Indian markets end a lackluster session with modest cut; Nifty ends below 8500 mark

Indian benchmark indices extended the sorrow of closing in the red territory for the second consecutive session on Thursday as investors fretted over the rising chances that maverick tycoon Donald Trump could win the US presidency in next Tuesday's election. Trump’s provocative stand on key issues like global trade, immigration, outsourcing, internal security, globalization and trade barriers have caused a considerable amount of anxiety among the global business community. Further, the US Federal Reserve on Wednesday indicated a likely hike in interest rates in December due to improving economic conditions, too induced a prolonged spell of volatility in the local market. On the domestic front, sentiments were undermined by the repot that GST Council, which began 2-day deliberations today, is likely to shortly finalize a tax structure as Centre and states seeming to harden their positions with respect to the issues they disagree on.  There is a raging debate on the Centre’s proposal for having multiple rates for GST. Market participants also disappointed with the S&P Global Ratings’ decision to rule out an upgrade for India over the next two years even as it affirmed the stable outlook on the country’s ‘BBB-’ long-term and ‘A-3’ short-term sovereign credit ratings. The global rating agency has stuck to its rating, 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. However, investors got some comfort with the report indicating India’s Services sector activity gathered pace in October, driven by sharper increase in new business orders amid strong demand and improved market conditions. The Nikkei India Services Purchasing Managers' Index (PMI), which tracks services sector companies on a monthly basis, stood at 54.5 in October as against 52.0 in September. Some support also came with the report that India Inc is optimistic about its business prospects with a majority of firms saying current economic conditions are 'moderately to substantially better' compared to the last six months, even as cost and availability of credit remain a concern. The Overall Business Confidence Index (OBCI) rose to a six quarter high in the Business Confidence Survey conducted by FICCI, indicating that demand is gaining traction. The index value stood at 67.3 in the current round as against 62.8 in the previous poll.

On the global front, Asian markets ended mostly lower on Thursday, on concerns over the outcome of next week's US presidential election. Tensions were aggravated by the reports that some agents at the FBI had wanted to press ahead with an investigation of the Clinton Foundation, but senior officials at the agency and at the Justice Department did not think much of the evidence. Markets favor a Clinton victory as she is seen maintaining the status quo, while Trump’s policies are less clear and the uncertainty rocks markets. However, the downside was limited amid a rebound in oil prices in Asian deals and a market holiday in Japan. Chinese shares ended higher after a private gauge showed activity in China's service sector expanded at a faster pace in October. Meanwhile, European stocks eked out modest gains in early trading, as some well-received earnings updates from banks and higher oil prices following reports of an attack on a Nigerian oil pipeline helped investors shrug off lingering worries over the upcoming US presidential election.

Back home, the local benchmark got off to a pessimistic start following the Asian peers as sentiments got pressured by mounting worries over the outcome of next week's US presidential election.  However, the frontline indices soon gathered momentum and touched intraday highs in late morning session but the optimism fizzled out sooner and the indices sea-sawed around the neutral line though the noon session. Thereafter, the indices drifted into the negative zone and slipped to intraday lows in the last leg of trade. Finally, the NSE’s broadly followed index Nifty, took a cut of about over quarter percent to settle below the crucial 8500 support level, while Bombay Stock Exchange’s Sensitive Index, Sensex slipped by around hundred points and closed below the psychological 27450 mark. On the BSE sectoral space, the Oil & Gas and PSU pockets remained among top laggards in the space as they got lacerated by over a percent, while sectors like Realty, Power and Consumer Durables too got pounded heavily in the session. On the flipside, FMCG pocket managed to go home with moderate gains.

The market breadth remained pessimistic as there were 1174 shares on the gaining side against 1775 shares on the losing side, while 125 shares remained unchanged.

Finally, the BSE Sensex declined by 96.94 points or 0.35% to 27430.28, while the CNX Nifty dropped 29.05 points or 0.34% to 8,484.95. 

The BSE Sensex touched a high and a low of 27600.74 and 27399.26, respectively and there were 10 stocks on gainers side against 20 stocks on the losers side on the index.

