Benchmarks end November F&O expiry session on pessimistic note

Indian equity markets truly depicted the choppiness of F&O expiry session on Thursday with key gauges ending the session with a cut of over a percentage point. After a cautious negative start, markets traded range-bound for most part of the session, but last hour sell off dragged key gauges below their crucial 33,200 (Sensex) and 10,250 (Nifty) levels. Sentiments remained dampened as traders remained on sidelines ahead of September quarter GDP data that will be announced later in the day, though it is expected that economic growth pace is likely to pick up in the three months ending in September, halting a five-quarter slide as businesses started to overcome teething troubles after the bumpy launch of a national sales tax. Selling got intensified in final hour of trade on report that India’s fiscal deficit at the end of October hit 96.1 percent of the budget estimate for 2017- 18, mainly due to lower revenue realisation and rise in expenditure. In absolute terms, the fiscal deficit -- the difference between expenditure and revenue -- was Rs 5.25 lakh crore during April-October of 2017-18. During the same period of 2016-17, the deficit stood at 79.3 percent of the target.

Sentiments also remained dampened with Chief Economic Advisor Arvind Subramanian’s statement that demonetization and GST rollout may have reinforced the growth deceleration that had already set in. He added that not just growth, but investment, credit, exports, industrial production they all started decelerating sometime in the second quarter last year. Traders also remained concerned with a foreign brokerage report enlightening that a prolonged bull market across stocks, bonds and credit has left a measure of average valuation at the highest since 1900, a condition that at some point is going to translate into pain for investors. The report added that all good things must come to an end and there will be a bear market, eventually. Traders paid no heed towards the report that India has moved up one place to the 68th spot on the Global Entrepreneurship Index of 2018, which is topped by the US. Traders also shrugged off Minister of State for Finance, Shiv Pratap Shukla’s statement that by March 2018, GST will become so simple that people will have no issues.

Weakness in regional counterparts too dampened sentiment with most of the Asian markets ending lower on Thursday, weighed down by a plunge in high-flying tech shares on fears that a long boom in micro-chips may have peaked, while virtual currency bitcoin steadied after a roller-coaster ride in the previous session. However, European markets trading mostly in green in early deals, as investors shrugged off concerns over North Korea and looked ahead to euro zone inflation data due later in the day.

Back home, steel stocks exhibited mixed trend with a report from Moody’s Investors Services which has said that profitability of Indian steel companies is likely to improve next year despite an increase in raw material prices. The rating agency said that among major steel-producing Asian countries, operating conditions will be most supportive in India because of robust domestic demand and protectionist measures, and despite an increase in raw material prices and new capacity. Export oriented stocks too remained in focus, as the Finance Ministry asked exporters to file GSTR 3B and table 6A of GSTR 1 on the GSTN portal and Shipping Bill(s) on the Customs EDI System, which are pre-requisites for sanction of payment.

Finally, the BSE Sensex tumbled 453.41 points or 1.35% to 33,149.35, while the CNX Nifty was down by 134.75 points or 1.30% to 10,226.55.

The BSE Sensex touched a high and a low of 33,576.20 and 33,108.72, respectively and there were 2 stocks on gaining side as against 29 stocks on losing side on the index.

The broader indices ended mixed; the BSE Mid cap index declined 0.55%, while Small cap index was up by 0.10%.

The few gaining sectoral indices on the BSE were Realty up by 1.09%, Telecom up by 0.38% and Consumer Durables was up by 0.06%, while Bankex down by 1.88%, Energy down by 1.58%, Metal down by 1.10%, PSU down by 1.09% and Auto was down by 0.98% were the top losing indices on BSE.

The only gainers on the Sensex were Dr. Reddy’s Lab up by 0.45% and NTPC was up by 0.36%. On the flip side, Kotak Mahindra Bank down by 2.63%, SBI down by 2.54%, Tata Motors - DVR down by 2.54%, Reliance Industries down by 2.42% and Axis Bank down by 2.39% were the top losers.

Meanwhile, the Food Safety and Standards Authority of India (FSSAI) has issued a set of guidelines regarding the process to recall food products from markets if found unsafe. It noted that the main purpose behind this is to help food business operators (FBOs) frame a proper recall plan and implement them when the situation demand. Besides, it said that at the time of recall being carried out, the FBO shall submit their detailed recall plan to the CEO, FSSAI. It also said that the concerned company should also inform consumers, depending upon the extent of the recall.

As per the FSSAI, food recalls are essential to remove or correct marketed food products and their labelling that violate the laws administered by the regulatory authority. It also expalined that recall can be defined as an action to remove food products from market at any stage of the food chain, including that possessed by consumer, which may pose a threat to the public health or food that violate the Act, or the rules or regulations made there under. According to its guidelines, there are 10 steps which must be carried out to ensure a successful recall exercise. It said the key steps are that FBOs need to set up a recall management team, inform the regulator, identify all products to be recalled, detain and segregate products to be recalled which are in the company's control besides verifying the effectiveness of the recall.

The Food safety regulator further said that the recovered product must be stored in an area which is separated from any other food product. It also said that companies must also maintain records of the amount of recovered product and the batch codes of the product recovered. It also said that after recovery, products may be corrected or reprocessed before release to the market if it is fit for human consumption. It noted the companies, which have produced unsafe products, should take steps so that the need for such recalls does not arise again in future.

The CNX Nifty traded in a range of 10,332.70 and 10,211.25. There were 11 stocks in green as against 39 stocks in red on the index.

The top gainers on Nifty were GAIL India up by 1.05%, Bosch up by 1.04%, Bajaj Auto up by 0.58%, NTPC up by 0.55% and HPCL up by 0.46%. On the flip side, UPL down by 3.36%, Hindalco down by 2.88%, Kotak Bank down by 2.50%, Axis Bank down by 2.49% and Reliance Industries down by 2.48% were the top losers.

The European markets were trading mostly in green; France’s CAC increased 19.9 points or 0.37% to 5,417.95 and Germany’s DAX was up by 87.48 points or 0.67% to 13,149.35, while UK’s FTSE 100 was down by 16.59 points or 0.22% to 7,376.97.

Asian equity markets ended mostly in red on Thursday as weakness in tech stocks following the overnight pullback by the tech-heavy Nasdaq overshadowed positive manufacturing data from China. The manufacturing sector in China continued to expand in November, and at a faster pace, the National Bureau of Statistics said with a PMI score of 51.8. That beat forecasts for 51.4 and was up from 51.6 in October. Chinese shares ended lower, pressured by selling of real estate and financial shares, and as investors booked profits in sector leaders that had stellar gains this year. Though, Japanese shares hit a three-week high as the dollar firmed up against the yen and gains in the financial sector offset weakness in tech shares. There were also hopes that the Bank of Japan will buy more exchange-traded funds.