Benchmarks snap four days gaining streak; Nifty slips below 9,900 mark

Snapping four days winning streak, Indian equity benchmarks ended the Thursday’s trade in red with marginal losses, after the Reserve Bank of India (RBI) cut its growth estimate for the current fiscal on Wednesday and warned that any economic stimulus and farm debt waivers could push up fiscal deficit by 1 percentage point, potentially stoking inflation. Markets started off on optimistic note, but soon gave up all of their gains to turn red and traded flat-to-negative. Fresh selling in the last leg of trade mainly dragged the frontline indices below their crucial 9,900 (Nifty) and 31,600 (Sensex). Investors remained cautious on foreign brokerage report that the sentiment of foreign portfolio investors towards India is likely to remain weak until corporate earnings recovery sets in.  This, coupled with high equity supply, would mean that the market performance will remain subdued until the end of the year. FPIs have pulled out over Rs 24,000 crore from Indian equities since August due to disappointment over economic growth, delay in earnings recovery, expensive valuation and geopolitical tensions.

However, losses remained capped on report that Nikkei India Services Purchasing Managers’ Index rose to 50.7 in September from 47.5 in August. India’s service sector PMI marked below the 50.0 neutral level in the previous two months due to the goods and services tax (GST) introduced in July. According to the PMI survey, greater workloads supported job creation in September, with the rate of employment growth the strongest since June 2011. Traders also took some solace with NITI Aayog CEO Amitabh Kant’s statement that while there has been a ‘little bit of dip’ in the Indian economy, it is now bouncing back. Prime Minister Narendra Modi too has asserted that the economy is much better than critics make it out to be and that his government is ‘totally committed’ to reverse the slowdown in GDP growth in recent quarters.

On the global front, European markets were trading mostly in red as investors monitored political events and took a cautious approach ahead of key data releases. Spanish equities investors cautioned that political uncertainty could hurt the economy after Catalonia’s separatist leader said the region would move on Monday to declare independence after a referendum that authorities in Madrid declared illegal. Asian markets ended mixed, as market participants awaited the US government's non-farm payrolls report due out Friday for further clues as to the timing of the next rate rise.

Back home, select IT stocks remained under pressure as Indian IT companies are likely to report another quarter of muted results as clients in retail and banking and financial services continue to curtail their IT spends. However, IT margins will be helped by favourable currency movements. Banking stocks edged lower despite RBI cutting 50 basis points in SLR, which will further ease liquidity in the banking system. Prataap Snacks made a stellar listing on the bourses today and went home with a gain of over 25%. The Rs 482 crore IPO was oversubscribed 47.39 times.

Finally, the BSE Sensex lost 79.68 points or 0.25% to 31,592.03, while the CNX Nifty was down by 26.20 points or 0.26% to 9,888.70.

The BSE Sensex touched a high and a low of 31,772.41 and 31,562.25, respectively and there were 13 stocks on gaining side as against 18 stocks on losing side on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.49%, while Small cap index was up by 0.79%.

The top gaining sectoral indices on the BSE were Basic Materials up by 0.94%, Realty up by 0.86%, Healthcare up by 0.35%, Metal up by 0.29% and Industrials up by 0.21%, while Telecom down by 0.71%, Oil & Gas down by 0.56%, Consumer Durables down by 0.40%, PSU down by 0.31% and Bankex down by 0.31% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 1.79%, Coal India up by 1.11%, Mahindra & Mahindra up by 0.85%, Reliance Industries up by 0.61% and Tata Motors - DVR up by 0.61%. On the flip side, Power Grid down by 1.99%, ICICI Bank down by 1.54%, Hero MotoCorp down by 0.97%, Bajaj Auto down by 0.94% and Axis Bank down by 0.82% were the top losers.

Meanwhile, the Department of Telecommunications (DoT) has approached the sector regulator the Telecom Regulatory Authority of India (TRAI) on review of existing spectrum caps - 50 percent within a band and 25 percent overall across all bands - applicable on the operators. The telecom department’s letter to TRAI in this regard follows the recommendations made by the inter-ministerial group (IMG) tasked with examining financial stress in the telecom sector.

In light of the IMG report, TRAI is requested to provide views on whether existing applicable band-wise spectrum cap of 50 percent of total spectrum assigned in a band for an LSA (Licensed Service Area) and overall cap of 25 percent of total spectrum assigned in LSA across bands, should continue or needs review. IMG, in its report, had stated that Idea, Vodafone and Reliance Communications had requested for removing the spectrum caps, while Airtel had represented against it.  It also noted that the matter 'merits examination and inputs from regulator' and accordingly, the telecom department has decided to consult TRAI on the issue of spectrum limit.

As per the current rules, operators in each access area are not allowed to exceed the cap of 25 percent of total radiowaves assigned in 700, 800, 900, 1800, 2100, 2300 and 2500 Mhz bands, and 50 percent within a specific band. In case of a merger and acquisition, if merged entity exceeds the stipulated limits it has to surrender the excess spectrum within one year. Any easing of spectrum limit within a band by TRAI may come as a relief to Idea Cellular and Vodafone which are in the process of merging.

The CNX Nifty traded in a range of 9,945.95 and 9,881.85. There were 21 stocks in green as against 29 stocks in red on the index.

The top gainers on Nifty were Aurobindo Pharma up by 2.66%, Ambuja Cement up by 1.93%, NTPC up by 1.40%, Yes Bank up by 1.17% and Coal India up by 1.15%. On the flip side, Tech Mahindra down by 3.24%, Bharti Infratel down by 2.87%, Power Grid down by 1.94%, HPCL down by 1.83% and ICICI Bank down by 1.48% were the top losers.

European markets were trading mostly in red; Germany’s DAX decreased 27.9 points or 0.22% to 12,942.62 and France’s CAC was down by 3.37 points or 0.06% to 5,359.86, while UK’s FTSE 100 was up by 13.33 points or 0.18% to 7,480.91.

Asian equity markets made a mixed closing on Thursday as market participants awaited the US government's non-farm payrolls report due out Friday for further clues as to the timing of the next rate rise. Meanwhile, falling oil prices coupled with worries about Catalonia's independence vote from Spain kept investors’ appetite in check. Japanese shares ended little changed near two-year highs as the yen strengthened slightly versus the greenback. Markets in South Korea and China were closed for the Harvest Festival and National Day holidays, respectively. Hong Kong also remained closed for the Mid-Autumn Festival.