Post Session: Quick Review

Today’s session turned out to be a disastrous day of trade for Indian equity markets with the frontline gauges ended the session with losses of around one and quarter percent. The domestic market dropped the most in four-weeks and Nifty slipped below its crucial psychological level of 8,550. The benchmarks made a gap-down opening in early deals tracking a weak trend in global market. Anxiety in markets has deepened over a possible Trump victory given uncertainty on the Republican candidate’s stance on several issues including foreign policy, trade relations and immigrants, while Clinton is viewed as a candidate of the status quo. Some pessimism also crept in, after Indian rupee weakened marginally against the US dollar tracking the losses in the local equity and Asian currencies markets before the Federal Reserve announces an interest-rate decision on Wednesday and the US holds its presidential election on 8 November. Foreign institutional investors sold shares worth Rs 124 crore, while domestic institutional investors bought shares worth Rs 192 crore on Tuesday. Another factor that laid pressure on the market is crude oil prices, which fell for the fourth straight day. Crude oil price has always had a positive correlation with global equities.

Meanwhile, Standard & Poor’s affirmed India’s sovereign ratings, welcoming the country’s policy stability and improved monetary credibility, but ruled out any upgrade for this year or in 2017 because of weak public finances and low per capita income. The stance comes despite a push for a ratings upgrade by government officials, who have argued the country has kept its fiscal deficit in check and passed a slew of major economic reforms including a revamp of the goods and services tax (GST). The global rating agency has stuck to its rating of ‘BBB-minus’ with a ‘stable’ outlook, saying it would need to see more efforts to lower the country’s net general government debt level to below 60% of gross domestic product. The ratings agency also expressed concerns that government could delay subsidy cuts, while noting the country’s banking sector would likely need capital infusions of about $45 billion by 2019, or 2% of the country’s GDP, to meet global Basel III capital norms.

On the global front, Asian shares tumbled to seven-week lows and the dollar lost ground against the yen and the euro after Wall Street’s ‘fear index’ spiked on jitters over the US presidential election. China’s commerce ministry stated that the country will face relatively large downward pressure on foreign trade in the fourth quarter, with uncertainties continuing into 2017. The government will continue to implement policies to promote trade growth. European stocks were trading lower as uncertainty over the outcome of the upcoming US presidential election continued to weigh on market sentiment.

Back home, telecom stocks ended on a weak note. The Department of Telecommunications (DoT) is now looking to herald second generation reforms like simplifying licences and launching electromagnetic field (EMF) portals to help people test the level of radiation from towers.

The BSE Sensex ended at 27551.38, down by 325.23 points or 1.17% after trading in a range of 27500.81 and 27679.32. There were 4 stocks advancing against 26 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 1.81%, while Small cap index was down by 1.84%. (Provisional)

The losing sectoral indices on the BSE were Oil & Gas down by 2.73%, Realty down by 2.19%, PSU down by 1.98%, TECK down by 1.13% and Capital Goods down by 1.12%. (Provisional)

The top gainers on the Sensex were Mahindra & Mahindra up by 3.02%, Hindustan Unilever up by 0.81%, NTPC up by 0.68% and Bajaj Auto up by 0.15%. (Provisional)

On the flip side, ONGC down by 3.89%, Tata Motors down by 3.04%, Cipla down by 2.64%, SBI down by 2.59% and Sun Pharma down by 2.40% were the top losers. (Provisional)

Meanwhile, Federation of Indian Chambers of Commerce and Industry (FICCI) in its latest report stated that the Overall Business Confidence Index (OBCI) rose to a six quarter high and the index stood at 67.3 in the current survey as against 62.8 in the last round. In the October business confidence survey, which is based on enterprises' assessment of production and current position and expectations of industry analysts received optimistic views.

The report said that the proportion of respondents citing a ‘moderately to substantially better’ performance in the current conditions vis-a-vis last six months noted an increase at all the three levels - economy, industry and firm level. As per the survey, about 63% of the respondents reported current economic conditions as ‘moderately to substantially better’ compared to last six months. Likewise, the corresponding number at the industry and firm level was 63% and 60% respectively. About 75% of the participants foresee a better performance at the economy level in near term. Further, 63% of the respondents at the industry level and 70% of the respondents at the firm level were hopeful of a better performance going ahead.

The report also showed that the demand pulse is gradually gaining strength. Good monsoons and award of the seventh pay commission will give a further trigger to demand. In the current round, 46% of the participants reported weak demand to be an impediment to their business performance. Further, a higher proportion of respondents expected an improvement in the order book position over next two quarters. With respect to credit, an increase was noted in the proportion of respondents citing availability and cost of credit to be constraining factors. High interest cost has been one of the major areas of worry for the industry. It remains critical that the cost of capital is made competitive to propel investments. With regard to sales prospects, a majority of the respondents anticipated an improvement in performance over the next two quarters. On the investment front, a marginal increase was noted in the proportion of respondents expecting an uptick in investments.

The CNX Nifty ended at 8519.15, down by 107.10 points or 1.24% after trading in a range of 8504.85 and 8549.50. There were 7 stocks advancing against 44 stocks declining on the index. (Provisional)

The top gainers on Nifty were Mahindra & Mahindra up by 2.94%, Bharti Infratel up by 2.70%, IndusInd Bank up by 1.30%, Hindustan Unilever up by 0.68% and NTPC up by 0.65%. (Provisional)

On the flip side, ONGC down by 4.01%, Tata Motors - DVR down by 3.60%, Bank of Baroda down by 3.41%, BHEL down by 3.29% and Tata Motors down by 3.17% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 29.41 points or 0.43% to 6,887.73, Germany’s DAX decreased 81.32 points or 0.77% to 10,444.84 and France’s CAC decreased 29.5 points or 0.66% to 4,440.78.

Asian equity markets ended in red on Wednesday as the US presidential race appeared to tighten and investors awaited the Fed policy statement for clues on the timing of the next US rate hike. The Federal Reserve's policy-setting committee concludes its two-day policy meeting later today, although the US central bank isn't expected to lift its key rate ahead of the November 8 presidential election. New polls indicated an increasingly uncertain outcome for the presidential race after a FBI probe into Hillary Clinton's emails dented her lead over Republican rival Donald Trump. Tumbling oil prices and fresh demand for safe-haven assets such as the Japanese yen, the Swiss franc and gold also kept investors on edge. Chinese shares slid on worries about tightening liquidity ahead of the upcoming initial public offering (IPO) of Bank of Shanghai. Further, Japanese stocks hit a two-week low as the yen strengthened against the US dollar and survey figures from Cabinet Office showed Japan's consumer confidence weakened more than expected in October.