Post Session: Quick Review

Indian equity benchmarks traded on sluggish note yet for another session and ended with cut of around one percent. The downfall was due to collapse in Tata group companies stocks and banking stocks which were the biggest contributors to the market declines. The benchmarks made a cautious start and traded in red in early deals as funds and retail investors hit the sell button tracking a sluggish global trend due to tumbling oil prices. Sentiments remained subdued with report that despite many efforts, India moved up only one position in the International Finance Corporation’s (IFC) ease of doing business rankings. The Doing Business 2017 report showed that India was placed 130th among 190 countries that had been surveyed for the annual rankings, with Russia, Bhutan, South Africa, China, Nepal, Sri Lanka and Brazil ranking higher. Disappointing earnings by some heavyweights too dampened sentiments. A private analysis showed concerns for wide trade deficit with China, India’s engineering exports are fast losing a huge Chinese market, falling by annualized 57% in September 2016 reflecting subdued demand in some of the core sectors like non-ferrous metals. For the cumulative period of April-September, 2016, India’s engineering exports to China dropped by a sharp 45% to $584.10 million over $1.06 billion in the first half of the previous fiscal. For September, 2016 the drop was even sharper at 57% to $92.57 million from $216 million a year ago. Some selling also crept in on reports that Foreign Portfolio Investors (FPIs) sold shares worth a net Rs 606.34 crore yesterday as per provisional data released by the stock exchanges. The market may remain volatile this week as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. October 2016 series to next month i.e. November 2016 series. The near month October 2016 derivatives contracts will expire on Thursday i.e. October 27, 2016.

On the global front, Asian markets ended mostly in red, with China stocks falling the most in a week, partly driven by lingering concerns over tighter liquidity that pushed up treasury yields, with a correction in resources shares offsetting strength in the healthcare and consumer sectors. The Bank of Japan is likely to hold off on expanding stimulus next week despite an expected downgrade in its price forecast that may show Governor Haruhiko Kuroda won’t see inflation hit his 2% target before his tenure ends in 2018. European shares fell maintaining a gloomy trend set in Asia and the United States and with concerns about a global glut of oil looming over the market.

Back home, select Tata group companies stocks extended their slide reacting to surprise decision to replace Chairman Cyrus Mistry as chairman of Tata Sons board by his predecessor Ratan Tata. Cyrus P Mistry criticized the decision in harsh and scathing terms terming the move unparalleled in the annals of corporate history. He has also described the board proceedings as invalid and illegal. The street however sees Mistry’s unceremonious removal as an aberration at a group that doesn’t believe in hire and fire policy. Select jewellery stocks ended in green as retailers are expecting around 25% growth in sales during Dhanteras, considered auspicious to buy precious metal, compared to last year due to good monsoon and pent up consumer demand.

The BSE Sensex ended at 27836.51, down by 254.91 points or 0.91% after trading in a range of 27759.56 and 28050.55. There were 10 stocks advancing against 20 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.90%, while Small cap index was down by 0.66%. (Provisional)

The sole gaining sectoral indices on the BSE were Consumer Durables up by 0.39%, while Bankex down by 1.89%, Metal down by 1.37%, Power down by 0.93%, Realty down by 0.70% and PSU down by 0.68% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Hero MotoCorp up by 2.01%, Bharti Airtel up by 1.75%, Maruti Suzuki up by 1.47%, Hindustan Unilever up by 1.20% and Dr. Reddy’s Lab up by 0.90%. (Provisional)

On the flip side, Axis Bank down by 8.33%, Tata Steel down by 5.42%, Tata Motors down by 4.54%, ICICI Bank down by 3.61% and Adani Ports &Special down by 2.40% were the top losers. (Provisional)

Meanwhile, in order to attract foreign capital into the country, the Department of Industrial Policy & Promotion (DIPP), under the commerce and industry ministry, has notified 100 percent foreign direct investment (FDI) in 'other financial services' carried out by non-banking finance companies (NBFCs).

DIPP has said that the government has liberalized its FDI policy in Other Financial Services and non-banking finance companies (NBFCs). The other financial services will include activities which are regulated by any financial sector regulator - RBI, SEBI, IRDA, Pension Fund Regulatory and Development Authority, National Housing Bank 'or any other financial sector regulator as may be notified by the government in this regard. However, such investment would be subject to conditionalities, including minimum capitalization norms, as specified by the concerned regulator or government agency.

The two key relaxations sought to be introduced vide this Notification are firstly, opening up of all the sub-sectors falling within the non-banking financial services sector for up to 100% foreign participation and secondly, removing any form of additional capitalization norms linked to foreign ownership prescribed under the FDI Policy, thereby aligning the capitalization norms with those prescribed by the relevant regulators regulating these activities.

However, DIPP has not specified the sectors which have been opened up for automatic route. The present regulations on NBFCs stipulate that FDI would be allowed on automatic route for only 18 specified NBFC activities after fulfilling prescribed minimum capitalization norms mentioned therein. Currently, 100 percent FDI through automatic route is permitted in 18 NBFC activities including merchant banking, under writing, portfolio management services, financial consultancy and stock broking. In 2015-16, foreign direct investment in India grew by 29 percent year-on-year to $40 billion.

The CNX Nifty ended at 8608.30, down by 83.00 points or 0.95% after trading in a range of 8596.60 and 8657.30. There were 13 stocks advancing against 38 stocks declining on the index. (Provisional)

The top gainers on Nifty were Idea Cellular up by 3.98%, Kotak Mahindra Bank up by 2.89%, Bharti Airtel up by 1.68%, Hero MotoCorp up by 1.65% and Maruti Suzuki up by 1.53%. (Provisional)

On the flip side, Axis Bank down by 8.29%, Tata Motors - DVR down by 5.57%, Tata Steel down by 5.38%, Tata Motors down by 4.76% and ICICI Bank down by 3.66% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 58.5 points or 0.83% to 6,959.14, Germany’s DAX decreased 100.7 points or 0.94% to 10,656.61 and France’s CAC decreased 32.81 points or 0.72% to 4,508.03.

Asian stocks ended mostly in red on Wednesday as oil prices retreated and a big rise in Australian inflation weakened the case for a surprise November rate cut from the Reserve Bank of Australia. A slew of disappointing earnings results from the US and Yuan depreciation worries also kept investors on edge. Investors also remained nervous given the US election next month, the Federal Reserve's policy meeting in December, and over the health of China's economy. Chinese stocks fell as bond yields surged higher on concerns over banks' off-balance sheet wealth management products. Meanwhile, Japanese shares eked out modest gains as the yen held weaker at a three-month low against the dollar and a survey showed Japan's small business confidence strengthened for the second consecutive month in October.