Nifty hovers around 8,450; BSE Smallcap index dips 2%

Key benchmark indices continue to trade lower weighed down by pharma shares. At 13:05 IST, the barometer index, the S&P BSE Sensex was down 79 points or 0.3% to 27,351. The Nifty 50 index was currently down 34 points or 0.4% at 8,450.

The Sensex and the Nifty recovered after hitting hit their lowest intraday levels in almost four months in early afternoon trade. The Sensex fell 130.26 points, or 0.47% at the day's low of 27,300.02 in early afternoon trade, its lowest level since 8 July 2016. The index rose 68.63 points, or 0.25% at the day's high of 27,498.91 in early trade. The Nifty fell 52.45 points, or 0.62% at the day's low of 8,432.50 in early afternoon trade, its lowest level since 11 July 2016. The index rose 19.05 points, or 0.22% at the day's high of 8,504 in early trade.

In overseas stock markets, 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. 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. There was also unanimous support to stick with August's bond-buying plans.

Closer home, the market breadth indicating the overall health of the market was weak. On BSE, 2,134 shares declined and 532 shares advanced. A total of 97 shares were unchanged. The BSE Mid-Cap index was currently off 1%. The BSE Small-Cap index was currently off 1.94%. The fall in both these indices was higher than the Sensex's decline in percentage terms.

Telecom stocks declined. MTNL (down 3.07%), Tata Teleservices (Maharashtra) (down 2.93%), Reliance Communications (down 2.38%) and Idea Cellular (down 0.82%), edged lower.

Bharti Airtel lost 0.55% to Rs 307.85 amid initial volatility after the company said its subsidiary has closed several ongoing major litigations in Nigeria, UK and Netherlands. Bharti Airtel International (Netherlands) BV (Airtel) and Zain Telecom (Zain) have reached an agreement, pursuant to which Zain is to pay to Airtel about $129 million for the settlement of all of Airtel's claims on account of the Nigeria Litigation, certain tax matters and associated legal costs.

Under the terms of the 2010 share sale/purchase agreement, Zain had provided Airtel certain indemnities covering the Nigeria Litigation and for certain tax claims. A separate settlement has been reached between Airtel and Econet Wireless settling all claims, disputes whatsoever, between the two including in Nigeria and Netherlands. With these settlements, Airtel has closed several ongoing major litigations in Nigeria, UK and Netherlands.

Telecom tower infrastructure provider Bharti Infratel was down 3.54%.

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 6.01%), Glenmark Pharmaceuticals (down 5.75%), Strides Shasun (down 5.09%), Dr Reddy's Laboratories (down 4.71%), Lupin (down 4.64%), Aurobindo Pharma (down 3.66%), IPCA Laboratories (down 2.88%), Wockhardt (down 2.67%), Alkem Laboratories (down 1.91%), GlaxoSmithKline Pharmaceuticals (down 1.88%), Divi's Laboratories (down 1.24%), Cadila Healthcare (down 1.2%), Cipla (down 0.79%) and Piramal Enterprises (down 0.04%), edged lower.

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.

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.