Key benchmark indices declined as negative global cues spoiled investors’ sentiment. The barometer index, the S&P BSE Sensex, fell 156.13 points or 0.57% to settle at 27,274.15. The Nifty 50 index fell 51.20 points or 0.60% to settle at 8,433.75. Selling pressure was witnessed in select mid-cap and small-cap stocks. The Sensex declined for the fifth consecutive session today, 4 November 2016. The Nifty declined for the third consecutive session today, 4 November 2016. The Sensex and the Nifty, both, hit their lowest closing levels in almost four months.
In overseas stock markets, European stocks were trading lower today, 4 November 2016, following declines overnight on Wall Street as the closeness of the US elections continues to rattle nerves in the market. Meanwhile, the Bank of England (BoE) scrapped its plan to cut interest rates, which it said could now move up or down, and raised its forecasts for 2017 growth and inflation sharply due to the slide in sterling since Britain’s vote to leave the European Union. The BOE’s nine policymakers all voted to keep rates on hold yesterday, 3 November 2016. There was also unanimous support to stick with August’s bond-buying plans.
Most Asian stocks declined as investors were spooked by growing uncertainty about the outcome of the US presidential election next week. US stocks closed lower yesterday, 3 November 2016, marking the S&P 500’s longest losing streak since the depths of the financial crisis, as Facebook shares slumped and investors fretted over election uncertainty. Fresh polls released yesterday, 3 November 2016 reportedly showed that Democrat Hillary Clinton, who is seen as the status quo candidate by markets, maintained her narrow lead over Republican Donald Trump. Investors generally view Clinton as a known quantity, but there is deep uncertainty about what a Trump win might mean for US economic policy, free trade and geopolitics.
Back home, the Sensex fell 156.13 points or 0.57% to settle at 27,274.15, its lowest closing level since 8 July 2016. The index rose 68.63 points, or 0.25% at the day’s high of 27,498.91. The index fell 236.67 points, or 0.86% at the day’s low of 27,193.61.
The Nifty 50 index fell 51.20 points or 0.60% to settle at 8,433.75, its lowest closing level since 8 July 2016. The index rose 19.05 points, or 0.22% at the day’s high of 8,504. The index fell 84.70 points, or 1% at the day’s low of 8,400.25.
The broad market depicted weakness. There were more than three losers against every gainer on BSE. 2,224 shares rose and 681 shares fell. A total of 115 shares were unchanged. The BSE Mid-Cap index fell 1.34%. The BSE Small-Cap index fell 2.20%. The fall in both these indices was higher than the Sensex’s decline in percentage terms.
The total turnover on BSE amounted to Rs 4534.84 crore, higher than turnover of Rs 3202.47 crore registered during the previous trading session.
Among the sectoral indices on BSE, the S&P BSE Healthcare index (down 4.16%), the S&P BSE Realty index (down 2.44%), the S&P BSE Metal index (down 2.41%), the S&P BSE Telecom index (down 2.08%), the S&P BSE Capital Goods index (down 1.72%), the S&P BSE Consumer Durables index (down 1.6%), the S&P BSE Basic Materials index (down 1.44%), the S&P BSE Energy index (down 1.35%), the S&P BSE Industrials index (down 1.27%), the S&P BSE Consumer Discretionary Goods & Services index (down 1.23%), the S&P BSE Power index (down 1.15%), the S&P BSE Utilities index (down 1.14%), the S&P BSE Finance index (down 1.13%), the S&P BSE Auto index (down 0.82%) and the S&P BSE Bankex (down 0.62%), underperformed the Sensex. The S&P BSE Oil & Gas index (down 0.56%), the S&P BSE Teck index (up 0.31%), the S&P BSE IT index (up 0.66%) and the S&P BSE FMCG index (up 1.41%), outperformed the Sensex.
Shares of cigarette major ITC jumped 3.64% to Rs 249.10 as fears of Goods and Services Tax overhang has subsided after the GST council finalised four-tier tax structure. The GST council approved four main tax slabs 5%, 12%, 18% and 28% under the proposed Goods and Services Tax (GST). The sin or demerits products (tobacco, aerated drinks, pan masala and luxury cars) will be taxed at 28% with additional cess, quantum of which has not been stated/finalised. However, the government has indicated that overall tax incidence on these categories will remain broadly unchanged, reports suggested.
Further, media reports suggested that most analysts are positive on ITC given its sharp underperformance in past months on GST concerns. A foreign brokerage is reportedly overweight on ITC stock stating that some uncertainty will remain on the final taxation change for ITC. It added that the earnings impact on ITC could be gauged only as clarity emerges on quantum and nature of cess on sin products. Another foreign brokerage reportedly increased target price on ITC as it sees 25% upside. ITC is at a big discount to other FMCG stocks due to the overhang of GST, the brokerage reportedly added. As this overhang is lifted, the brokerage expects sharp re-rating for ITC.
