a risk, given the large weights on food, fuel, and other volatile items in the Reserve Bank of India’s target basket. In comparison, S&P has said that China has been nudged up as it raised the GDP growth forecast by about a quarter percentage point in 2016 and 2017 to 6.6 per cent and 6.4 per cent, respectively, and has kept its 2018 forecast roughly unchanged at 6.1 per cent.

The CNX Nifty is currently trading at 8635.15, down by 73.65 points or 0.85% after trading in a range of 8620.90 and 8681.55. There were 11 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were ONGC up by 2.96%, Infosys up by 1.94%, BPCL up by 1.34%, Cipla up by 1.26% and Ultratech Cement up by 0.85%.

On the flip side, Zee Entertainment down by 2.66%, Tata Motors down by 2.50%, Bank of Baroda down by 2.44%, HDFC down by 2.42% and HCL Tech down by 2.39% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 275.32 points or 1.18% to 23,131.73, Nikkei 225 decreased 67.57 points or 0.4% to 16,772.43, Taiwan Weighted decreased 36.17 points or 0.39% to 9,216.43, KOSPI Index decreased 11.4 points or 0.56% to 2,022.33, FTSE Bursa Malaysia KLCI decreased 5.02 points or 0.3% to 1,662.01 and Jakarta Composite decreased 4.99 points or 0.09% to 5,359.62.

On the other hand, Shanghai Composite increased 0.24 points or 0.01% to 3,058.74.