Indian Benchmarks end a lackluster session with modest cut; broader markets outclass

After showing a firework in last session, Indian Benchmark indices ended the Wednesday’s session on a dismal note as investors chose to remain on the sidelines eyeing the ongoing government meet on the goods and services tax (GST) for clarity on new rates. The crucial GST Council meeting, comprising federal and state finance ministers, will decide the main tax rate and those for different sectors. Also, Caution prevailed ahead of some key company results. This week, companies such as Biocon, Reliance Industries, ACC, Wipro and HCL Technologies are slated to report quarterly results. Sentiments remained subdued with minutes of the Reserve Bank of India’s maiden monetary policy committee (MPC) meeting, released on Tuesday, whereby the rate panel eyed growth concerns. The minutes showed that broad concerns over economic growth and relief from the pullback in inflation, spurred the bank’s recent rate cut decision. However, investors got some confidence with Steel Minister Chaudhary Birender Singh’s statement that India is seen as the sole bright spot in a troubled global economy. Confident that 'Make in India' will transform the nation into a manufacturing powerhouse, Minister has also said that nearly $26 billion has flowed into the country this year so far since we opened the floodgates for FDI across sectors. Some support also came in from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 345.04 crore on October 18, 2016. Meanwhile, selling was witnessed in selected FMCG stocks on fears that higher GST rate on select products would result in price hikes and hurt volume growth going forward. Financial stocks witnessed profit taking with ICICI Bank down 1.7 percent after gains of 11 percent in the previous two sessions. However, logistics companies edged higher after the goods and services tax (GST) council worked out a compensation formula for states and is now bracing for a testy debate on rates. The Centre has proposed a tiered rate structure with the rates varying from 4% for commodities like gold to 26% plus cess on so-called sin goods.

On the global front, Asian markets ended mostly in green on Wednesday as investors’ sentiment got boost after data out of China showed Asia’s largest economy remained stable in the third quarter and also on speculation the Federal Reserve will stick to a gradual tightening of monetary policy. Chinese gross domestic product (GDP) expanded 6.7% in the year to September, exactly as forecast, while other data showed retail sales rising a solid 10.7% and urban investment 8.2%, though industrial output disappointed by growing only 6.1%.  Japanese stocks ended higher, taking cues from a bounce in Wall Street shares and as investors looked ahead to a slew of corporate earnings results next week. Meanwhile, European stocks edged lower in early trade as investors assessed a batch of corporate earnings reports, but gains in energy shares as oil prices rose limited the loss for the market’s benchmark.

Back home, the local benchmarks got off to a soft start as the indices showed signs of consolidation in early trade, a session after the awe-inspiring close to two percent rally. Thereafter, the key indices failed to show any kind of fervor due to lack of any encouraging leads. The selling pressure accentuated in the noon trades as investors took to across the board risk aversion. Though, the bourses recovered from the lows of the day but could not succeed in minimizing the whole losses by the end of trading session. Finally, the NSE’s 50-share broadly followed index Nifty, slipped by about quarter a percent and settled above the crucial 8,650 support level, while Bombay Stock Exchange’s Sensitive Index Sensex deposed sixty six points and closed below the psychological 28,000 mark. Moreover, the broader markets showed some resilience and settled on a positive note, outperforming their larger peers by quite a margin.

Meanwhile, Auto component maker Endurance Technologies made a stellar debut on BSE by listing at Rs 570, a 20.76% premium to its issue price of Rs 472 apiece. Strong demand was seen from high net worth individuals (HNIs) and qualified institutional buyers (QIBs) as the quota for the two categories was subscribed to 127 times and 53.43 times of the quota limits, respectively.

The market breadth remained optimistic as there were 1636 shares on the gaining side against 1168 shares on the losing side, while 213 shares remained unchanged.

Finally, the BSE Sensex declined by 66.51 points or 0.24% to 27984.37, while the CNX Nifty dropped 18.80 points or 0.22% to 8,659.10. 

