Markets fail to hold early gains; end flat with negative bias

Wednesday turned out to be a volatile day for the Indian markets, as both Sensex and Nifty ended flat with a negative bias after altering between green and red terrain. The start of the trading session was cheerful, amid reports that the Reserve Bank (RBI) will infuse Rs 12,000 crore into the system through purchase of government securities on November 15, with an aim to ease tight liquidity situation. Traders also got encouragement as the Securities and Exchange Board of India (SEBI) tightened disclosure and review norms for credit rating agencies (CRAs). SEBI ordered CRAs to analyse deterioration in the liquidity conditions of an issuer, while monitoring its repayment schedules and taking into account any asset-liability mismatches. These measures will enable investors to understand underlying rating drivers better and make more informed investment decisions. Sentiments were also positive during early morning deals with Prime Minister Narendra Modi’s statement that financial inclusion has become a reality for 1.3 billion Indians as he pitched India as a favourite investment destination at the Fintech Festival.

However, key indices gave up their early gains and traded volatile throughout the session, after WPI inflation spread concerns on street by rising 4-month high to 5.28% in October from 5.13% in September and 3.68% during the corresponding month of the previous year. The mood of the market participants got affected with a private report stating that the overall hiring sentiment for the second half of this financial year has declined by 3% to 92% with persisting currency and oil pricing concerns in the country. Traders also got worried as the CriSidEx index showed that sentiment among micro and small enterprises (MSEs) dipped marginally in the quarter ended September, compared to the last three months. The CriSidEx index stood at 124 in Q2 FY19, marginally lower than 127 in Q1. Adding more concerns, a private report showed that the liquidity crisis at non-bank lenders and higher interest rates seem to have rattled chief financial officers (CFOs) of India Inc and resulted in their optimism to slip to a 19-quarter low. Some concerns also came with reports that large-scale cyberattacks, massive incidents of data theft and extreme weather events are the top three risks for India Inc. About 88% of the survey respondents across 19 industries identified cyberattacks as the top-most risk.

On the global front, European markets were trading in red, as Germany's consumer price inflation in October was the highest in over a decade. The final figures from the Federal Statistical Office showed that the consumer price index rose 2.5% year-on-year following a 2.3% increase in September. The street overlooked reports that German investor confidence improved in November, defying expectations for further weakness. According to the survey data from the ZEW, the ZEW Indicator of Economic Sentiment for Germany improved to (-) 24.1 from (-) 24.7 in October. Asian markets ended mixed, as Japan's gross domestic product slipped a seasonally adjusted 0.3% sequentially in the third quarter of 2018. That was in line with expectations following the 0.7% gain in the previous three months.

Back home, banking sector stocks ended higher, amid report that the government is of the view that the RBI should resort to Basel III norms for capital adequacy in banks rather than the present stricter guidelines which restrict the lending capacity of lenders, while power stocks gained with Power Secretary A K Bhalla’s statement that the power ministry will bring its second round for 2,500 Mw capacities to give relief to stressed power assets, buoyed by a good response for the first tender of mid-term (3 years) power purchase agreement auction. Further, agriculture sector stocks remained in focus as agri input companies posted decent growth in revenue and net profit for the quarter ended September 2018, due to an increase in sales volume on normal monsoon rainfall and price hikes, while coal Industries stock remained in limelight, as a private report stated that Niti Aayog plans to come out with a policy prescription on how India should meet its demand for coal in domestic power and non-power sectors to cut imports of the fossil fuel over the next 10 years.

Finally, the BSE Sensex lost 2.50 points or 0.01% to 35,141.99, while the CNX Nifty was down by 6.20 points or 0.06% to 10,576.30.

The BSE Sensex touched a high and a low of 35,351.88 and 34,986.86, respectively and there were 14 stocks advancing against 17 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index rose 0.19%, while Small cap index was down by 0.21%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.18%, PSU up by 1.07%, FMCG up by 0.94%, Telecom up by 0.83% and Bankex up by 0.52%, while IT down by 2.24%, TECK down by 1.86%, Healthcare down by 1.65%, Realty down by 1.52% and Metal down by 0.81% were the top losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 3.16%, Asian Paints up by 2.73%, ONGC up by 2.72%, SBI up by 2.00% and Indusind Bank up by 1.95%. On the flip side, Sun Pharma down by 7.36%, Kotak Mahindra Bank down by 3.04%, TCS down by 2.85%, Mahindra & Mahindra down by 2.62% and Infosys down by 1.84% were the top losers.

Meanwhile, Union Minister Nitin Gadkari will invite prospective investors for the second tranche of highway projects of 586 km under toll-operate-transfer (TOT) basis. The first TOT auction for a bundle of nine projects was a huge success and had fetched NHAI Rs 9,681 crore. TOT is a model for monetising operational National Highways projects. Under TOT, the investor makes a lump sum payment in return for long term toll collection rights backed by a sound tolling system and the concession period is 30 years.

He said upto 49 percent divestment is allowed till two years of the concession period, upto 10 percent change in ownership is allowed after two years. The investor is de-risked from undertaking any construction. If required, NHAI will conduct capacity augmentation at its own cost. The first lot of TOT bundle comprising nine projects, totalling around 681 KM of roads in two states of Andhra Pradesh and Gujarat, was awarded in 2018.

The second bundle of over 586 kms is now offered spread over four States - Rajasthan, Gujarat, West Bengal and Bihar. The offer has 12 toll plazas across four highways. These stretches include Chittorgarh-Kota & Chittorgarh Bypass Swaroopganj-Pindwara & Pindwara-Udaipur, Palanpur / Khemana - Abu Road, Jetpur-Somnath, PurneaDalkhola, DalkholaIslampur, Islampur - Sonapur - Ghoshpukur and Salsalabari - West Bengal Assam Border Section.

The CNX Nifty traded in a range of 10,651.60 and 10,532.70. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were HPCL up by 4.04%, BPCL up by 3.60%, UPL up by 3.05%, Maruti Suzuki up by 2.79% and IOC up by 2.69%. On the flip side, Sun Pharma down by 7.29%, Tech Mahindra down by 3.58%, GAIL India down by 3.52%, Kotak Mahindra Bank down by 3.51% and HCL Tech. down by 3.50% were the top losers.

European markets were trading in red; UK’s FTSE 100 dipped 43.22 points or 0.62% to 7,010.54, France’s CAC lost 55.52 points or 1.1% to 5,046.33 and Germany’s DAX was down by 100.46 points or 0.88% to 11,371.76.

Asian markets ended mixed on Wednesday as global growth worries persisted and Italy's populist government escalated a row with the European Commission over the country's spending plans. The Italian government told the European Union Tuesday it would maintain its deficit and economic growth forecasts for 2019 despite calls from the bloc's authorities to revise its draft budget. Chinese shares ended lower after the release of mixed economic data. Industrial production in China rose an annual 5.9 percent in October, the National Bureau of Statistics said today - exceeding expectations for 5.8 percent, which would have been unchanged from the September reading. Retail sales climbed 8.6 percent year-on-year - missing forecasts for a gain of 9.2 percent, while fixed asset investment advanced an annual 5.7 percent, surpassing forecasts for 5.5 percent. Meanwhile, Japanese shares ended higher as technology companies and electronic component makers surged on short covering.