Sensex drifts lower after an initial upmove

A bout of volatility was seen in early trade as the key benchmark indices saw divergent trend after trimming initial gains triggered by mostly positive Asian stocks. At 9:27 IST, the barometer index, the S&P BSE Sensex was down 33.46 points or 0.12% to 27,896.75. The Nifty 50 index was currently up 4.65 points or 0.05% at 8,630.35.

In overseas stock markets, most Asian stocks were trading higher, after the release of encouraging purchasing managers index data from China and as the Bank of Japan central bank largely held firm on their policies. China's official manufacturing PMI rose to 51.2 in October from 50.4 in September, adding to signs that the world's second-largest economy is stabilizing. China's official non-manufacturing purchasing managers index, a measure of activity outside factory gates, edged up to 54 in October from 53.7 in September. The Caixin manufacturing PMI for China was 51.2 in October, up from 50.1 in September. Japan's central bank largely held fire in a policy update today, 1 November 2016. The Bank of Japan (BOJ) said it would keep its deposit rate steady at -0.1%, and would continue to target a zero yield for 10-year Japan government bonds. Its only notable move was to push back the timeline for achieving 2% inflation by one year, to fiscal 2018. US stocks closed lower yesterday, 31 October 2016 as stronger-than-expected consumer spending data underlined the view that the economy is growing at a steady pace, while a drop in oil prices and election uncertainty weighed on the minds of investors.

Closer home, the market breadth indicating the overall health of the market was positive. On BSE, 824 shares rose and 773 shares fell. A total of 57 shares were unchanged. The BSE Mid-Cap index was currently down 0.01%. The BSE Small-Cap index was currently down 0.11%. The fall in both these indices was lower than the Sensex's decline in percentage terms.

Tata Steel rose 0.68%. The company announced yesterday, 31 October 2016 that ratings agency Brickwork Ratings downgraded the company's credit rating to BWR AA from BWR AA+, with negative outlook for the unsecured non-convertible debenture (NCD) issues of Rs 4000 crore. The ratings agency also downgraded ratings to BWR AA- from BWR AA for the company's unsecured subordinated perpetual debt issues of Rs 2500 crore, with negative outlook. The sudden change of guard at the holding company/group level has not only heightened the management risk for Tata Steel, but also has exposed it to uncertainty over continuity of critical decisions on cost cutting and deleveraging the balance sheet concerning the unprofitable UK operations and restructuring its European business, the ratings agency said. Unless the company takes appropriate measures in this regard, it may lead to a further deterioration in financial profile of the company, as also a rating action, the agency added.

Yes Bank shed 0.13%. The bank announced yesterday, 31 October 2016 that it has received the approval from Reserve Bank of India (RBI) for appointment of Ashok Chawla as Non-Executive Part-time Chairman of the bank for a period of three years from the date of his taking charge. Accordingly, Chawla took charge as Non-Executive Part-time Chairman of the bank with effect from 30 October 2016 upon the expiry of the term of the current Chairperson of the bank, Radha Singh. Ashok Chawla, an independent director, was appointed on the board on 5 March 2016.

Among macro economic data, Markit Economics will announce the India Manufacturing Purchasing Managers' Index (PMI) data for October 2016 today, 1 November 2016. The seasonally adjusted Nikkei India Manufacturing PMI fell to 52.1 in September from 52.6 in August.

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