The BSE Sensex touched a high and a low of 28131.07 and 27926.17, respectively and there were 17 stocks on gainers side against 13 stocks on the losers side on the index. The broader indices made a positive closing; the BSE Mid cap index ended higher by 0.06%, while Small cap index was up by 0.55%.

The top gaining sectoral indices on the BSE were Power up by 1.16%, PSU up by 0.76%, Oil & Gas up by 0.75%, TECK up by 0.26% and IT up by 0.23%, while FMCG down by 1.09%, Realty down by 0.91%, Auto down by 0.54%, Bankex down by 0.52% and Capital Goods down by 0.05% were the top losing indices on BSE.

The top gainers on the Sensex were Wipro up by 2.74%, Lupin up by 2.04%, Adani Ports &Special up by 1.74%, GAIL India up by 1.48% and Power Grid up by 0.96%. On the flip side, ITC down by 2.44%, ICICI Bank down by 2.00%, Hero MotoCorp down by 1.28%, Hindustan Unilever down by 1.00% and SBI down by 0.82% were the top losers.

Meanwhile, the minutes of Reserve Bank of India's newly appointed Monetary Policy Committee (MPC) meeting released on October 18, showed that broad worries over economic growth and relief from the pullback in inflation led the Reserve Bank of India’s (RBI) to cut rate earlier this month.

The minutes of the two-day meeting on October 3-4, where all six members of the committee unanimously voted for a 25-basis-point rate cut, showed that all the members agreed on the need to boost growth at the current juncture with excess capacity in the economy and softening food prices unlikely to pose much risk to inflation.It also revealed all members expecting inflation to be in line with Reserve Bank of India's March-end target of 5 percent.

The minutes further showed that while Governor Urjit Patel was brief in his views and expressed confidence in achieving the RBI's March-end inflation target, Executive Director M D Patra highlighted the need to remain vigilant once inflation starts moving up in the January-March quarter. Retail inflation as measured by the Consumer Price Index had been rising in April-July, especially on higher prices of pulses and vegetables.

The Reserve Bank of India's monetary policy committee has three members from the central bank and three external members appointed by the government with the governor having a tie-break vote. This was the first time the rate decision was taken by the MPC, as against past instances where the governor of the central bank was the sole arbiter. The next meeting of the MPC is scheduled on December 6 and 7, and its resolution will be announced on December 7.

The CNX Nifty traded in a range of 8,698.75 and 8,636.70. There were 25 stocks in green against 26 stocks in red on the index.

The top gainers on Nifty were Idea Cellular up by 7.42%, BHEL up by 3.34%, Tata Power up by 3.05%, Wipro up by 2.33% and Lupin up by 2.08%. On the flip side, ITC down by 2.42%, ICICI Bank down by 1.92%, Hero MotoCorp down by 1.30%, Hindustan Unilever down by 1.18% and HDFC down by 1.15% were the top losers.

The European markets were trading in red; UK’s FTSE 100 decreased 18.88 points or 0.27% to 6,981.18, Germany’s DAX decreased 33.48 points or 0.31% to 10,598.07 and France’s CAC decreased 9.65 points or 0.21% to 4,499.26.

Asian stocks ended mostly in green on Wednesday, as oil extended overnight gains, while the dollar held steady against the yen and the highly anticipated Chinese economic data came along expected lines. Japanese shares ended higher, taking cues from a bounce in Wall Street shares and as investors looked ahead to a slew of corporate earnings results next week. Meanwhile, Chinese shares closed on a flat note even as a barrage of data showed fresh signs of stability in the world's second-largest economy. China's GDP expanded at an annual 6.7 percent in the third quarter of 2016 - in line with expectations and unchanged from the Q2 reading. Industrial output gained an annual 6.1 percent in September - shy of forecasts for 6.4 percent and down from 6.3 percent in August, while retail sales and fixed asset investment growth matched forecasts.