The broader indices made a negative closing; the BSE Mid cap index ended lower by 1.36%, while Small cap index was up by 1.05%.

The sole gaining sectoral index on the BSE was FMCG up by 0.13%, while Oil & Gas down by 1.83%, PSU down by 1.75%, Realty down by 1.29%, Power down by 0.98% and Consumer Durables down by 0.82% were the top losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 1.66%, ITC up by 1.29%, HDFC Bank up by 0.85%, TCS up by 0.67% and Bajaj Auto up by 0.49%. On the flip side, Adani Ports &Special down by 3.92%, ONGC down by 3.53%, Tata Steel down by 2.50%, Asian Paints down by 2.36% and SBI down by 2.25% were the top losers.

Meanwhile, Global rating agency, Standard and Poor's (S&P) has affirmed India’s sovereign rating for long term at 'BBB-' and short term at 'A-3' with stable outlook and ruled out any upgrade in two years, citing weak public finances. Ratings agency said that the stable outlook balances India's sound external position and inclusive policymaking tradition against the vulnerabilities stemming from its low per capita income and weak public finances. Further, outlook indicates that the agency does not expect to change its rating assigned to India this year or next, based on their current set of forecast.

According to the S&P, the upward pressure on the credit ratings could emerge if the government reforms markedly improve India's fiscal performance and pushes down the level of net general government debt below 60% of the gross domestic product (GDP). Currently, government debt amounts to about 69% of the GDP. Further, improvements in policymaking continue to strengthen and flagged wide fiscal deficits, a heavy debt burden and low per capita income as concerns.

On other hand, it said that downward pressure on the ratings could re-emerge if growth disappoints as a result of stalling reforms or if interest rate-setting monetary policy committee (MPC) does not achieve inflation targets. It added that a higher-than-expected deterioration in the nation's external liquidity position could also put downward pressure on ratings. The rating agency is expecting India's economy to grow 7.9% in 2016 with current account deficit (CAD) at 1.4% of the gross domestic product (GDP). It is also expecting that the Reserve Bank of India (RBI) would meet its inflation target of 5% by March 2017. Earlier, in September 2014, it had upgraded India's rating to stable from negative.

The ratings agency also said that India's external position remains a credit strength and it has a floating exchange rate and limited reliance on external savings to fund the growth. Besides, the authorities also maintain contingent financing facilities of $68 billion through bilateral swaps and contingency reserve arrangements. The ‘BBB-’ rating indicates lowest investment grade rating.

The CNX Nifty traded in a range of 8,537.65 and 8,476.15. There were 18 stocks in green against 33 stocks in red on the index.

The top gainers on Nifty were Hindalco up by 4.15%, Bharti Infratel up by 3.74%, ITC up by 1.66%, ACC up by 1.46% and Hero MotoCorp up by 1.34%. On the flip side, Adani Ports &Special down by 3.75%, Grasim Industries down by 3.30%, Asian Paint down by 2.73%, Wipro down by 2.57% and BPCL down by 2.53% were the top losers.

The European markets were trading mostly in green; UK’s FTSE 100 increased 14.08 points or 0.21% to 6,859.50, France’s CAC increased 10.69 points or 0.24% to 4,425.36, while Germany’s DAX decreased 7.77 points or 0.07% to 10,363.16.

Asian equity markets ended mostly in red on Thursday, although the downside remained limited amid a rebound in oil prices in Asian deals and a market holiday in Japan. While US election worries persisted, the greenback came under selling pressure after the Federal Reserve policy announcement. The Fed on Wednesday held rates steady, as widely expected, but left the door open to a December rate hike amid signs of an improving economy. Hong Kong stocks closed at a 2-1/2-month low as worries over the tightening US presidential election race. However, Chinese shares ended higher after a private gauge showed activity in China's service sector expanded at a faster pace in October. The Caixin China services PMI rose to a four-month high of 52.4 on the back of growing new orders. Japan Stock Exchange was closed on account of ‘Culture Day’ holiday.