Bourses fail to hold gains; end in red terrain

Indian equity bourses failed to hold gains on Monday and ended in red. After a cautious start, markets remained positive for the most part of the session, taking support from Niti Aayog Vice-chairman Rajiv Kumar’s statement that with several steps taken by the government in the past couple of months to boost the economy, the country’s growth is expected to be around 6.5% this year, although it is lower than expected. Some relief also came among investors because of the Finance Ministry’s statement that the Reserve Bank's decision to lower benchmark lending rate will complement recent measures taken by the government to accelerate growth.

But, in the last leg of trade, key indices slipped into negative terrain. Sentiments got hit with RBI’s survey showing that the consumer sentiment declined further, and people are less optimistic about their income to rise over the year ahead. The consumer confidence in September registered a steep fall to 89.4 from 95.7 in July this year. The consumer confidence has touched the lowest level in at least the last six years. The street overlooked Union Minister of State for Finance and Corporate Affairs Anurag Thakur’s statement that India will see heavy foreign investment in the next two years following the government's decision to cut corporate tax rates.

On the global front, European markets were trading in red terrain, after Norway's industrial production declined further in August. The figures from Statistics Norway showed that industrial production declined a calendar-adjusted 9.2 percent year-on-year in August, following a 5.7 percent fall in July. Asian markets ended in green territory, despite China's foreign exchange reserves declined in September. The figures from the People's Bank of China showed that forex reserves totaled $3.092 trillion at the end of September compared to $3.107 trillion in August. The expected level was $3.105 trillion.

Back home, automobile industry stocks were in watch, after rating agency ICRA said its outlook for the domestic commercial vehicle industry remains negative for the rest of the fiscal due to subdued sales amid slowing economic growth and tight financing environment. The rating agency believes that demand headwinds would continue in the near-term with likelihood of limited pre-buying ahead of the roll-out of BS-VI emission norms. Further, e-commerce industry stocks remained in focus, after the government assured that the new e-commerce policy, which is under the process of formulation, will be ‘good and sound’.

Finally, the BSE Sensex fell 141.33 points or 0.38% to 37,531.98, while the CNX Nifty was down by 48.35 points or 0.43% to 11,126.40.

The BSE Sensex touched a high and a low of 37,919.47 and 37,480.53, respectively and there were 08 stocks advancing against 23 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index lost 0.24%, while Small cap index was down by 0.75%.

The few gaining sectoral indices on the BSE were Consumer Durables up by 1.06%, Telecom up by 0.32% and Bankex up by 0.26%, while Healthcare down by 2.43%, Oil & Gas down by 1.84%, PSU down by 1.71%, Capital Goods down by 1.65% and Industrials down by 1.44% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 8.19%, Axis Bank up by 2.53%, Bajaj Auto up by 1.03%, ICICI Bank up by 0.62% and Bharti Airtel up by 0.53%. On the flip side, Tata Motors - DVR down by 3.17%, Tata Steel down by 2.49%, ONGC down by 2.43%, ITC down by 2.18% and Mahindra & Mahindra down by 2.00% were the top losers.

Meanwhile, the Union Cabinet headed by Prime Minister Narendra Modi has approved a new process of strategic disinvestment. Under the new process, the Department of Investment and Public Asset Management (DIPAM) under the Ministry of Finance has been made the nodal department for the strategic stake sale. This was done with a view to streamlining and speeding up the process, reducing the role of administrative ministries which often used to place hurdles in the path of major stake sales.

While currently public sector units (PSUs) for strategic sale are identified by NITI Aayog, the tweak in policy has now brought DIPAM into the picture. DIPAM and NITI Aayog will now jointly identify PSUs for strategic disinvestment. Also, DIPAM secretary would now co-chair the inter-minister group on disinvestment, along with the secretary of administrative ministries concerned. Strategic sale may involve two-stage bidding beginning with an expression of interest (EoI) or a preliminary intent showing bid, and a final financial bid. Pre-bid meetings with likely bidders and roadshows to attract potential investors will form part of the process to provide clarity on every aspect of the stake sale. Also, data centre will be set up for bidders to look for information on the PSUs up for sale. The idea is to complete the stake sale within a timeframe, say 4-5 months.

The government has set a target of mobalising Rs 1.05 lakh crore for the current financial year (FY20) from disinvestment proceeds and achieving this has become more critical after it doled out Rs 1.45 lakh crore stimulus by way of a cut in corporate tax. Disinvestment proceeds will be critical for the government to stick to its target of keeping fiscal deficit at 3.3 percent of the Gross Domestic Product (GDP) in the current fiscal year ending March 31, 2020.

The CNX Nifty traded in a range of 11,233.85 and 11,112.65. There were 17 stocks advancing against 32 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Yes Bank up by 7.59%, Zee Entertainment up by 5.62%, Britannia up by 3.88%, Axis Bank up by 1.87% and Nestle up by 1.18%. On the flip side, BPCL down by 5.17%, JSW Steel down by 3.07%, ONGC down by 2.93%, Ultratech Cement down by 2.63% and Cipla down by 2.40% were the top losers.

European markets were trading mostly in red; France’s CAC decreased 8.23 points or 0.15% to 5,480.09 and Germany’s DAX fell 2.80 points or 0.02% to 12,010.01, while UK’s FTSE 100 increased 1.29 points or 0.02% to 7,156.67.

Asian markets ended mostly higher on Monday after data showed the US unemployment rate unexpectedly dropped to a nearly 50-year low, offsetting concerns about a potential recession. Meanwhile, the investors are now cautiously awaited the outcome of trade talks between the United States and China. Japanese shares ended lower as exporters fell on a stronger yen. Markets in China and Hong Kong were closed for public holidays.