Weakness persist in market; Sensex collapse over 290 points

Selling pressure in Indian equity markets has been arrested as the bourses if not recouping losses are not even enticing more of the pressure. Investor anxiety has deepened over a possible Trump victory given uncertainty on the Republican candidate's stance on several issues including foreign policy, global trade and immigrants. Polls suggest a tight neck-to-neck race between the two candidates, following last week's news that the FBI had opened a new investigation into Clinton's private email server. Another factor putting pressure on the equity markets are crude oil prices, which declined for the fourth straight day. Crude oil price has always had a positive correlation with global equities. On the domestic front, sentiments were undermined by the report that foreign portfolio investors (FPIs) sold shares worth a net Rs 123.96 crore on November 01, 2016. Market participants also overlooked 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.

On the global front, Asian markets exhibited dispiriting trends on Wednesday as overnight US indices triggered a sharp correction in global markets with Europe, Latin America following suit. The tightening of the race between Hillary Clinton and Donald Trump for the White House, just days before the November 8 vote, has introduced a new element of uncertainty into financial markets. Further, Investors are also cautious as the US Federal Reserve is due to announce its latest monetary policy decision later in the day. It is widely expected that US central bank will keep interest rates stable since the election is just next week.

Back on street, all sectoral indices on the BSE were trading in the red with Oil & Gas index emerging as the top loser down by around two and half percent followed by Realty, PSU and Capital Goods indices among others. In scrip specific development, Ujaas Energy has rallied after the company bagged order from Airport Authority of India (AAI). Moreover, Mahindra & Mahindra (M&M) edged higher after reporting a strong 61% year on year (YoY) growth in total tractor sales at 45,177 units in October 2016.

The market breadth remained pessimistic as there were 735 shares on the gaining side against 1827 shares on the losing side, while 86 shares remained unchanged.

The BSE Sensex is currently trading at 27582.17, down by 294.44 points or 1.06% 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 1.60%, while Small cap index was down by 1.57%.

The losing sectoral indices on the BSE were Oil & Gas down by 2.31%, Realty down by 2.30%, PSU down by 1.72%, Capital Goods down by 1.34% and Bankex down by 1.33%.

The top gainers on the Sensex were Mahindra & Mahindra up by 2.74%, NTPC up by 0.97% and Hindustan Unilever up by 0.89%. On the flip side, ONGC down by 2.75%, SBI down by 2.63%, Tata Motors down by 2.44%, GAIL India down by 2.32% and Tata Steel down by 1.93% were the top losers.

Meanwhile, 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 8531.60, down by 94.65 points or 1.10% after trading in a range of 8518.70 and 8549.50. There were 6 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 2.84%, Mahindra & Mahindra up by 2.41%, Hindustan Unilever up by 0.86%, NTPC up by 0.84% and Indusind Bank up by 0.49%. On the flip side, Yes Bank down by 3.38%, Tata Motors - DVR down by 3.31%, Bank of Baroda down by 3.06%, SBI down by 2.72% and ONGC down by 2.70% were the top losers.

Asian markets were trading in red; Nikkei 225 tumbled 1.69%, Hang Seng declined 1.31%, Taiwan Weighted decreased 1.44%, KOSPI Index dropped 1.39%, Shanghai Composite shed 0.58%, FTSE Bursa Malaysia KLCI dipped 0.43% and Jakarta Composite was down by 0.1%.