Benchmarks end choppy trade with marginal losses

Indian equity benchmarks ended the sluggish day of trade with marginal losses on Tuesday, as traders remained cautious with a report from domestic rating agency Care Ratings, which said that employment generation has not kept pace with GDP expansion and termed it as a ‘major concern’. Such a scenario calls for proactive measures from government and the recent infrastructure building efforts will help, it noted and said that employment growth has not kept pace with economic growth. Traders overlooked report that the government has extended the last dates of filing GSTR-2 and GSTR-3. The last date for filing of GSTR-2 for the month of July, 2017 is 31st October, 2017, while the last date for filing of GSTR-3 for the month of July, 2017 stands extended to 11th December, 2017. Besides, Finance Secretary Ashok Lavasa statement that India’s fiscal deficit is on the path of recovery, with showing an ease of about 90 percent of the budget estimate for the full year at the end of September from the level of 96.1 percent at the end of August, too failed to provide support.

However, losses remained capped with SBI Research in its latest report accessing that Indian economy is likely to improve to 6 percent in the second quarter of the current fiscal year 2017-18, as against 5.7 percent growth in the first quarter of FY18. It also said that Q2 growth might be in the lower end of 6-6.5 percent band with an upward bias. Traders also took some comfort with report that India is expecting a significant improvement in ranking in the World Bank's ease of doing business index on the back of several steps taken by the government like bankruptcy law and host of other reforms. Traders also got some solace with few foreign investment banks, who have started revising upwards their targets for the benchmark indices on the back of bank recapitalisation programme, infrastructure push and continued inflow of domestic savings into equities and said that best is yet to come for Sensex and Nifty.

On the global front, European counters were trading in green in early deals amid muted trading as Germany’s stock market was closed for a holiday. Euro zone inflation slowed in October, coming in below expectations and edging slightly further away from the European Central Bank’s target. Asian markets exhibited mixed trend, as China’s official manufacturing PMI for October missed economists’ expectations and the Bank of Japan kept its monetary policy steady, as widely expected.

Back home, stocks related to real estate space edged higher on report that real estate investment in India’s six major cities doubled to $2.87 billion in the year ended June 2017 as Mumbai attracted maximum capital and was ranked 81st globally. These six cities were able to attract capital because of strong economic drivers, acceleration in reforms, high yields and rapidly modernizing business base. Mixed reactions were displayed in cement stocks on report that cement prices in northern states of India are expected to rise on the back of rising costs brought about by a ban on the use of pet-coke in the Delhi NCR region from November 1.

Finally, the BSE Sensex lost 53.03 points or 0.16% to 33,213.13, while the CNX Nifty was down by 28.35 points or 0.27% to 10,335.30.

The BSE Sensex touched a high and a low of 33,294.30 and 33,164.28, respectively and there were 14 stocks on gaining side as against 17 stocks on losing side on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.14%, while Small cap index was up by 0.46%.

The top gaining sectoral indices on the BSE were Realty up by 3.03%, Telecom up by 1.46%, Consumer Durables up by 0.76%, FMCG up by 0.28% and Bankex was up by 0.25%, while Metal down by 1.76%, Utilities down by 0.73%, IT down by 0.64%, Basic Materials down by 0.58% and PSU was down by 0.55% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 8.00%, ONGC up by 2.38%, Bharti Airtel up by 0.98%, Hero MotoCorp up by 0.63% and Wipro up by 0.39%. On the flip side, Infosys down by 2.43%, Mahindra & Mahindra down by 2.14%, Tata Steel down by 2.11%, SBI down by 2.02% and Tata Motors down by 1.66% were the top losers.

Meanwhile, moving ahead with reforms to revive the public sector banks (PSBs), the government has constituted a ministerial panel headed by Finance Minister Arun Jaitley that will oversee merger proposals of the country’s 21 state-owned banks. The other members of the panel include Railway and Coal Minister Piyush Goyal and Defence Minister Nirmala Sitharaman.

The decision comes less than a week after the government announced a Rs 2.11 trillion bank recapitalisation plan for public sector banks weighed down by bad loans, seeking to stimulate the flow of credit to spur private investment. Jaitley had said that capital infusion roadmap for PSBs will be accompanied by a series of banking reforms over next few months. The constitution of an Alternative Mechanism is a move in that direction. The cabinet had decided to set up an Alternative Mechanism to fast-track PSBs consolidation.

Besides, the consolidation of struggling state-run banks, which have a market share of about 70% and account for over 80% of bad loans in the Indian banking system, is aimed at building scale and bolstering their risk-taking ability.

The CNX Nifty traded in a range of 10,367.70 and 10,323.95. There were 17 stocks in green as against 32 stocks in red, while one stock remained unchanged on the index.

The top gainers on Nifty were Axis Bank up by 8.52%, Bharti Infratel up by 2.85%, ONGC up by 2.41%, HCL Tech up by 2.27% and Bharti Airtel up by 1.03%. On the flip side, UPL down by 3.08%, Vedanta down by 2.63%, GAIL down by 2.24%, Mahindra & Mahindra down by 2.09% and Tata Steel down by 2.05% were the top losers.

European markets were trading in green; France’s CAC increased 5.69 points or 0.1% to 5,499.32 and UK’s FTSE 100 was up by 14.75 points or 0.2% to 7,502.56.

Asian equity markets made a mixed closing on Tuesday as China's official manufacturing PMI for October missed economists' expectations and the Bank of Japan kept its monetary policy steady, as widely expected. Japanese shares ended on a flat note as the dollar dipped versus the yen and preliminary figures showed Japan's industrial production dropped a seasonally adjusted 1.1 percent month-over-month in September, reversing a 2.0 percent rise in August. A separate report revealed that the country's jobless rate held steady for the third straight month in September, in line with expectations. Meanwhile, Chinese shares closed marginally higher, underpinned by strong gains in transport firms even as China posted a disappointing October manufacturing activity index. The manufacturing PMI fell to 51.6 from 52.4 in September.