Benchmarks make cautious start

Indian equity benchmarks have made a cautious start on Tuesday, as traders remained on sidelines ahead of manufacturing PMI for the month of October to be released later in the day. However, traders are getting some support with Core sector output rising to three months high by 5 per cent in September, compared to growth of 2.4 per cent in the year-ago period, on the back of a sustained growth in the steel sector and a rise in refinery products. Also, a private report has said that the Indian economy is well-prepared, even if not completely immune, for any external risk in case the US Federal Reserve normalises rates in December.

On the global front, Asian markets were trading mixed at this point of time tailing the somberness in US markets overnight. Japanese market too was down ahead of BOJ meeting. The energy stocks were the major losers in early trade in the region following a plunge in oil prices. Back home, stocks related to fast moving consumer goods (FMCG) counters were trading lower despite Assocham-TechSci Research that domestic FMCG companies have performed significantly well vis-a-vis the multinational companies (MNCs) in India during 2015-16.

The BSE Sensex is currently trading at 27922.19, down by 8.02 points or 0.03% after trading in a range of 27872.15 and 27991.89. There were 13 stocks advancing against 16 stocks declining on the index, while one stock remained unchanged.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.07%, while Small cap index was down by 0.10%.

The top gaining sectoral indices on the BSE were Metal up by 1.11%, Basic Materials up by 0.75%, Auto up by 0.61%, Telecom up by 0.61% and Consumer Discretionary Goods & Services up by 0.46%, while Consumer Durables down by 0.84%, IT down by 0.59%, TECK down by 0.43%, Capital Goods down by 0.37% and FMCG down by 0.31% were the top losing indices on BSE.

The top gainers on the Sensex were GAIL India up by 1.61%, HDFC up by 1.33%, Mahindra & Mahindra up by 1.21%, Lupin up by 1.19% and Maruti Suzuki up by 1.12%. On the flip side, ONGC down by 2.40%, Axis Bank down by 1.48%, Infosys down by 0.84%, Sun Pharma down by 0.77% and TCS down by 0.73% were the top losers.

Meanwhile, the Union Cabinet has given in-principle approval for strategic sale in over a dozen public sector undertakings (PSUs) including those that are making profits, as recommended by the government think thank Niti Aayog. Although, the government has not disclosed the number and names of public sector companies in which it will sell stakes, but the companies are a mix of loss-making and profitable units and the government is looking to bring down its stake to less than 50% in some of them.

Finance Minister Arun Jaitley said the names of PSUs that are up for strategic stake sale would be made public once they are going to be put up for the auction. Specific cases would now come up after a detailed examination as to how it is to be done in each case and the details with regard to the units concerned will be furnished at that stage. This list does not include PSUs for closure. He added that some of these are important units and therefore since each unit would be considered in its own merit, the timing of that would be decided by the government accordingly.

With regard to valuation of these PSUs, Jaitley said that there are settled valuation processes and a transparent one would be followed. He said that sale methods and valuation for PSUs or units up for sale would be examined by the Department of Investment and Public Asset Management (DIPAM) and the line ministry. DIPAM and the ministries, under which these companies function, will now draw up a detailed plan for the stake sales, cabinet’s approval will again be sought for each of them separately.

The government's disinvestment target for the current financial year is Rs 56,500 crore. Of this, Rs 36,000 crore is expected from minority stake sales and buybacks. The rest Rs 20,500 crore is expected from 'strategic sales' in loss-making or profit-making PSUs or their assets (factories, warehouses, office buildings, etc).

The CNX Nifty is currently trading at 8630.25, up by 4.55 points or 0.05% after trading in a range of 8614.50 and 8653.40. There were 29 stocks advancing against 21 stocks declining on the index, while one stock remained unchanged.

The top gainers on Nifty were Eicher Motors up by 3.32%, Bharti Infratel up by 2.42%, Hindalco up by 2.30%, HDFC up by 1.62% and GAIL India up by 1.60%. On the flip side, ONGC down by 1.95%, Kotak Mahindra Bank down by 1.56%, Axis Bank down by 1.50%, Tata Power down by 1.47% and Tech Mahindra down by 1.23% were the top losers.

Asian markets were trading mixed; Nikkei 225 rose 0.48 points to 17,425.50, Jakarta Composite gained 4.06 points or 0.07% to 5,426.61, Shanghai Composite increased 10.25 points or 0.33% to 3,110.74 and Hang Seng was up by 261.22 points or 1.14% to 23,195.76.

On the flip side, Taiwan Weighted decreased 18.11 points or 0.19% to 9,272.01, KOSPI Index slipped 3.26 points or 0.16% to 2,004.93 and FTSE Bursa Malaysia KLCI was down by 0.17 points or 0.01% to 1,672.29.