Post Session: Quick Review

Indian equity benchmarks traded on choppy note and ended in red. The broad market too depicted weakness. Nifty posted biggest weekly loss since September 30 because Sun Pharmaceutical Industries & Reliance Industries contributed 50% to index fall. The sentiments remained weak as participants indulged in cutting their bets, tracking a falling trend in global market. Foreign investors have also been reducing their exposure to emerging markets, including India ahead of this event. The benchmarks made a cautious start in red in early deals on concern over the Presidential election outcome amid lackluster economic data. Foreign institutional investors were net sellers in equities worth Rs 707 crore on Thursday, as per provisional stock exchange data. Investors failed to draw solace with the GST Council fixing a four-slab tax structure for GST implementation. The council finalized four-tier GST tax structure of 5, 12, 18 and 28 percent that aims to lower tax incidence on most goods and keep out essential items. Chief Economic Advisor Arvind Subramanian has said that the GST Council’s decision to peg the tax rate on items of mass consumption at 5 percent will bring down prices and soften inflation. However, the street expects that GST may not immediately give a big boost to the economy as was initially expected because of the complicated tax structure. There is expectation that growth will slow down initially before the longer term benefits kick in. Selling got intensified in Pharma stocks on reports that US prosecutors could file charges by year-end in a criminal investigation of generic makers over suspected price collusion. The reports highlighted that high-level executives were likely to be charged in an ongoing investigation by the US Department of Justice. Meanwhile, in a setback for the Information Technology companies (IT), as per reports Nasscom is likely to revise the sector’s revenue growth guidance downwards. The revision will be in the range of 8-10 percent as compared to 10-12 percent projected in the beginning of this financial year. The revision in growth guidance is due to uncertain global environment and softening of Banking, Financial services and Insurance (BFSI) sector. Separately, the UK government has announced changes to its visa policy for non-EU nationals, which will affect a large number of Indians especially IT professionals.

On the global front, Asian shares ended mostly in red on jitters over the US presidential election. Chinese Finance Minister Lou Jiwei stated that the country is actively pushing forward reforms on property taxes as it overhauls its fiscal system. Any progress on expanding the tax would be a major development in China’s red-hot housing market. European stocks dropped, while sterling holds near four-week highs after Bank of England decision. The Bank of England scrapped its plan to cut interest rates, which it said could now move up or down and raised its forecasts for 2017 growth and inflation sharply due to the slide in sterling since Britain's vote to leave the EU.

Back home, shares of cigarette manufacturing companies ITC, VST Industries and Golden Tobacco ended in green since the Goods and Services Tax (GST) Council finalized the tax slab for tobacco products at lesser rate than expected. The market feared these products will be taxed around 40 percent in the GST regime. Reliance Industries (RIL) slipped after the government sought $1.55 billion from the company and its partners for drawing natural gas belonging to state-owned ONGC in the KG basin over the last seven years.

The BSE Sensex ended at 27284.91, down by 145.37 points or 0.53% after trading in a range of 27193.61 and 27498.91. There were 13 stocks advancing against 17 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 1.35%, while Small cap index was down by 2.17%. (Provisional)

The few gaining sectoral indices on the BSE were FMCG up by 1.10%, IT up by 0.74% and TECK up by 0.40%, while Realty down by 2.49%, Metal down by 2.30%, Capital Goods down by 1.80%, Consumer Durables down by 1.57% and PSU down by 1.21% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were ITC up by 2.93%, Wipro up by 1.04%, ONGC up by 0.86%, Hindustan Unilever up by 0.85% and Mahindra & Mahindra up by 0.84%. (Provisional)

On the flip side, Sun Pharma down by 7.11%, Dr. Reddy’s Lab down by 5.93%, Lupin down by 3.15%, Coal India down by 2.80% and Hero MotoCorp down by 2.80% were the top losers. (Provisional)

Meanwhile, in view of India's low rankings in global ease of doing business, the rating agency, CRISIL in its latest report said that India needs to focus on domestic market to boost manufacturing and have do a lot more to encourage this high-employment sector. The rating agency said that India can nurture growth in its manufacturing sector only if it strikes a balance between export-led and domestic demand-led growth. And that will require relentless efforts on improving the competitiveness of the country’ manufacturing sector.

The report said that manufacturing sector cannot be competitive in face of difficulties like inadequate physical infrastructure (reliable power and water), inflexible labour laws and an ‘opaque’ land acquisition system. It further said that even after the goods are produced, they face problems because of the inefficiencies in the system like logistical bottlenecks which results in higher costs. It added that the government will also have to ensure purchasing power across all sections for pushing the domestic consumption as well.

Further, CRISIL said that policy measures that ensure distribution of income growth to all sections will sustain domestic demand-led growth. This need not be achieved by merely subsiding the poor, but also by empowering them to participate in the growth process. It said that the maximum possible growth for manufacturing sector can only be realized if it strikes a balance between export-led and domestic-demand led growth. Stating that China is ceding space in the low-end manufacturing, rating agency said the country can target this segment but is lagging behind both Vietnam and Bangladesh in the race.

The CNX Nifty ended at 8435.65, down by 49.30 points or 0.58% after trading in a range of 8400.25 and 8504.00. There were 18 stocks advancing against 33 stocks declining on the index. (Provisional)

The top gainers on Nifty were HCL Tech up by 3.88%, ITC up by 3.00%, Tech Mahindra up by 1.37%, Wipro up by 1.13% and Tata Motors - DVR up by 1.04%. (Provisional)

On the flip side, Sun Pharma down by 7.23%, Dr. Reddy’s Lab down by 5.17%, Bharti Infratel down by 4.42%, Aurobindo Pharma down by 3.78% and Coal India down by 3.32% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 74.88 points or 1.1% to 6,715.63, Germany’s DAX decreased 98.76 points or 0.96% to 10,227.12 and France’s CAC decreased 34.62 points or 0.78% to 4,377.06.

Asian equity markets ended mostly in red on Friday, as investors fretted over the potential outcome of next week's US presidential election and waited for cues from the US government's October jobs report due out tonight. The non-farm payrolls report is expected to show continued job growth and lower unemployment, bolstering the Fed's case to raise short-term interest rates next month. Investors ignored a private report, which showed that activity in Japan's services sector expanded for the first time in three months in October. Japanese shares tumbled on a firmer yen as polls showed an extremely tight race in the US presidential election. Chinese shares inched down but notched up its fourth straight week of gains as on some signs showing stability in world's second-largest economy.