Benchmarks trim losses to end flat; extend consolidation for third straight day

Erasing their initial losses, Indian equity benchmarks ended the session flat with negative bias and extended their consolidation for third straight day on Thursday. After making a decent start, markets witnessed sharp sell-off which dragged key gauges below their crucial 32,200 (Sensex) and 10,100 (Nifty) levels in early deals, as traders turn concerned with report that advance tax payments by top corporate for September quarter has increased only marginally. Adding to the pessimism, a survey found that optimism level among India’s Chief Financial Officers during July-September touched a one and half year low amid concerns related to subdued demand and strain on corporate balance sheet. The Composite CFO Optimism Index for the September quarter of this year declined by 11% year-on-year and by 5.7% on a quarter-on-quarter basis.

However, markets got support near those psychological levels and started trimming their losses with traders taking solace after Finance Minister Arun Jaitley hint at a package of measures to boost the economy, while virtually ruling out any cut in duties on petroleum products to check the spike in fuel prices. Jaitley said the government is considering additional measures to bolster economy that has hit a three-year low of 5.7 percent in the first quarter of the current fiscal. He said an announcement with regard to the additional steps will be made after consulting Prime Minister Narendra Modi. Traders also get some comfort with World Bank President Jim Yong Kim’s statement that India has been growing pretty ‘robustly’ and predicted a strong global growth this year.

Firm opening in European counters too aided sentiments as banking shares drove the bourses higher. German’s Finance Ministry said that the country’s economy weakened at the start of the third quarter after a strong performance in the first half of the year, but indicators suggest its solid growth will continue. However, Asian markets ended mostly in red, digesting the Fed views on rates and the latest Bank of Japan review.

Back home, pharma stocks edged higher as traders paid no heed on reports that some drugs used in the treatment of cancer, hepatitis B, tuberculosis, measles and malaria are expected to get cheaper as the country’s drug pricing watchdog has limited their maximum prices. The National Pharmaceutical Pricing Authority (NPPA) said it has fixed and revised the ceiling prices of 39 drug formulations. The move is expected to slash prices of some of these drugs, like Hepatitis B immunoglobulin, by as much as 20%. However, auto stocks edged lower despite Moody’s Investors Service in its latest report stated that car sales in India are expected to grow by 9% this year riding on the back of GST regime as well as new product launches.

The NSE’s 50-share broadly followed index Nifty edged lower by around twenty points to end below its psychological 10,150 support level, while Bombay Stock Exchange's Sensitive Index -- Sensex declined by over thirty points to end below its crucial 32,400 mark. The broader markets too struggled to get traction and ended the session in red with a cut of around half a percent. The market breadth was in the favour of decliners, as there were 1000 shares on the gaining side against 1,564 shares on the losing side, while 151 shares remain unchanged.

Finally, the BSE Sensex slipped 30.47 points or 0.09% to 32,370.04, while the CNX Nifty was down by 19.25 points or 0.19% to 10,121.90.

The BSE Sensex touched a high and a low of 32,462.61 and 32,164.42, respectively and there were 12 stocks on gaining side as against 19 stocks on losing side on the index.

The broader indices ended in red; the BSE Mid cap index shed 0.34%, while Small cap index was down by 0.51%.

The few gaining sectoral indices on the BSE were Healthcare up by 2.74%, IT up by 0.18% and Telecom was up by 0.03%, while Realty down by 2.28%, Consumer Durables down by 1.43%, PSU down by 0.84%, Basic Materials down by 0.80% and Utilities was down by 0.78% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddy’s Lab up by 7.47%, Cipla up by 4.04%, Lupin up by 3.02%, Sun Pharma up by 2.59% and HDFC up by 1.37%. On the flip side, Tata Motors - DVR down by 2.14%, ICICI Bank down by 1.99%, Axis Bank down by 1.37%, Coal India down by 1.09% and ONGC down by 0.93% were the top losers.

Meanwhile, Commerce and Industry Minister Suresh Prabhu has said that his ministry is working on strategic roadmap in close collaboration with the Finance Ministry and the government think-tank NITI Aayog in order to effectively resolve the problems faced by exporters to boost shipments and create job. The statement came after exporters flagged their concerns on liquidity crunch and the loss of competitiveness of India’s exports due to the Goods and Services Tax (GST). 

The minister further said that the strategic roadmap includes addressing blockage of working capital, speeding up refunds of taxes paid by exporters and making incentives for exporters more attractive.  He also noted that ensuring growth of exports is the priority of the commerce ministry. He added that the ministry is also holding consultations with exporters to review the foreign trade policy.

Besides, the country's exports posted a double-digit year-on-year growth of 10.29 percent after a gap of three months to $23.81 billion in August, mainly on account of sharp rise in export of petroleum products, chemicals, marine products and engineering goods.

The CNX Nifty traded in a range of 10,158.90 and 10,058.60. There were 17 stocks in green as against 33 stocks in red, while 1 stock remained unchanged on the index.

The top gainers on Nifty were Dr. Reddy’s Lab up by 7.57%, Cipla up by 4.09%, Lupin up by 2.72%, Tech Mahindra up by 2.52% and Sun Pharma up by 2.45%. On the flip side, Zee Entertainment down by 2.57%, GAIL India down by 2.55%, ACC down by 2.23%, Eicher Motors down by 2.08% and Indiabulls Housing Finance down by 2.04% were the top losers.

European markets were trading in green; UK’s FTSE 100 rose 6.66 points or 0.09% to 7,278.61, France’s CAC increased 28.54 points or 0.54% to 5,270.20 and Germany’s DAX was up by 39.4 points or 0.31% to 12,608.57.

Asian equity markets ended mostly lower on Thursday, while the dollar strengthened after the US Federal Reserve struck a hawkish tone by signaling another rate hike this year. The Fed also announced that it would begin shrinking its $4.5 trillion balance sheet starting October. The dollar hit a two-month high versus the yen as Fed officials projected one more 25 bps rate hike by the end of the year and the Bank of Japan maintained the status quo in line with market expectations. Chinese shares ended a tad lower as losses in the realty and material sectors overshadowed gains in financials. However, Japanese shares inched higher as the yen eased on the back of a hawkish Federal Reserve. Investors also heaved a sigh of relief as the Bank of Japan kept its monetary policy steady and maintained its upbeat view of the economy, saying that exports have been on an increasing trend. The markets in Indonesia are closed for the Islamic New Year.