Engineering and construction major L&T fell 1.78% to Rs 1,418.90. Media reports suggested that the government is selling stake in L&T via block deal mechanism on the stock exchanges today, 4 November 2016. As per reports, the government proposes to offload up to 3% stake in the company held under Specified Undertaking of the Unit Trust of India (Suuti). The base price for the share sale has been set at Rs 1,415.66 per share, about 2% discount to the stock’s closing price of Rs 1,444.55 on the BSE yesterday, 3 November 2016, reports added. Suuti currently holds 8.14% stake in L&T as per the shareholding pattern as on 30 September 2016.
State run coal mining major Coal India lost 3.44% to Rs 315.50 on reports that a foreign brokerage has maintained underperform rating on the stock with a target price of Rs 270.
Colgate-Palmolive (India) rose 3.40% to Rs 983.85 on reports a foreign brokerage has upgraded the stock to outperform from neutral and revised target price on the stock to Rs 1,150 from Rs 1,100 earlier.
Shares of pharma companies declined after reports suggested that prosecutors at the US Federal Reserve may bring charges of price collusion against a group of generic drugmakers before the end of the year. Sun Pharmaceutical Industries (down 7.41%), Dr Reddy’s Laboratories (down 5.67%), Aurobindo Pharma (down 5.61%), Strides Shasun (down 5.52%), Glenmark Pharmaceuticals (down 4.78%), Wockhardt (down 4.05%), Lupin (down 3.57%), Alkem Laboratories (down 2.87%), Cipla (down 2.6%), Piramal Enterprises (down 1.59%), Cadila Healthcare (down 1.54%), Divi’s Laboratories (down 0.6%) and IPCA Laboratories (down 0.27%), edged lower. GlaxoSmithKline Pharmaceuticals rose 1.41%.
A report suggested that the US Department of Justice had started the investigation two years ago, and the list included a dozen drug companies such as Sun Pharmaceutical Industries, Taro Pharmaceutical Industries and Mylan. Charges could come up as early as December 2016, it added. Generic drugs are supposed to keep healthcare costs down. But the US government may claim that these companies worked together to keep prices higher instead of allowing market competition to set pricing, report noted.
Banks stocks declined. Among public sector banks, Vijaya Bank (down 3.52%), Punjab & Sind Bank (down 3.05%), Central Bank of India (down 2.96%), Bank of Baroda (down 2.86%), Syndicate Bank (down 2.73%), Andhra Bank (down 2.71%), UCO Bank (down 2.53%), Allahabad Bank (down 2.3%), Bank of India (down 2.29%), Dena Bank (down 2.16%), Indian Bank (down 2.06%), Bank of Maharashtra (down 2.02%), Union Bank of India (down 1.97%), Canara Bank (down 1.96%), Corporation Bank (down 1.72%), IDBI Bank (down 1.36%), Punjab National Bank (down 1.16%), State Bank of India (down 1.14%) and United Bank of India (down 0.48%), edged lower.
Among private sector banks, RBL Bank (down 3.28%), HDFC Bank (down 1.03%), IndusInd Bank (down 0.94%), Yes Bank (down 0.91%), Kotak Mahindra Bank (down 0.75%), Federal Bank (down 0.45%), ICICI Bank (down 0.04%) and City Union Bank (down 0.03%), edged lower. Axis Bank rose 0.54%.
Meanwhile, the Sensex has dropped for the fifth session in a row today, 4 November 2016. The Sensex has dropped 667.36 points or 2.39% in five sessions from a close of 27,941.51 on 28 October 2016. The Sensex has fallen 656.06 points or 2.35% in November 2016 so far (till 4 November 2016). The Sensex has risen 1,156.61 points or 4.43% in calendar year 2016 so far (till 4 November 2016). From a 52-week low of 22,494.61 hit on 29 February 2016, the barometer index has risen 4,779.54 points or 21.25%. From a 52-week high of 29,077.28 hit on 8 September 2016, the barometer index has fallen 1,803.13 points or 6.30%. The Sensex is off 2,750.59 points or 9.16% from a record high of 30,024.74 hit on 4 March 2015.
On the economic front, the GST council yesterday, 3 November 2016 approved four main tax slabs 5%, 12%, 18% and 28% under a proposed Goods and Services Tax (GST). While there will be two standard tax rates – 12% and 18% – under the GST, half of the items in the consumer price index would not be taxed at all to safeguard the interests of the poor.
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