Post Session: Quick Review

Extending last session’s south-bound journey, Indian equity markets closed near a week’s low level on Wednesday on account of relentless selling pressure in absence of any positive triggers. Local equity markets although turned the tables by reversing flat start against the backdrop of sluggish global set-up in early deals, the optimism fizzled out by the second half of the trade. Post that, markets just kept losing strength and settled near day’s lowest point, as investors cashed on profit on every single rise which was witnessed by the markets. Additionally, disappointing earnings of index heavyweight, BHEL, also perturbed markets. The stocks closed half a percent lower after the company reported 64.22% fall in its net profit at Rs 455.95 crore the second quarter ended September 30, 2013 as compared to Rs 1274.45 crore for the same quarter in the previous year.

Besides the absence of positive trigger at home front, negative regional counterparts’ also enticed investors to take profit off the table.  At the close, while 30 share barometer indexes, Sensex lost over quarter of a percent and settled below crucial 20,900, Nifty lost over half a percent and ended near 6,200 levels. Meanwhile, broader indices managed to keep their head above the water for the entire trading session and ended with modest gains.

On the global front, Asian stocks ended quiet on Wednesday as faster-than-estimated expansion in a US services gauge stoked speculation, the world's largest economy is strong enough to allow the US Federal Reserve to reduce stimulus earlier that the street’s expectation. Contrary to this, batch of better-than-expected corporate results lifted European market. Investors welcomed forecast-beating results from Dutch banking and insurance group ING and Adecco, the world's No. 1 staffing agency, while cement major Lafarge confirmed debt reduction targets for this year and next.

Closer home, Finance Minister P Chidambaram’s confidence that India’s current account deficit (CAD) will be contained below $60 billion this financial year as against an earlier estimate of $70 billion, led to some early gains at Dalal Street. However, afterwards markets just went in correction mood as belligerent bears refused to surrender their hold on the markets. Sectorally, Information Technology, Power and Technology counters led the markets from the front, while Consumer Durables, Realty and Banking counters were the top losers. IT pack turned out to be outperformer after the global IT major Cognizant Technology Solutions Corp reported a better-than-expected 22 percent rise in revenue, helped by contracts from insurers setting up online exchanges as part of President Barack Obama's healthcare reforms and raised its full-year forecast for both profit and revenue. On the other hand, following the Consumer Durable pivotal plunge, Realty and Banking index too witnessed massive drubbing.  The market breadth on the BSE ended in green; advances and declining stocks were in a ratio of 1304: 1148, while 150 scrips remained unchanged. (Provisional)

The BSE Sensex lost 85.73 points or 0.41% to settle at 20889.06.The index touched a high and a low of 21045.38 and 20861.42 respectively. Among the 30-share Sensex, 11 stocks gained, while 19 stocks declined. (Provisional)

The BSE Mid cap index ended lower by 0.17% and Small cap index ended higher by 0.76%. (Provisional)

On the BSE Sectoral front, IT up by 1.46%, Power up by 1.12%, Teck up by 0.97% and Health Care up by 0.92%, were the only gainers, while Consumer Durables down by 2.06%, Realty down by 2.01%, Bankex down by 1.97%, Metal down by 1.31% and Oil & Gas down by 0.69% were the top losers in the space. (Provisional)

The top gainers on the Sensex were NTPC up by 3.46%, TCS up by 2.59%, Sun Pharma up by 2.07%, Infosys up by 1.28% and Coal India up by 0.91%, while,  SBI down by 3.29%, SSLT down by 2.57%, Jindal Steel down by 2.12%, BHEL down by 1.97% and Hindalco Industries down by 1.95% were the top losers in the index. (Provisional)

Meanwhile, an expert panel, headed by the Prime Minister's Economic Advisory Council chairman C Rangarajan, will soon examine the proposal of financially stressed highway developers seeking a bailout in the form of deferral of the premium payment from the government. The panel will also scrutinize the moral hazard of allowing such post-contract concessions which the road ministry and National Highways Authority of India (NHAI) are expected to benefit to around 40 stalled projects in this case. The panel, expected to be formally constituted this week, will submit its report in a month.

Earlier in October, the government had decided to set up the committee under Rangarajan to work out the modalities of the highly contentious bailout policy. Meanwhile, the opinions regarding the policy are still divided between the highway ministry and NHAI. The NHAI has demanded that the discount rate should be kept at 10%, no penalty should be imposed and no corporate guarantee should be taken from developers. On the other hand, road ministry is in favour of a 12% discount rate as well as imposition of penalty to avoid any undue advantage to a handful of developers. The government wants to decide soon on bailout policy as it is cautious over the adverse impact of the delay in decision-making, which has already stagnant investment flows in the highways sector. In the previous fiscal, road ministry awarded only 1,400 km of projects against a target of 9,500 km and had cited reasons like lukewarm response by the bidders owing to a number of factors including delay in clearances. For the current fiscal, road ministry has set a target of 5,000 km highway roads.

Further, in order to boost country’s infrastructure sector, the government is also formulating a plan to determine the way in which bad assets are recognized, which will give lenders more leeway to rescue projects and will give a strong push to infrastructure investment. The government has identified the development of infrastructure a most critical prerequisite for sustaining the present growth momentum of the economy. The government has set the $1-trillion investment target for the infrastructure sector for the 12th Five Year Plan (2012-17).

India VIX, a gauge for markets short term expectation of volatility gained 1.55 % at 20.25 from its previous close of 19.94 on Tuesday. (Provisional)

The CNX Nifty lost 36.55 points or 0.58% to settle at 6,216.60. The index touched high and low of 6,269.70 and 6,208.70 respectively. Out of the 50 stocks on the Nifty, 14 ended in the green, while 36 ended in the red.

The major gainers of the Nifty were NTPC up 3.46%, TCS up by 2.45%, Sun Pharmaceuticals up by 1.88%, Ranbaxy up by 1.50% and Infosys up by 1.26%. The key losers were PNB down by 3.52%, SBI down by 3.51%, JP Associate down by 3.34%, DLF down by 3.14% and Ambuja Cements down by 2.90%. (Provisional)

Most of the European markets were trading in green with, France’s CAC 40 up by 0.81%, Germany’s DAX up by 0.34% and the United Kingdom’s FTSE 100 up by 0.05%.

The Asian markets concluded Wednesday’s trade mostly in red following a weak lead from Wall Street. Stocks in Hong Kong ended flat ahead of the beginning of a Communist Party plenum at the weekend. Indonesia’s economy continued to slow in the third quarter after Bank Indonesia tightened its monetary stance to rein in inflation and shrink the country’s current-account deficit. Southeast Asia’s largest economy expanded by 5.62% in the July-September quarter from a year earlier, slowing from the 5.81% increase in the second quarter and marking the slowest growth rate in nearly four years. Indonesia’s gross domestic product rose 2.96% on-quarter, compared with a 2.6% increase in the previous quarter.

Manufacturing activity in Singapore rose unexpectedly last month. In a report, SIPMM Central Office stated that Singaporean PMI rose to 51.2, from 50.5 in the preceding month. Japan’s monetary base fell unexpectedly last month. Bank of Japan stated that Japan’s Monetary Base fell to 45.8%, from 46.1% in the preceding month.