Benchmarks continue weak trade in late morning session

Indian equity benchmarks continued their weak trade in the late morning session as investors cut down their bets, 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 putting 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.

Investors failed to draw solace from ASSOCHAM’s report that Indian economy is expected to fare better in the second half of the current fiscal backed by uptick in sales and improved capacity utilization, though fresh investments and new jobs creation may be a concern going forward. Meanwhile, ASSOCHAM has made a pitch to Finance Minister Arun Jaitley not to levy cess, but hike GST rate by 1-2 percent to garner additional resources to compensate states for any revenue loss on rollout of the new regime from April next year. Telecom stocks were trading 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. Traders were seen selling in Oil & Gas, Realty and PSU sector stocks. In scrip specific development, MOIL was trading firm after the company revised price of various grades of manganese ore with effect from November 01, 2016.

On the global front, Asian shares were trading in red, 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. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 8,550 and 27,600 levels respectively. The market breadth on BSE was negative in the ratio of 635:1734, while 82 scrips remained unchanged.

The BSE Sensex is currently trading at 27584.87, down by 291.74 points or 1.05% after trading in a range of 27535.02 and 27679.32. There were 3 stocks advancing against 27 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.59%, while Small cap index was down by 1.40%.

The losing sectoral indices on the BSE were Oil & Gas down by 2.24%, Realty down by 1.88%, PSU down by 1.74%, Bankex down by 1.37% and Metal down by 1.35%, while there were no gaining indices on BSE sectoral front.

The top gainers on the Sensex were Mahindra & Mahindra up by 2.61%, NTPC up by 0.90% and Hindustan Unilever up by 0.86%.

On the flip side, SBI down by 2.67%, ONGC down by 2.35%, GAIL India down by 2.29%, Tata Motors down by 2.12% and Tata Steel down by 2.05% were the top losers.

Meanwhile, the Associated Chambers of Commerce & Industry of India (Assocham) in its latest survey report that is based on ‘ASSOCHAM Bizcon Survey’ stated that Indian economy is expected to fare better in the second half of the current fiscal and the trend appears to have begun from the quarter beginning October, 2016 backed by uptick in sales and improved capacity utilization, though fresh investments and new jobs creation may be a concern going forward.

The report said that the second best driver for the optimistic outlook are effective policy reforms followed by a stable foreign exchange rate of the Indian currency despite global head winds like uncertainty on account of the Federal Reserve's next policy move and the most bitterly fought US Presidential elections. While a big chunk of Bizcon Survey participants felt the present economic situation appears to be in a better shape than the previous six months on several parameters, the optimism is more pronounced for the second half of 2016-17.

As per the survey, an increased spending on infrastructure development, largely by the government, is seen as the most important driver for a turnaround in the economic outlook for the period between October and March in 2016-17. Further, over 66 percent respondents participated in the Assocham Bizcon Survey are expecting improved sales and capacity utilisation during the second half of the fiscal, but remained uncertain on fresh investments coming in. However, in the short horizon, the survey indicated that there will not be any change in the employment scenario in the industry. As majority (55.6 percent) of respondents believe that employment condition will not improve in the coming days. Besides, 38.9 per cent of the respondents feel that their profits may not change in the short term, October to December.

Further, the confidence was quite pronounced at the level of individual firms' level, as about 89 percent of the respondents expressed optimism about better days ahead. The majority (55.6 percent) of the respondents feel that there is an increase in sales volume during September quarter and also expecting more sales during October-December 2016. In terms of the wage costs scenario, the majority of the industry (44.4 percent) opines that in the July to September 2016, there is no change in wages costs. Moreover, half of the respondents felt that wage costs will not change in the near future.

According to Assocham, good thing is that there is a clear turnaround in business confidence, which holds the key to new investment and consumer confidence. The latest survey indicates a slight uptick even with regard to capacity utilization going forward and the order book. However, generation of new employment and improvement in wages is still some distance away. The Reserve Bank of India expecting the economy to grow 7.6 percent in the current fiscal, but the Bizcon Survey did not give an estimate of economic growth in the coming quarter.

The CNX Nifty is currently trading at 8530.75, down by 95.50 points or 1.11% after trading in a range of 8518.70 and 8549.50. There were 5 stocks advancing against 46 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 3.08%, Mahindra & Mahindra up by 2.39%, NTPC up by 0.94%, Hindustan Unilever up by 0.81% and Lupin up by 0.04%.

On the flip side, Yes Bank down by 3.48%, Tata Motors - DVR down by 3.07%, Bank of Baroda down by 3.06%, SBI down by 2.82% and BPCL down by 2.67% were the top losers.

The Asian markets were trading in red; Nikkei 225 decreased 341.09 points or 1.96% to 17,101.31, Hang Seng decreased 340.28 points or 1.47% to 22,806.79, Taiwan Weighted decreased 123.71 points or 1.33% to 9,148.99, KOSPI Index decreased 28.53 points or 1.42% to 1,978.86, Shanghai Composite decreased 15.11 points or 0.48% to 3,107.32, FTSE Bursa Malaysia KLCI decreased 7.21 points or 0.43% to 1,663.72 and Jakarta Composite decreased 5.56 points or 0.1% to 5,410.45.