Benchmarks end slightly in red on weak global cues

Indian equity benchmarks ended the volatile session of trade with marginal losses on Thursday, as traders opted to book some profit with key indices touching the all time high, amid weak global cues. Markets traded cautiously throughout the day, as traders remained on sidelines awaiting the formal nomination of the next head of the central bank. However, losses remained capped as traders took some solace with private report stating that India’s current account deficit (CAD) for this financial year is expected to be around $ 40 billion, or 1.5 per cent of GDP. CAD rose sharply to $ 14.3 billion, 2.4 per cent of GDP, at the end of first quarter of 2017-18. Report highlighted that July-September CAD is expected at about 1.6% of GDP and accordingly, CAD for the first half of this fiscal (April- September) is likely to be around 2% of GDP.

Traders also took some comfort with Former Economic Affairs Secretary Shaktikanta Das’ statement that improvement in ease of doing business is extremely relevant and will promote private investment, growth and job creation. Separately, after a record jump of 30 places in the World Bank’s ease of doing business ranking, India is gearing up to leapfrog into the top 50 with around 90 specific reforms lined up for various ministries. The reforms covering seven ministries are to be implemented by May next year with a focus on reducing the number of processes and moving them online. The maximum improvements targeted are in the areas of construction permits (22) and registering property (14), areas where India still has a low rank.

Weakness in global markets dampened sentiments with European counters making sluggish start, as investors waited for the latest rate decision from the Bank of England (BOE). Manufacturers in the euro zone had their strongest month since early 2011 in October as factories struggled to meet booming demand despite adding staff at the fastest rate in at least 20 years. Asian markets closed mostly in red. China will lower tariffs and step up bank financing to support more imports as the country’s massive trade surplus has a negative impact on its citizens.

Back home, investors took note that the government may nudge cash surplus central public sector enterprises (CPSEs) to invest in the proposed Rs 1.35 lakh crore bond offering to recapitalize public sector banks. On the sectoral front, Pharma stocks emerged as a dark horse due to attractive valuations and expectation of faster USFDA approvals for plants. However, PSU banking stocks remained under pressure, despite report that the government in a bid to push consolidation among state run lenders has said that the alternative Mechanism headed by finance minister Arun Jaitley may also direct banks to examine proposals for amalgamation. Steel stocks too lost sheen despite report that the Union Steel Minister Chaudhary Birender Singh has called for coastal shipping of steel products to boost growth of the sector.

Finally, the BSE Sensex lost 27.05 points or 0.08% to 33,573.22, while the CNX Nifty was down by 16.70 points or 0.16% to 10,423.80.

The BSE Sensex touched a high and a low of 33,657.57 and 33,527.00, 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 0.47%, while Small cap index was up by 0.41%.

The gaining sectoral indices on the BSE were Healthcare up by 2.48%, Consumer Durables up by 1.26%, Telecom up by 0.75%, Utilities up by 0.67% and Power was up by 0.34%, while FMCG down by 0.93%, Auto down by 0.61%, Oil & Gas down by 0.34%, Energy down by 0.30% and Metal was down by 0.30% were the top losing indices on BSE.

The top gainers on the Sensex were Lupin up by 3.26%, Sun Pharma up by 2.69%, Power Grid Corporation up by 2.14%, Dr. Reddy’s Lab up by 1.88% and Coal India up by 1.54%. On the flip side, Hero MotoCorp down by 2.19%, ITC down by 1.52%, ONGC down by 1.52%, SBI down by 1.52% and Hindustan Unilever down by 1.40% were the top losers.

Meanwhile, Union Steel Minister Chaudhary Birender Singh has said that coastal shipping is crucial for the growth of steel sector and the economy in general. He described coastal shipping as ‘cheap, eco-friendly, energy-efficient and relatively safe mode of transport’.

Singh has said that coastal shipping would help to reduce logistics cost incurred by steel and other major industries drastically and the industry can be made more competitive. He also said that there was great scope for developing coastal steel clusters in the country and to increase exports to other countries. He added that India has the potential to become a major exporter of steel in the global market.

The Steel Minister further said the synergies between the steel, ship-building and automobile sectors should be fully exploited by making use of coastal shipping. He also said that, according to a study, India could save up to Rs 35,000 crore per annum by coastal shipping of commodities.

The CNX Nifty traded in a range of 10,453.00 and 10,412.55. There were 22 stocks in green as against 28 stocks in red on the index.

The top gainers on Nifty were Aurobindo Pharma up by 3.77%, Lupin up by 3.22%, Sun Pharma up by 2.77%, Power Grid Corporation up by 2.69% and Dr. Reddy’s Lab up by 2.16%. On the flip side, Tech Mahindra down by 4.30%, Hero MotoCorp down by 2.57%, Bharti Infratel down by 2.07%, SBI down by 1.77% and ITC down by 1.50% were the top losers.

European markets were trading mostly in red; Germany’s DAX decreased 22.4 points or 0.17% to 13,443.11 and France’s CAC was down by 3.71 points or 0.07% to 5,510.58, while UK’s FTSE 100 was up by 11.28 points or 0.15% to 7,499.24.

Asian equity markets ended mostly lower on Thursday as investors awaited the announcement of next Fed chief as well as Friday's US jobs report for direction. The dollar pulled back in Asian trading as lingering uncertainty about the US tax bill overshadowed a mildly hawkish FOMC statement. The Federal Reserve on Wednesday left interest rates unchanged as widely expected and offered support for the December rate hike that most economists were predicting. Chinese shares ended lower, as worries resurfaced over a possible economic slowdown and tighter liquidity before year-end. Meanwhile, Japanese shares extended its strong rally to top a new 21-year peak, ahead of a long weekend, with investors piling into miners and companies such as Honda Motor and Sony on robust earnings prospects.