Benchmarks end a lackluster session modestly in red; Nifty slips below 8100 mark

Indian stock markets prolonged the lull for second straight day and finished the session on a dull note, marginally below the neutral line as investors at large remained reluctant to build on long positions, keeping an eye on Parliament’s winter session where the government is unlikely to bring three bills related to GST in the coming days. Both Houses of Parliament had a rocky start to the winter session as the government and the Opposition again locked horns over a move to scrap two high-value banknotes that has triggered chaos and confusion across the country. Opposition parties attacked the Centre for the move - aimed at stamping out illegal cash - and said the measure has hit the poor and the marginalized. Negative sentiment and selling pressure have impacted the market during the last 4-5 trading days as companies struggle to gauge the effects of the move on the spending in various sectors of the economy. The severe cash crunch has reduced the spending power of a majority of Indian population, impacting demand-led and consumption stocks in the market. Besides, continued outflow of foreign funds, coupled with negative global cues, too weigh on the sentiment. Foreign Institutional Investors (FIIs) and foreign portfolio investors (FPIs) have sold equity shares worth over $1 billion in the past five trading days. However, investors got some comfort with Moody’s Investors Service affirming India’s sovereign rating at ‘Baa3’ with a positive outlook, saying it expects policymakers to continue reforms to achieve balanced growth and reduce the government's debt load. Moody's further said that India's policy makers have taken important steps to strengthen the country's institutions. Meanwhile, IT stocks continued to witness selling pressure for the second straight sessions after IT industry body Nasscom cut growth guidance for the industry to 8-10 percent in constant currency terms from 10-12 percent. Further, jewellery showed some fine recovery in the last hours of trade as market participants lapped up beaten down but fundamentally strong stocks in the segment.

On the global front, Asian markets ended mostly in green, while Japanese stocks ended marginally higher as stocks were bought after the central bank's first fixed-rate debt purchasing operation weakened the yen. Investors remained on the sidelines and refrained from any buying activity ahead of inflation, jobs and exports data expected from the US and testimony from Federal Reserve Chairwoman Janet Yellen on the economic outlook to Congress later in the day. Meanwhile, European stocks were mostly higher, as markets eyed the release of final euro zone inflation data due later in the day.

Back home, the local benchmarks began the session on a somber note, investors largely remained influenced by the daunting sentiments prevailing in Asian markets.  Though, the frontline indices soon gathered momentum and touched intraday highs in early hours but the optimism fizzled out soon and the indices see-sawed around the neutral line though the session. Finally the NSE’s 50-share broadly followed index Nifty, took a cut of over quarter percent to settle below the crucial 8,100 support level, while Bombay Stock Exchange’s Sensitive Index, Sensex slipped by seventy points and closed above the psychological 26,200 mark On the BSE sectoral space, Teck and IT pockets remained among top laggards in the space as they got lacerated by 1.66% and 1.38% respectively. On the flipside, Power, Metal and Oil & Gas pockets managed to go home with moderate gains of around half a percent. The market breadth remained pessimistic as there were 943 shares on the gaining side against 1671 shares on the losing side while 158shares remained unchanged.

Finally, the BSE Sensex declined 71.07 points or 0.27% to 26227.62, while the CNX Nifty dropped 31.65 points or 0.39% to 8,079.95. 

The BSE Sensex touched a high and a low of 26449.87 and 26155.40, respectively and there were 14 stocks on gainers side against 16 stocks on the losers side on the index.

The broader indices made a negative closing; the BSE Mid cap index ended lower by 0.38%, while Small cap index was down by 0.57%.

The top gaining sectoral indices on the BSE were Power up by 0.93%, Metal up by 0.50%, Oil & Gas up by 0.36%, PSU up by 0.35% and FMCG up by 0.33%, while TECK down by 1.66%, IT down by 1.38%, Capital Goods down by 0.08% and Auto down by 0.07% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 3.21%, Power Grid Corpn. up by 2.66%, GAIL India up by 1.52%, Cipla up by 1.12% and NTPC up by 1.10%. On the flip side, Bharti Airtel down by 4.26%, Bajaj Auto down by 2.55%, TCS down by 2.20%, Coal India down by 2.08% and Asian Paints down by 1.72% were the top losers.

Meanwhile, the government is mulling on a proposal to completely ban foreign direct investment (FDI) in the tobacco sector. Currently FDI is allowed in various forms of technology collaboration including licensing for franchise, trademark, brand name and management contracts in the sector and is not permitted in manufacturing of cigars, cigarettes of tobacco and tobacco substitutes, but now the government will consider closing this route as well for FDI.

There were reports that the Commerce and Industry Ministry is proposing to even ban FDI in licensing for franchise, trademark, brand name and management contract in the sector and inter-ministerial discussions were held in this regard and the proposal may be taken up by the cabinet soon. The ministry has already circulated a draft Cabinet note to seek views of different departments including health, finance, commerce and Niti Aayog.

The ban would eliminate the possibility of indirect flow of overseas funds to the tobacco sector and the major cigarettes manufactures have raised serious concerns over this move. But even if the proposal is okayed, existing collaborations will not be affected as it would be applicable only prospectively.

India is signatory to the Framework Convention on Tobbaco Control, under which it has the responsibility of reducing consumption of tobacco products and had recently made it mandatory to carry larger pictorial warnings on cigarette packets.

The CNX Nifty traded in a range of 8,151.25 and 8,060.30. There were 22 stocks in green against 29 stocks in red on the index.

The top gainers on Nifty were Tata Motors up by 3.70%, Hindalco up by 3.56%, Tata Motors - DVR up by 2.17%, Power Grid up by 2.15% and GAIL India up by 1.59%. On the flip side, Ambuja Cement down by 3.78%, Bharti Airtel down by 3.58%, Zee Entertainment down by 2.78%, ACC down by 2.54% and Asian Paint down by 1.88% were the top losers.

The European markets were trading mostly in green; UK’s FTSE 100 increased 23.71 points or 0.35% to 6,773.43, France’s CAC increased 3.27 points or 0.07% to 4,504.41, while Germany’s DAX decreased 25.85 points or 0.24% to 10,638.02.

Asian equity markets ended mostly in green on Thursday, even after the Dow Jones Industrial Average broke its seven-day winning streak overnight and oil prices retreated on bearish inventory data from the US Energy Information Administration. Investors also looked ahead to Fed Chair Janet Yellen's speech later in the day for clues as to the direction of US interest rates. Chinese shares ended higher after official data showed China's foreign direct investment grew in the first ten months of the year. FDI rose an annual 4.2 percent to reach CNY 666.3 billion or around $97 billion in the January-October period. Japanese stocks ended marginally higher as stocks were bought after the central bank's first fixed-rate debt purchasing operation weakened the yen.