Last hour sell off drag benchmarks lower; Nifty breaches 10K mark

Paring all of their initial gains, Indian equity benchmarks ended the trade in red terrain on Wednesday. Selling which crept in final hour of trade mainly played spoil sport for the key gauges and pulled them below their crucial 10,000 (Nifty) and 31,900 (Sensex) levels, as traders opted to book profit at higher levels ahead of Q2 numbers of TCS and Reliance scheduled to be released on October 12 and October 13 respectively. Though, markets started the session on optimistic note, as sentiments remained upbeat with OPEC’s statement that India is experiencing some of the greatest structural changes as bold new reforms like note ban and GST have put the country firmly on a sustainable growth path. Some support also came with report that Private Equity/Venture Capital (PE/VC) investments touched a record high of $8.7 billion in the September quarter, a sharp increase over the last year, largely driven by big-ticket transactions. The surge was driven by large transactions, with nine $200-million-plus deals in the said quarter. Adding to the optimism, former RBI Governor C Rangarajan said that he expects that the economy would grow at 6.5% for the year 2017-18. He also said the job opportunities and economic growth of the country are inter-related.

However, markets took U-turn and entered into negative terrain as traders booked profit ahead of key economic data of August IIP and September CPI, which are scheduled to be released tomorrow. Some cautiousness also crept on report that US President Donald Trump discussed a ‘range of options’ with his top military advisors to respond to North Korea’s aggression and prevent it from threatening the US and its allies. North Korea has fired 22 missiles during 15 tests since February, drawing a sharp reaction from the US and its allies. Sentiments also turned downbeat on report that International Monetary Fund (IMF) pared India’s growth forecast for FY18, citing the lingering impact of demonetisation and disruption caused by the goods and services tax (GST), though it expects a revival as structural reforms bear fruit.

Weak opening in European counters too dampened sentiments. The German government will raise its 2017 growth forecast for Europe’s biggest economy to 2.0 percent, a sharp increase from its earlier estimate of 1.5 percent and the strongest rate since 2011. Asian markets ended mixed ahead of the release of the latest Fed meeting minutes and a key Chinese communist party meeting next week.

Back home, India Ratings & Research reported that the much awaited recovery in corporate capital expenditure in India has been delayed further and is now expected to happen only in the fiscal year ended 2021 two years later than earlier thought as highly leveraged stressed companies will drag down investment recovery. On the sectoral front, telecom stocks rang loud on the buzz of anticipated tower deal. Also, an anticipation of good set of quarterly revenues by the telecom companies is helping the upswing. Agri related stocks remained buzzing, as the Union Minister for Water Resources Nitin Gadkari said that the Centre plans to launch 285 irrigation projects covering a total of 1.88 crore hectares of farmland by next year.

Finally, the BSE Sensex lost 90.42 points or 0.28% to 31,833.99, while the CNX Nifty was down by 32.15 points or 0.32% to 9,984.80.

The BSE Sensex touched a high and a low of 32,098.46 and 31,769.40, respectively and there were 9 stocks on gaining side as against 22 stocks on losing side on the index.

The broader indices ended in red; the BSE Mid cap index declined by 0.82%, while Small cap index was down by 1.08%.

The top gaining sectoral indices on the BSE were Telecom up by 2.83%, Oil & Gas up by 1.11%, TECK up by 0.65%, Energy up by 0.37% and IT up by 0.30%, while Realty down by 2.01%, Metal down by 1.43%, Industrials down by 1.08%, Basic Materials down by 1.03% and Bankex down by 0.97% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 5.04%, TCS up by 1.66%, Wipro up by 1.43%, Mahindra & Mahindra up by 1.30% and Hindustan Unilever up by 0.32%. On the flip side, Tata Motors down by 2.02%, SBI down by 1.97%, Dr. Reddy’s Lab down by 1.47%, Lupin down by 1.42% and Tata Steel down by 1.40% were the top losers.

Meanwhile, the World Bank in its latest report has said that India's economic momentum has been affected by disruptions arising from structural reforms like demonetisation and uncertainties around the new uniform tax regime. As a result of this, it said that the country’s economic growth may slow down to 7.0 percent in 2017 from 8.6 percent in 2015. However, it also expects that sound policies around balancing public spending with private investment could accelerate growth to 7.3 percent by 2018.

In its latest South Asia Economic Focus, a biannual economic update, the unilateral agency has stated that while sustained growth is expected to translate to continued poverty reduction, more focus could be made to help benefit the informal economy more.  On the one hand, the report indicated that public and private consumption gained pace after implementation of the 7th central pay commission recommendations and due to the revival in rural demand after normal monsoon and agricultural impetus, however, overall demand slowed as public investments started to wane.

The report further said that economic growth is expected to increase gradually to 7.4 percent by 2020, underpinned by a recovery in private investments, which are expected to be crowded-in by the recent increase in public capex and an improvement in the investment climate (partly due to the passage of GST and Bankruptcy Code, and measures to attract FDI). It also said that the most substantial medium-term risks are associated with private investment recovery, which continues to face several domestic impediments such as corporate debt overhang, regulatory and policy challenges, along with the risk of an imminent increase in US interest rates.

The CNX Nifty traded in a range of 10,067.25 and 9,955.80. There were 14 stocks in green as against 35 stocks in red, while one stocks remained unchanged on the index.

The top gainers on Nifty were Bharti Airtel up by 5.55%, HPCL up by 3.65%, Bharti Infratel up by 2.71%, TCS up by 1.66% and Indian Oil Corporation up by 1.62%. On the flip side, Yes Bank down by 2.78%, SBI down by 2.24%, Vedanta down by 2.18%, Tata Motors down by 2.16% and Indiabulls Housing Finance down by 1.90% were the top losers.

European markets were trading mostly in red; France’s CAC decreased 4.72 points or 0.09% to 5,358.93 and UK’s FTSE 100 was down by 3 points or 0.04% to 7,535.27, while Germany’s DAX was up by 7.96 points or 0.06% to 12,957.21.

Asian equity markets made a mixed closing on Wednesday as upward momentum from a record Wall Street close faded and investors grew cautious ahead of the release of the latest Fed meeting minutes and a key Chinese communist party meeting next week. Meanwhile, higher commodity prices and better-than-expected data from Japan and Australia boosted investor optimism about global growth. Traders also heaved a sigh of relief after Catalan leader Carles Puigdemont refrained from making a formal declaration of the region's independence on Tuesday. Japanese shares closed at their highest level in 21 years, with exporters and defensive stocks leading the surge after data showed Japan's core machinery orders rose for a second straight month in August. Further, Chinese shares ended higher, helped by a jump in defensive consumer staples such as big liquor producers, while resources shares curbed gains. China is on track to meeting its growth target of around 6.5 percent this year, and could well exceed it, the head of the Statistics Bureau said on Tuesday.