Diwali cheers end; markets correct on profit taking

Trade at Indian markets remained volatile on Tuesday, coming from a day of break after the short Muhurat session on Diwali. Traders remained in profit booking mood since the start, though there was smart recovery towards the noon that took the markets out of their day’s low but traders once again took that opportunity to book profits, restricting the markets to enter the green terrain, on the contrary selling aggravated in the final hours taking the indices lower by over a percent near the lows of the day. However, there was some attempt towards the north too in early deals after global investment bank, Goldman Sachs raised its investment stance on India to ‘Marketweight’ and increased the Nifty index target to 6900 but that too was sold out.

In the global markets, while the US indices managed a positive close overnight, the Asian markets made a mixed closing with some of the regional indices recovering from their early lows to end modestly in green. Chinese market that traded lower in early deals, recovered to close in green supported by gains in the agricultural stocks on speculation the government will introduce reforms to bolster the industry, while the Japanese market after a long weekend made a good bounce back despite faltering in initial trades, taking cues from the Bank of Japan’s record monetary easing. Later the European markets made a flat but positive start and gave some support to the local markets, but going forward all the major indices slipped into red and weighed on the local market sentiments.

Back home, the day turned out to be of profit booking for the Indian markets with traders taking every opportunity to take their gains from the recent rally and markets losing their momentum completely in the very first hour of trade, however there was good bounce back in afternoon supported by realty and auto stocks that took the markets to almost the level of early morning but traders opted to book profits at the highs, taking the markets lower once again afterwards the trade remained range bound with no serious efforts to enter the green. There remained some caution with the report that the activity in services sector, which makes up nearly 60% of country’s economic output, remained below the 50.0 no-change mark for the fourth successive month in October, indicating a further contraction. Earlier, it was reported that foreign direct investment (FDI) inflow into the services sector, declined 47.5 percent to $1.19 billion during April-August. However, one positive emerged for the day was the buying interest in the broader markets, which after initial decline recovered and outperformed the benchmarks. Sectorally, while realty and PSU managed to close in green, defensive FMCG and healthcare were the laggards, while the IT sector turned lower after rupee recovered from its lows. Non sectoral Jewellary gauge too remained under pressure as the stock crunch following restrictions on imports weighed on the festival demand and despite the report that Gems and gold jewellery exports from India are expected to rise for a third straight month to a level of Rs 19,800 crore for October, most of the jewellary stocks ended with cut of 1-2 percent.

Finally, the BSE Sensex lost 264.57 points or 1.25%, to settle at 20974.79, while the CNX Nifty plunged by 64.20 points or 1.02% to settle at 6,253.15.

The BSE Sensex touched a high and a low of 21158.56 and 20951.71, respectively. The BSE Mid cap index gained 0.89% and Small cap index was up by 0.54%.

The top gainers on the Sensex were Hindalco Inds up 1.47%, Coal India up 1.42%, Tata Motors up 1.02%, Cipla up 0.59% and HDFC up 0.49%, on the flip side ITC down 3.52%, ICICI Bank down 3.07%, Sun Pharma down 2.96%, Dr Reddys Lab down 2.88%, and TCS down 2.74%, were the top losers on the index. 

On the BSE Sectoral front, Realty up by 0.27%, and PSU up by 0.15%, were the only gainers, while FMCG down by 2.53%, Healthcare down by 1.55%, IT down by 1.28%, Teck down by 1.25%, and Consumer Durables down by 1.03%, were the top losers on the sectoral front.

Meanwhile, in a move to enhance the country’s exports, the government has explored the possibility of having more free trade agreements (FTAs) with various countries. The meeting of Trade and Economic Relations Committee, headed by Prime Minister Manmohan Singh and attended by Commerce and Industry Minister Anand Sharma has reviewed progress of various free trade agreements (FTAs) under negotiations. At present, India is negotiating several FTAs with various countries, including Canada, Australia, New Zealand besides the European Union.

Export is the key determinants of economic growth as the rising exports increases the country’s GDP, besides strengthens the country’s external situation. Recently, the government has taken a slew of initiatives that included announcing sops for exports orientated Special Economic Zones (SEZs), encouraging exporters to tap newer markets and extension of the Export Promotion Capital Goods (EPCG) scheme to all sectors in order to boost shipments.

Meanwhile, the government's efforts to raise exports have started yielding as exports increased by 11.15% for the third consecutive month to $27.68 billion for the month of September from $24.90 recorded during the same month in 2012. Further, improving country’s exports has also raised hopes for a significant reduction in the country's gaping current account deficit. On cumulative basis, value of exports increased by 5.14% to $152.10 billion during April-September, 2013 as against $144.67 billion in the corresponding period of last year.

The CNX Nifty touched a high and low of 6,304.75 and 6,244.30 respectively.

The top gainers on the Nifty were BPCL up by 2.47%, NMDC up by 2.34%, DLF up by 2.10%, Asian Paints up by 2.02% and Jaiprakash Associates up by 1.64%. On the other hand, ITC down by 3.51%, ICICI Bank down by 3.29%,Power Grid Corporation of India down by 3.20%, Dr. Reddy's Laboratories down by 3.03%, and Sun Pharmaceuticals Industries down by 2.81%, were the top losers.

The European markets were trading in red, France’s CAC 40 was down by 0.34%, Germany’s DAX was down by 0.49%, and United Kingdom’s FTSE 100 was down by 0.67%.

The Asian markets concluded Tuesday’s trade mostly in red as investors awaited the release of US jobs and growth data later in the week. Jakarta Composite was closed on account of ‘Muharram/Islamic New Year’ holiday. On Friday, China’s Communist Party will start the Third Plenum, a meeting during which it is expected to provide details of economic policy for the next decade. China’s service sector expanded in October at the fastest pace in 12 months, confirming that the Chinese economy is on a path to stability. The non-manufacturing Purchasing Managers’ Index rose to 56.3 in October from 55.4 in September, the official National Bureau of Statistics and China Federation of Logistics and Purchasing stated. A reading above 50 indicates expansion.

China’s central bank has signaled a further opening of the country’s fast growing debt market by allowing more participation in the onshore interbank bond market. Indonesia’s rupiah fell to the lowest level in three weeks on concern an unexpected trade deficit in September will weigh on the nation’s current account. Consumer price inflation in the Philippines rose to a seasonally adjusted annual rate of 0.1%, from 0.6% in the preceding quarter. National Statistics Taiwan stated that Taiwanese CPI fell to a seasonally adjusted annual rate of 0.64%, from 0.83% in the preceding quarter.