Post Session: Quick Review

Mirroring the regional counterparts, stock markets in India too made a mute ending on mounting concerns that Washington's budget deadlock could spell serious repercussions for the world's largest economy. In the highly volatile session of trade, benchmark equity indices slipping several times below neutral line and consequently bouncing back, ended flat as cautious traders’ preferred booking profit ahead of start of the result session next week. Additionally, negative macro-economic data-print also hit the sentiment in the late morning deals. On the macro-front, underscoring the prolonged period of slowdown in Asia's third-largest economy, the activity in services sector, which makes up of nearly 60% of country’s economic output shrank at the fastest pace in more than four years in September.

Just as recovery followed after early set-back, the selling pressure which gripped the market in the last leg of the trade washed away all the early gains of the bourses. In all, it turned out to be volatile session of trade, where benchmark equity indices ended almost from where they started. However, for the week, both Sensex and Nifty, lapped up gains of close to a percent. Meanwhile, on last trading session of week, markets despite giving up most portion of their gains, ended above the crucial 19,900 and 5,900 psychological levels respectively. Broader indices, on the other hand, managed to outperform larger peers and ended up with gains of over quarter (Midcap index) and half of a percent (Small cap index).

On the global front, Asian and European markets slipped on worries that US budget deadlock could have negative implications on much more critical legislation to raise the US federal debt ceiling. The shutdown appeared likely to drag on for another week and possibly longer, with no end in sight until the next crisis hits Washington around Oct. 17, the date Congress must raise the nation's borrowing authority or risk default.

Closer home, the sentiments in early trade were bolstered with the CCEA’s approval to Jet-Etihad’s Rs 5300 crore deal which strengthened Rupee, given that the deal paves the way of for the biggest foreign investment in the country's aviation sector. Nevertheless, selling in Power, Capital Goods and Banking sector counterbalanced buying in Realty, Auto and  Metal counters, leading to a mixed close at Dalal Street. Meanwhile, shares of oil marketing companies (OMCs) rallied as investors turned bullish on these counters on hopes that an appreciating rupee and easing crude oil prices would lower subsidy burden. The market breadth on the BSE ended positive; advances and declining stocks were in a ratio of 1239: 1123, while 135 scrips remained unchanged. (Provisional)

The BSE Sensex gained 20.60 points or 0.10% to settle at 19922.67.The index touched a high and a low of 20052.00 and 19833.17 respectively.  Among the 30-share Sensex pack, 14 stocks gained, while 16 stocks declined. The BSE Mid cap and Small cap indices ended higher by 0.29% and 0.51% respectively. (Provisional)

On the BSE Sectoral front, Realty up by 1.71%, Auto up by 1.03%, Metal up by 0.61%, Oil & Gas up by 0.39% and FMCG up by 0.35% were the top gainers, while Capital Goods down by 0.57%, Power down by 0.50%, Bankex down by 0.17%, Health Care down by 0.11% and Teck down by 0.07% were the top loser in the space. (Provisional)

The top gainers on the Sensex were Hindalco Industries up by 2.38%, Coal India up by 2.30%, Tata Motors up by 1.70%, Maruti Suzuki up by 1.12% and Mahindra & Mahindra up by 1.09%, while, Dr Reddys Lab down by 2.60%, Jindal Steel down by 1.74%, L&T down by 1.10%, NTPC down by 0.90% and Infosys down by 0.82% were the top losers in the index. (Provisional)

Meanwhile, underscoring the prolonged period of slowdown in Asia's third-largest economy, the activity in services sector, which makes up of nearly 60% of country’s economic output shrank at the fastest pace in more than four years in September. The HSBC Services Purchasing Managers' Index (PMI), compiled by Markit, slipped from 47.6 in August to 44.6 in September, it’s weakest since April 2009. The latest figures, which mark the straight third reading below 50, the threshold between growth and contraction, is consistent with a sharp contraction in business activity and one that was the fastest since March 2009.

The survey indicated that all six monitored sub-categories, recorded lower output. Third consecutive drop in new order levels explains the underlying fall of the private sector output. Incoming new work contracted sharply and at the quickest pace since February 2009 mainly driven by weaker order flows in renting & business activities, hotels and restaurants and financial intermediation.

Meanwhile on employment front, private sector in response to lower volumes of incoming new work reduced their workforce numbers. However, the marginal fall in employment was broad-based, with both manufacturers and service providers reporting job shedding for the first time in 19 months. 

Thus, the PMI, which has clocked the worst quarter for the Indian services sector in turn has ignited fears that growth in the three months to September will be weaker than April through June. Further, September data also points to a weaker degree of positive sentiment in the Indian service sector, with the index measuring business sentiment dropping to its lowest mark since February 2009. Meanwhile, the survey supports the RBI’s stepped up efforts to better anchor inflation expectations, given the inflation reading hold steady even in the backdrop of weak growth.

India VIX, a gauge for markets short term expectation of volatility gained 3.81% at 26.13 from its previous close of 25.17 on Thursday. (Provisional)

The CNX Nifty lost 2.40 points or 0.04% to settle at 5,907.30. The index touched high and low of 5,950.45 and 5,885.00 respectively. Out of the 50 stocks on the Nifty, 20 ended in the green, while 30 ended in the red.

The major gainers of the Nifty were Hindalco Industries up 2.47%, Coal India up by 2.30%, Lupin up by 2.18%, BPCL up by 2.00% and Tata Motors up by 1.46%. The key losers were Dr. Reddy's Laboratories down by 2.47%, Power Grid down by 2.00%, Jindal Steel down by 1.89%, IDFC down by 1.32% and L&T down by 1.29%. (Provisional)

Most of the European markets were trading in green with, France’s CAC 40 up by 0.53%, Germany’s DAX up by 0.13% and the United Kingdom’s FTSE 100 up by 0.14%.

Most of the Asian markets barring KLSE Composite and Taiwan Weighted concluded Friday’s trade in red amid partial government shutdown in US. The standoff comes just weeks before a crucial deadline to raise the nation’s borrowing limit - a measure which also must be approved by lawmakers. Shanghai Stock Market was close down on account of National Day and will open for trading on October 8. The Bank of Japan kept its monetary policy unchanged following its meeting, and stated that the economy is recovering moderately. This suggested that no additional monetary policy measures are needed to counter the pain from next year’s sales tax hike. In terms of the inflation outlook, the central bank noted that consumer prices excluding fresh food are in the range of 0.5% to 1%, and that inflation expectations appear to be rising on the whole. The Bank of Japan has set a 2% inflation target, which it aims to reach by 2015.

Malaysia’s trade balance rose more-than-expected last month. The Department of Statistics Malaysia stated that Malaysian Trade Balance rose to 7.10B, from 2.90B in the preceding month. Consumer price inflation in the Philippines rose more-than-expected in the last quarter. The Philippines CPI rose to a seasonally adjusted annual rate of 0.6%, from 0.2% in the preceding quarter. South Korea’s foreign reserves hit another record high last month as the depreciation of the US dollar raised the conversion value of non-dollar assets. Foreign reserves reached a record high of $336.92 billion as of the end of September, up $5.83 billion from a month earlier, according to the Bank of Korea. The reserves posted the largest monthly rise since October 2011 when the figure increased by $7.59 billion.