Indian equities decline for second straight session; Sensex slips below 27,900 mark

Indian benchmarks extended the declining streak for the second successive session as funds and retail investors turned jittery tracking a sluggish global trend due to tumbling oil prices. Oil prices came under pressure after a rise in US crude inventories and as hopes that OPEC will find a deal to cut production faded. Market participants around the world 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. On the domestic front, sentiments were undermined by the report that India has moved up only one rank on the World Bank’s ease of doing business ranking this year, a disappointing result for the Narendra Modi government that made several initiatives and has set itself a target to break into the top 50.  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. In the ranking, India has made a substantial improvement in some areas such as electricity connection, but slippage in other areas, including payment of taxes and enforcing contracts, prevented improvement on the rankings that is followed widely by global investors. Furthermore, amidst concerns for wide trade deficit with China, India’s engineering exports are fast losing a huge Chinese market, falling by annualised 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. Besides, disappointing earnings by some heavyweights and sustained selling by FIIs too dampened the trading sentiments. Axis Bank's quarterly net profit plunged 83% in the September quarter, while IDBI Bank reported a 53% decline in quarterly net profit. However, losses remained capped with the Economic Affairs Secretary Shaktikanta Das’s statement that the GDP growth will be around 8 percent this fiscal, while the agriculture sector is expected to grow over 4 percent. Also, NITI Aayog Vice-Chairman Arvind Panagariya said the Indian economy has the potential to touch $ 6-8 trillion in the next 15 years, as against $ 2 trillion at present.

On the global front, Asian markets ended mostly lower on Wednesday as there were fresh fears after reports emerged that Russia will not take part in a planned oil output cut by major producers. Besides, Overnight losses in the US on lower-than-expected earnings added to the anxiety. Chinese stocks fell as bond yields surged higher on concerns over banks' off-balance sheet wealth management products, while 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. Meanwhile, European market fell in early trade 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, the benchmarks got off to a somber start, extending the downtrend for the fourth straight session as pessimistic sentiments prevailed across Asian markets. Thereafter, the key indices failed to show any kind of fervor due to lack of encouraging leads. The key gauges suffered a setback in afternoon 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 huge losses by the end of trading session. Eventually the NSE’s 50-share broadly followed index Nifty, took a cut of over half a percent to settle below the crucial 8,650 support level, while Bombay Stock Exchange’s Sensitive Index, Sensex slipped by over two hundred and fifty points and closed above the psychological 27,800 mark. Moreover, the broader markets too failed to show any kind of fervor and closed with losses of over half a percent.

The market breadth remained pessimistic as there were 1344 shares on the gaining side against 1446 shares on the losing side, while 235 shares remained unchanged.

Finally, the BSE Sensex declined by 254.91 points or 0.91% to 27836.51, while the CNX Nifty dropped 76.05 points or 0.88% to 8,615.25. 

The BSE Sensex touched a high and a low of 28050.55 and 27759.56, respectively and there were 9 stocks on gainers side against 21 stocks on the losers side on the index. The broader indices made a negative closing; the BSE Mid cap index ended lower by 0.90%, while Small cap index was up by 0.66%.

The sole gaining sectoral index 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 top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 2.25%, Hero MotoCorp up by 1.92%, Maruti Suzuki up by 1.56%, Dr. Reddys Lab up by 1.34% and Hindustan Unilever up by 1.29%. On the flip side, Axis Bank down by 8.04%, Tata Motors down by 4.27%, Tata Steel down by 4.01%, ICICI Bank down by 3.65% and Adani Ports &Special down by 2.43% were the top losers.

Meanwhile, despite many efforts of the government, India remained at the 130th position out of 190 countries globally, and managed to move up just one rank in the World Bank's ease of doing business ranking this year, even the one place improvement was because the last year's ranking was revised lower to 131 from which the country has improved its place by one spot. The government was expecting at least a 10-spot jump on the back of several ease of doing business measures taken in the past two years. The list of countries in the Doing Business 2017 is topped by New Zealand while Singapore is ranked second.

The rankings are based on ten parameters which includes starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Out of 10 parameters, India’s ranking this year improved in two, remained unchanged in three and worsened in five. Though, in the ranking, India has made a substantial improvement in some areas such as electricity connection, but slippage in other areas, including payment of taxes and enforcing contracts, prevented improvement on the rankings that is followed widely by global investors.

The report titled ‘Doing Business 2017: Equal Opportunity for All’,noted that the country has embarked on a fast-paced reform path, and the Doing Business 2017 report acknowledged a number of substantial improvements, mentioning electricity connections to businesses, paying taxes, electronic system for paying employee state insurance contributions, electronic filing of integrated customs declarations, the Companies (Amendment) Act, passage of the commercial courts and the Insolvency and Bankruptcy Code.

The government has been making efforts to further improve the ease of doing business and aims to bring the country in the top 50. Expressing disappointment over no change in India's ranking in the World Bank's index, Indian government regretted that the report did not take into consideration 12 key reforms undertaken by the government. Industry secretary Ramesh Abhishek has said that the government will soon appoint an external agency and launch a portal for round-the-clock feedback from users on the policy steps launched by the government.

The CNX Nifty traded in a range of 8,657.30 and 8,596.60. There were 12 stocks in green against 39 stocks in red on the index.

The top gainers on Nifty were Idea Cellular up by 4.12%, Kotak Mahindra Bank up by 3.23%, Hero MotoCorp up by 1.65%, Bharti Airtel up by 1.59% and Maruti Suzuki up by 1.53%. 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 4.79% and ICICI Bank down by 3.66% were the top losers.

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.