Benchmarks continue weak trade; Bankex, FMCG drag

Indian equity benchmarks continued their weak trade in the late morning session on account of selling in front line blue chip counters. The S&P BSE Sensex slipped below its crucial level of 28000 mark, while Nifty50 slipped below its crucial psychological support level of 8,650. The sentiments were under pressure as funds and retail investors hit the sell button tracking a sluggish global trend due to tumbling oil prices. Domestic equity indices are likely to trade on a negative note tracking BoE Governor Mark Carney’s comments and a drop in US stocks in overnight trade, ahead of results of many blue chip companies. Investors will be eyeing the quarterly results whereby in all a total of 83 companies would announce September quarter results scheduled for the day. The list includes many banks besides FMCG major ITC, two-wheeler maker Hero MotoCorp, Exide Industries and Dabur India. Through the week, a total of 475 BSE-listed companies will be announcing their September quarter results. 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. Separately, a private report showed that China is unlikely to deter its firms from investing in India, but it is not going to be an easy sailing for Chinese investors who will have to deal with labour unions which they are not used to at home. The article added that as Chinese component enterprises become more deeply entrenched in the Indian economy, they will soon encounter a number of differences between the two countries in terms of commercial ecology. The Chinese investments also will be hampered by lack of skilled workers besides lack of cohesion between the states. Most of Tata group companies stocks continued their weak trade reacting to promoters Tata Sons 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.

Traders were seen piling position in Realty, Consumer Durables and Metal stocks, while selling was witnessed in Bankex, FMCG and Oil & Gas sector stocks. In scrip specific development, Axis Bank was trading under pressure after the bank reported a 83.4 per cent Y-o-Y plunge in profit after tax (PAT) at Rs 319 crore for the September quarter. The sharp drop in profits was on account of a rise in bad loan provisions, which jumped to Rs 3,623 crore for the quarter, compared with Rs 707 crore in the year-ago period. 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 were trading mostly in red, followed in the footsteps of Wall Street, which pulled back overnight on disappointing earnings, while the dollar inched down from a seven-month high and oil prices extended this week's losses. 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. 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 positive in the ratio of 1214:1002, while 178 scrips remained unchanged.

The BSE Sensex is currently trading at 27871.49, down by 219.93 points or 0.78% after trading in a range of 27846.40 and 28050.55. 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 0.14%, while Small cap index was up by 0.30%.

The top gaining sectoral indices on the BSE were Realty up by 0.45%, Consumer Durables up by 0.27%, Metal up by 0.19% and TECK up by 0.06%, while Bankex down by 1.36%, FMCG down by 0.78%, Oil & Gas down by 0.32%, IT down by 0.26% and Power down by 0.14% were the losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 3.02%, Hero MotoCorp up by 1.95%, Bajaj Auto up by 1.07%, Mahindra & Mahindra up by 0.78% and Maruti Suzuki up by 0.66%.

On the flip side, Axis Bank down by 7.47%, ICICI Bank down by 3.32%, Tata Motors down by 2.07%, Asian Paints down by 2.01% and Adani Ports & Special Economic Zone down by 1.36% were the top losers.

Meanwhile, Economic Affairs Secretary Shaktikanta Das has expressed his hopes that the recent series of government reforms would help India clock GDP growth of around 8 per cent, while the farm sector can grow by more than 4 per cent in FY17.

He pointed that last year the country achieved the growth of 7.6 per cent which was driven by good agriculture, therefore they are looking at growth upwards of 7.6 per cent and hopefully close to 8 per cent. He added that the GST will happen as bankruptcy law has happened. Both these pieces of legislation together with amendments to the arbitration law, DRT, company laws have potential to create a very vibrant and dynamic economy. Asserting that the government is determined to implement GST from the next fiscal, Das expressed confidence that the revenue neutral rate structure will be decided in the next meeting scheduled in November 3-4. Das also sounded optimistic about the economy’s medium-term growth prospects as he hoped that reforms unveiled by the government would take hold in coming years.

Das also said that economic Survey in February had projected a growth rate of 7-7.75 per cent while RBI forecasted 7.6 per cent for the current fiscal. Growth projections drawn up by the World Bank and International Monetary Fund are closer to RBI’s forecast figure.

The CNX Nifty is currently trading at 8634.95, down by 56.35 points or 0.65% after trading in a range of 8617.90 and 8657.30. There were 19 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Idea Cellular up by 4.91%, Kotak Mahindra Bank up by 2.85%, Bharti Airtel up by 2.69%, Hero MotoCorp up by 2.04% and Bajaj Auto up by 0.98%.

On the flip side, Axis Bank down by 7.53%, ICICI Bank down by 3.37%, Tata Motors - DVR down by 2.55%, Tata Motors down by 2.24% and Asian Paints down by 2.01% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 161.13 points or 0.68% to 23,403.98, KOSPI Index decreased 28.02 points or 1.38% to 2,009.15, Taiwan Weighted decreased 21 points or 0.22% to 9,364.65, Shanghai Composite decreased 12.92 points or 0.41% to 3,119.01, Jakarta Composite decreased 5.88 points or 0.11% to 5,391.95 and FTSE Bursa Malaysia KLCI decreased 3.16 points or 0.19% to 1,674.27.

On the other hand, Nikkei 225 increased 8.52 points or 0.05% to 17,373.77.