Benchmarks end marginally in the red on profit booking

After hitting 3-year highs in early deals, Indian equity benchmarks failed to hold the momentum and ended the session slightly in the red, as investors opted to book profit off the table ahead of Reserve bank of India’s (RBI) policy review next week. However, markets made a stellar start with both the frontline gauges hitting their three year highs, surpassing crucial 21,000 (Sensex) and 6,200 (Nifty) levels in early deals supported by report that foreign institutional investors (FIIs) bought shares worth a net Rs 644.80 crore on October 23, 2013.

Some support also came in from buying in banking stocks after Finance Ministry finalized the Rs 14,000-crore capital infusion plan for public sector banks to augment their capital base and promised another tranche in the fourth quarter of the current fiscal. Early buying in telecom stocks too aided the sentiments after the Telecom Regulatory Authority stuck to its earlier stance on pricing of spectrum, which calls for up to 60 percent cut in the reserve price of spectrum in the upcoming third round of auction.

Global cues too remained supportive with European markets making a positive start, with a survey showing a pick-up in manufacturing activity in China cheering investors. Moreover, most of the Asian equity benchmarks ended the session in the green terrain. However, the Chinese markets closed lower despite a flash report showing that manufacturing output strengthened more than anticipated this month. The Purchasing Managers’ Index released by HSBC Holdings Plc and Markit went up to 50.9 reading compared with a median estimate of 50.4.

Back home, markets in second half gave-up all their gains, as investors opted to book profit at higher levels awaiting RBI’s policy review meet on October 29, 2013, which would decide the markets trends in near term. Meanwhile, strength in rupee, that supported the equity markets in early deals, too saw paring most of its gains. Sentiments also got dampened after India Ratings & Research said that India’s GDP growth will remain below five percent mark at 4.9% in the current financial year on account of a mix of domestic and external factors.

Selling in software pack continued for second straight day. Wipro prolonged its downfall for another day after weak revenue guidance, while stocks related to cement sector remained under severe selling pressure after Ambuja Cements reported 45.40% fall in its net profit at Rs 165.97 crore for the September quarter. Aviation pack  too showed subdued trend, down by 2-3% after second-biggest carrier by domestic market share, Jet Airways reported its worst quarterly loss at Rs 891.01 crore for the quarter as compared to a net loss of Rs 99.67 crore for the same quarter in the previous year.

The NSE’s 50-share broadly followed index Nifty declined by over ten points, but managed to hold its psychological 6,150 level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped by over forty points to end below the psychological 20,750 mark.

Broader markets too struggled to get traction and ended the session mixed. The market breadth remained in favour of decliners, as there were 1,197 shares on the gaining side against 1,292 shares on the losing side, while 184 shares remained unchanged.

Finally, the BSE Sensex declined by 42.45 points or 0.20%, to settle at 20725.43, while the CNX Nifty lost 14.00 points or 0.23% to settle at 6,164.35.

The BSE Sensex touched a high and a low of 21039.42 and 20656.70, respectively. The BSE Mid cap index gained 0.16% and Small cap index was down by 0.05%.

The top gainers on the Sensex were Mahindra & Mahindra up 2.40%, L&T up 1.83%, Gail India up 1.49%, HDFC Bank up 1.34% and Tata Motors up 1.28%, on the flip side Wipro down 4.25%, Coal India down 3.25%, TCS down 2.52%, Jindal Steel down 1.85%, and BHEL down 1.68%, were the top losers on the index. 

On the BSE Sectoral front, Capital Goods up by 1.15%, Auto up by 0.61%, Consumer Durables up by 0.49%, Bankex up by 0.33%, and FMCG up by 0.16%, were the top gainers, while IT down by 1.77%, Teck down by 1.53%, Power down by 1.14%, Realty down by 1.12%, and Metal down by 0.63%, were top losers on the sectoral front.

Meanwhile, apart from signing an agreement on border defence cooperation, India and China have agreed to study the possibility of setting up an economic corridor BCIM (Bangladesh, China, India and Myanmar) covering two other regional nations Bangladesh and Myanmar.

Amidst Prime Minister Manmohan Singh's China visit a Joint Statement - A Vision for Future Development of China-India Strategic and Cooperative Partnership was issued. Pursuant to the understanding reached between the two leaders in May 2013, China and India have each established a Study Group on the BCIM Economic Corridor and the first BCIM Joint Study Group meeting will be held in the upcoming December “to study the specific programs” on the building of the corridor.

The apex-level talks between Manmohan Singh and Chinese Premier Li Keqiang expected the Strategic Economic Dialogue during its meeting in November/December 2013 to work out specific projects and initiatives in areas that have already been broadly agreed upon.

Earlier, Manmohan Singh has raised his concerns about the unsustainable trade balance between the two countries and they have agreed to explore avenues to bridge this gap. Bilateral trade with China touched $66.5 billion last year, of which China’s exports to India was about $ 47.7 billion. The CNX Nifty touched a high and low of 6,252.45 and 6,142.95 respectively.

The top gainers on the Nifty were Ranbaxy Laboratories up by 2.71%, IDFC up by 2.68%, NMDC up by 2.60%, Mahindra & Mahindra up by 2.56% and GAIL (India) up by 1.56%. On the other hand, HCL Technologies down by 4.63%, Wipro down by 4.59%, Coal India down by 3.81%, TCS down by 2.58%, and BHEL down by 2.28%, were the top losers.

The European markets were trading in green, France’s CAC 40 was up by 0.20%, Germany’s DAX was up by 0.72%, and United Kingdom’s FTSE 100 was up by 0.47%.

The Asian markets barring Shanghai Composite and Hang Seng concluded Thursday’s trade in green after upbeat data from China showed manufacturing activity expanded to a seven-month high in October. The upbeat reading, however, did little to offset fears over the Chinese economy, as China’s interbank lending rate moved higher for a second day, reviving fears of a liquidity crunch in June. In addition, data showing a further rise in house prices earlier in the week increased concerns that Beijing could step in to cool down the market. China’s manufacturing is extending its rebound into October, according to a preliminary reading of the sector released. The flash reading of October’s China manufacturing Purchasing Managers’ Index (PMI) rose to a seven-month high of 50.9, up from September’s final reading of 50.2, though it remained just below the Chinese government’s own PMI, which hit 51.1 last month.

China’s gross domestic product (GDP) growth forecast has been raised to 7.6 percent from 7.5 percent for 2013. The report, released, also forecast GDP growth for the fourth quarter of 2013 to reach 7.5 percent year on year. Hong Kong’s trade balance fell more-than-expected last month. The Hong Kong Census and Statistics Department stated that Hong Kong Trade Balance fell to a seasonally adjusted -42.0B, from -39.6B in the preceding month.