Benchmarks end lacklustre trade on flat note

Indian equity benchmarks snapped the extremely volatile day of trade on an absolute flat note on Friday as investors remained on sidelines ahead of WPI data slated to be released on September 16.  Moreover, investors were also awaiting the US Federal Reserve’s decision on stimulus tapering, as well as RBI policy review later next week. Markets after initial sluggishness, entered into green terrain and traded in fine fettle as sentiments remained up-beat with the industrial production rebounding to 2.6% in July from a year earlier, much better than the general street expectation of marginal contraction-to-flat numbers and far better than -2.2% figure of the last month. In other development, retail or CPI inflation, eased slightly to 9.52% in August over the previous month’s 9.64%, following softening in prices of almost all commodities, except vegetables.

But, later they turned red after Prime Minister's Economic Advisory Council (PMEAC) sharply lowered its growth forecast for the current fiscal to 5.3% from 6.4% projected earlier. Trade took a turn for the worst after a report by the Prime Minister's economic panel suggested it would be a challenge for the government to meet its fiscal deficit target of 4.8% of GDP in the current year. Further, fall in rupee against the dollar also aided pessimism to the markets. The rupee traded at Rs 63.70 at the time of equity markets closing, as compared to its previous close of Rs 63.54 per dollar.

Global cues too remained sluggish as European markets traded in the red in early deals, as market participants remained caution ahead of a crucial US Federal Reserve meeting, where the central bank could announce a reduction in its $85bn a month asset-buying stimulus. Moreover, most of the Asian equity indices ended in the red.

Back home, in a big political move, Bharatiya Janata Party on Friday confirmed that Narendra Modi would be the BJP’s prime ministerial candidate. BJP president Rajnath Singh informed Shiv Sena chief Uddhav Thackeray of party's decision to nominate Modi as its PM candidate. Back on street, sentiments got some support after shares of most of the sugar companies edged higher in trades in an otherwise choppy market after the food minister K V Thomas asked sugar mills to focus on exports. Food Minister said, sugar mills should focus on exports to clear payment of dues to cane farmers as the country's output of the sweetener is likely to exceed domestic demand for the fourth consecutive marketing year. Additionally, shares of India’s aviation companies viz, Spicejet and Jet Air India edged higher on the back of air fare hikes. SpiceJet pioneered the hike in fares this season and was followed by other entities, listed as well as non-listed, in the range of 25-30%.

The NSE’s 50-share broadly followed index Nifty declined marginally to hold the psychological 5,850 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by around fifty points to close below the psychological 19,800 mark.

Broader markets, however outperformed benchmarks and ended the session with a gain of over half a percent. The market breadth remained in favour of advances, as there were 1,355 shares on the gaining side against 1,036 shares on the losing side, while 165 shares remained unchanged.

Finally, the BSE Sensex lost 49.12 points or 0.25% to settle at 19732.76, while the CNX Nifty ended tad lower by 0.10 points to 5,850.60.

The BSE Sensex touched a high and a low of 19899.37 and 19675.68, respectively. The BSE Mid cap index was up by 0.57%, and Small cap index gained 0.60%.

The top gainers on the Sensex were BHEL up 5.60%, Coal India up 3.02%, L&T up 2.45%, Tata Power up 2.22%, and Hero MotoCorp up 2.07%, on the flip side, Wipro down 3.61%, Tata Steel down 1.55%, ITC down 1.32%, Infosys down 1.17%, and ICICI Bank down 1.10%, were the top losers on the index. 

On the BSE Sectoral front, Realty up by 2.72%, Power up by 2.47%, Capital Goods up by 2.27%,PSU up by 1.85%,and Auto up by 0.86%, were the top gainers, while Consumer Durables down by 1.54%, IT down by 1.43%, Teck down by 1.12%, and FMCG down by 0.97%, were the top losers on the Sectoral space.

Meanwhile, in a move to increase the overseas investment into the country, the Securities and Exchange Board of India (SEBI) has relaxed registration and disclosure norms for low-risk foreign investors. The market regulator SEBI also exempted the low-risk overseas entities from tedious paper work, which entail submission of various documents and disclosures to get registered and operate in Indian markets.

SEBI also classified eligible foreign investors under three broad segments as per their risk profile to make portfolio investments in the country. As per the SEBI new norms, investment by foreign investors into government and other sovereign securities will be considered in the lowest-risk - Category I. Well-regulated entities like investment trusts, mutual funds, insurers, banks, university funds and pension funds have been put in the medium-risk - Category II, while corporate bodies, individuals and family offices have been classified in the high-risk - Category III.

Accordingly, the know your client (KYC) requirements- which entails submission of various documents and disclosures to get registered and operate in Indian markets - would be eased for those with low-risk profile Category-I investors. Besides, low risk entities would be exempted from submission of the list, identity proof, address proof and photographs for their ultimate beneficial owners. The SEBI new norms are expected to make it much easier for the foreign investors to enter the country and make investment decisions.

The CNX Nifty touched a high and low of 5,884.30and 5,822.90 respectively. 

The top gainers on the Nifty were BHEL by 5.97%, DLF up by 5.13%, Axis Bank up by 4.21%, PNB up by 3.98%, and Reliance Infrastructure up by 3.77%. On the other hand, HCL Technologies down by 2.64%, Ultra tech cement by 2.32%, ITC down 1.87%, Tata Steel down 1.72% and ICICI Bank down by 1.65% were the top losers. 

The European markets were trading in red, France’s CAC 40 was down by 0.17%, Germany’s DAX was down by 0.18%, and United Kingdom’s FTSE 100 was down by 0.31%.

Most of the Asian markets, barring Jakarta Composite and Nikkei 225 concluded Friday’s trade in red ahead of next week’s key Federal Reserve policy meeting. Stocks across Asia posted healthy returns since last Friday, as further signs of an economic recovery in China combined with lower expectations of US military intervention in Syria supported regional risk sentiment. Japan’s industrial output rose 3.4 percent in July revised data showed, suggesting a recovery in factory activity remains intact. The figure compared with an initial reading of a 3.2 percent increase and follows a 3.1 percent decline in June. The capacity utilization index rose 3.7 percent in July from a month earlier to 99.3.

Meanwhile, the World Bank’s private-sector investment arm aims to double its investment in Indonesia in the next fiscal year, boosting infrastructure-sector loans. The International Finance Corporation (IFC) is targeting to invest between $500 million and $1 billion in the year ending June 30, 2014. Indonesia’s borrowing costs are surging toward those of Vietnam, rated five levels lower by Moody’s Investors Service, as a plunging rupiah spurs inflation. Besides, a planned free-trade zone in Shanghai is raising hopes that China’s new leaders will revive long-stalled economic reforms as they seek to make their mark.