Benchmarks end lackluster session in red, eyeing RBI’s policy meet

Indian equity markets snapped the lackluster day of trade slightly in the red with frontline gauges ending below their crucial 20,700 (Sensex) and 6,150 (Nifty) levels in absence of any major trigger. Benchmarks traded in tight band throughout the session as investors remained on sidelines ahead of Reserve bank of India’s (RBI) policy review meet on October 29, 2013, which would decide the markets trends in near term. Some cautiousness also crept in after Finance minister P Chidambaram asked financial sector regulators to put in place all possible measures to avoid any adverse impact on India from the US scaling back its stimulus programme, which he expects “sooner or later.”

However, losses remained capped as some support came in from the statement of Prime Minister’s key economic advisory council chairman C Rangarajan, who while rejecting the IMF and World Bank’s pessimistic projections, has exuded confidence that the growth would be around 5.5 percent in the current fiscal. Some respite also came in after Global financial services major HSBC lowered India’s current account deficit (CAD) forecast for this financial year to 3.4% of GDP from 4.1% earlier.

Global cues too remained choppy with European markets trading mostly in red as market participants awaited the release of economic data from Germany and the UK. Moreover, all the Asian equity benchmarks ended the session in the negative terrain as investors remained concerned amid uncertainty about the near-term outlook for the markets following the recent uptrend.

Back home, sentiments also remained dampened after Rating agency ICRA slashed India’s gross domestic product (GDP) growth estimate by 0.20 per cent to 4.7-4.9 per cent for FY14, citing hardening interest rates which will have a negative impact on the already-tepid economy. Meanwhile, selling witnessed in metal and mining counter, led by around 4% fall in NMDC after reporting weak Q2 numbers too exerted pressure. The company reported a fall of 21.46% in its net profit at Rs 1318.36 crore for the quarter as compared to Rs 1678.62 crore for the same quarter in the previous year.

On the positive side, foreign investors continued to buy local shares, remaining net buyers for a 15th consecutive session. Provisional exchange data showed a net purchase of 9.91 billion rupees on October 24, 2013, bringing the total to nearly 125 billion rupees during that period. Meanwhile, stocks related to software and technology counters edged higher after Indian rupee traded weak due to month-end dollar demand from importers.

The NSE’s 50-share broadly followed index Nifty declined by around twenty points to end below its psychological 6,150 level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped by over forty points to end below the psychological 20,700 mark.

Broader markets too struggled to get traction and ended the session with a cut of around half a percent. The market breadth remained in favour of decliners, as there were 1,049 shares on the gaining side against 1,392 shares on the losing side, while 160 shares remained unchanged.

Finally, the BSE Sensex declined by 41.91 points or 0.20%, to settle at 20683.52, while the CNX Nifty lost 19.45 points or 0.32% to settle at 6,144.90.

The BSE Sensex touched a high and a low of 20782.16 and 20622.55, respectively. The BSE Mid cap index plunged by 0.51% and Small cap index was down by 0.47%.

The top gainers on the Sensex were TCS up 2.92%, Wipro up 2.07%, SSLT up 1.84%, NTPC up 1.36% and Infosys up 0.64%, on the flip side Hindalco Inds down 4.71%, Tata Steel down 3.09%, Mahindra & Mahindra down 2.48%, Hindustan Unilever down 2.33%, and Gail India down 2.23%, were the top losers on the index. 

On the BSE Sectoral front, IT up by 1.54%, Teck up by 0.98%, and Consumer Durables up by 0.25%, were the only gainers, while Realty down by 2.27%, Capital Goods down by 1.61%, Metal down by 1.22%, Auto down by 1.19%, and FMCG down by 0.93%, were top losers on the sectoral front.

Global agencies have continuously been cutting the growth target of the Indian economy, which is under severe pressure due to the ballooning fiscal and current account deficit. Though, the government is making all its efforts to keep the numbers under budgeted limit but the global agencies are not obliging.

Now, the Prime Minister’s Economic Advisory Council (PMEAC) that had itself lowered the growth forecast for the current financial year to 5.3 percent from 6.4 percent it had projected earlier, has came to the defence and rejecting IMF and World Bank’s “unduly” pessimistic projections, PMEAC chairman C Rangarajan has exuded confidence that the growth would be around 5.5 percent in the current fiscal. Rangarajan further said that agriculture will do extremely well, while manufacturing too is likely to improve in second half. In August and September export growth rate was double digit that will also have an impact on domestic production. Therefore, we still stand by our earlier forecast,” he said.

Earlier this month, the World Bank slashed India's economic growth forecast for the current financial year to 4.7 percent from an earlier projection of 6.1 percent, while International Monetary Fund (IMF), in its World Economic Outlook, projected an average growth rate of about 3.75 percent, for India in 2013-14 and 5.1 percent next fiscal.

The CNX Nifty touched a high and low of 6,174.75 and 6,125.95 respectively.

The top gainers on the Nifty were TCS up by 2.80%, HCL Technologies up by 2.48%, Wipro up by 2.37%, NTPC up by 1.54% and a Sesa Sterlite up by 1.33%. On the other hand, Hindalco Industries down by 4.93%, DLF down by 4.83%, NMDC down by 3.68%, Cairn India down by 3.53%, and Tata Steel down by 3.10%, were the top losers.

Most of the European markets were trading in red, France’s CAC 40 was down by 0.29%, and Germany’s DAX was down by 0.02%, while United Kingdom’s FTSE 100 was up by 0.05%.

All the Asian markets concluded Friday’s trade in red as investors grew increasingly cautious by the end of the session. Indonesia’s rupiah led advances in emerging-market currencies this week on speculation that Federal Reserve will delay cutting stimulus. Malaysia is expected to introduce an unpopular consumption tax in its 2014 budget along with other measures to address soaring debt that has raised the specter of a credit downgrade. Malaysia has one of Asia’s highest debt-to-GDP ratios, its budget deficit swelling in recent years on massive populist spending. South Korea’s economic growth maintained the same robust pace in the third quarter as the preceding quarter, beating market expectations and bolstering hopes that Asia’s fourth-largest economy stays on a recovery track. Gross domestic product rose a seasonally adjusted 1.1% in the July-September period from the previous quarter, when the economy grew at the same pace. That is the strongest pace since the first quarter of 2011, when the economy grew 1.3% on quarter.

Japan’s corporate services price index remained unchanged at a seasonally adjusted annual rate of 0.7%, from 0.7% in the preceding month whose figure was revised up from 0.6%. Tokyo’s core CPI, which excludes fresh food costs rose to at an annualized rate of 0.3%, from 0.2% in the preceding month. Japan’s National Core CPI fell to a seasonally adjusted 0.7%, from 0.8% in the preceding month. Singapore's Industrial Production rose to an annual rate of 9.3%, from 4.0% in the preceding month whose figure was revised up from 3.5%.