Sensex, Nifty hit 4-1/2-week closing low

Losses for metal and pharma sector stocks and index heavyweights HDFC and L&T outweighed gains for banking stocks and index heavy heavyweight Reliance Industries (RIL) to push key benchmark indices lower. The barometer index, the S&P BSE Sensex, lost 97.68 points or 0.37% to settle at 26,559.15. The losses for the Sensex were higher in percentage terms than those for the 50-unit CNX Nifty index. The Nifty lost 15 points or 0.19% to settle at 8,050.80. A rebound in late trade helped the Nifty regain the psychological 8,000 level after the index fell below that level in intraday trade.

Comments from Revenue Secretary Hasmukh Adhia that the government could cut corporate tax rate to 25% from 30% before a previous deadline of four years and a recovery in European stocks aided intraday recovery on the domestic bourses. A recovery in stocks of state-run banks also aided intraday recovery on the domestic bourses after global credit rating agency Moody's Investors Service revised upwards its outlook on India's banking system to stable from negative because of the gradual improvement in the operating environment for Indian banks.

The Nifty remained in negative zone throughout the trading session. But due to technical error in data release from BSE at the onset of the trading session, the Sensex showed a jump of 167.47 points or 0.62% at the day's high of 26,824.30 at the onset of the trading session.

With a 6th straight trading session of decline, the Sensex and Nifty, both, hit 4-1/2-week closing low.

L&T extended post-result slide after the company's management in a post earnings conference call reduced the company's order inflow and revenue guidance for the full year. Metal and mining stocks declined as China's manufacturing data pointed to slowing activity. Coffee Day Enterprises (CDEL), the parent company of the Coffee Day Group which houses the coffee selling restaurants CafCoffee Day, made a weak debut on the bourses.

The Sensex lost 97.68 points or 0.37% to settle at 26,559.15, its lowest closing level since 1 October 2015. The barometer index fell 278.57 points or 1.04% at the day's low of 26,378.26. The index rose 167.47 points or 0.62% at the day's high of 26,824.30.

The CNX Nifty lost 15 points or 0.19% to settle at 8,050.80, its lowest closing level since 1 October 2015. The index fell 70.20 points or 0.87% at the day's low of 7,995.60. The index fell 5.10 points or 0.06% at the day's high of 8,060.70.

Meanwhile, Revenue Secretary Hasmukh Adhia was quoted as saying that the government could cut corporate tax rate to 25% from 30% before a previous deadline of four years. Adhia also said that the government will provide a roadmap for ending corporate tax exemptions shortly, according to reports. Finance Minister Arun Jaitley, while presenting his annual budget in February, announced that the government would gradually pare corporate tax by 5 percentage points during the next four years and roll back various tax exemptions.

Meanwhile, a monthly survey showed a further loss of growth momentum across the Indian manufacturing sector last month. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers' Index (PMI) hit 22-month low of 50.7 in October 2015 from a reading of 51.2 in September 2015. A reading above 50 indicates expansion in activity, while one below that level signals contraction.

The market breadth indicating the overall health of the market was negative. On BSE, 1,541 shares fell and 1,156 shares rose. A total of 119 shares were unchanged. The BSE Mid-Cap index rose 0.08%, outperforming the Sensex. The BSE Small-Cap index fell 0.20%. The decline in this index was lower than Sensex's decline in percentage terms.

The total turnover on BSE amounted to Rs 2413 crore, lower than turnover of Rs 3186.77 crore registered during the previous trading session.

Among the sectoral indices on BSE, the S&P BSE Healthcare index (down 0.72%), the S&P BSE Capital Goods index (down 1.05%) and the S&P BSE Metal index (down 1.27%), underperformed the Sensex. The S&P BSE Realty index (up 0.91%), the S&P BSE Consumer Durables index (up 0.53%), the S&P BSE FMCG index (up 0.33%), the S&P BSE Oil & Gas index (up 0.3%), the S&P BSE Teck index (up 0.26%), the S&P BSE IT index (up 0.24%), the S&P BSE Auto index (up 0.05%), the S&P BSE Bankex (up 0.03%) and the S&P BSE Power index (down 0.18%), outperformed the Sensex.

Index heavyweight and cigarette major ITC rose 0.51% to Rs 336.40. The stock hit a high of Rs 339.40 and low of Rs 329.70 in intraday trade.

Index heavyweight Reliance Industries (RIL) rose 1.07% to Rs 958. The stock hit a high of Rs 960.50 and low of Rs 945.25 in intraday trade.

Index heavyweight HDFC dropped 2.78% to Rs 1,222.25. The stock hit high of Rs 1,266.65 and low of Rs 1,213 in intraday trade.

Index heavyweight and software major Infosys fell 0.49% to Rs 1,130.50. The stock hit high of Rs 1,135 and low of Rs 1,114.30 in intraday trade.

L&T extended post-result slide after the company's management in a post earnings conference call reduced the company's order inflow and revenue guidance for the full year. The stock shed 1.78%. The company's management in a post earnings conference call reduced the company's order inflow guidance to around 5-7% for the current financial year as compared to earlier guidance of around 15%. Revenue growth guidance was also reduced to around 12.5% against earlier of around 15%. Lower commodity prices, weakening currency, lower demand worldwide and execution challenges were the major reasons for the reduction in guidance. The L&T management expects a significant pick up in business opportunities to happen only in the year ending 31 March 2017 (FY 2017). The L&T stock price had lost 4.1% to settle at Rs 1,411.15 on BSE during the previous trading session on Friday, 30 October 2015, after the company's Q2 September 2015 results disappointed investors.

Shares of many public sector banks reversed losses after global credit rating agency Moody's Investors Service revised upwards its outlook on India's banking system to stable from negative because of the gradual improvement in the operating environment for Indian banks. Bank of Baroda (up 1.19%), Syndicate Bank (up 0.48%), Punjab National Bank (up 1.01%), Allahabad Bank (up 1.87%), Bank of India (up 0.84%), Union Bank of India (up 1.56%), Canara Bank (up 0.27%), and United Bank of India (up 0.01%) edged higher. UCO Bank (down 2.54%), Corporation Bank (down 1.26%) and State Bank of India (SBI) (down 0.02%) declined.

The stable outlook on India's banking system over the next 12-18 months reflects Moody's expectation that the banks' gradually improving operating environment will result in a slower pace of additions to problem loans, leading to more stable impaired loan ratios. Moody's Vice President and Senior Credit Officer Srikanth Vadlamani expects the pace of new impaired loan formation for the Indian banking sector in the financial year ending 31 March 2016 (FY 2016) to be lower than the levels seen in the past four years. However, the recovery in asset quality will be U-shaped rather than V-shaped because corporate balance sheets remain highly leveraged, according to Vadlamani.

Meanwhile, Finance Minister Arun Jaitley on Saturday, 31 October 2015, said that recapitalization of public sector banks would give more strength and muscle for the banking sector to lend. Jaitley made these comments while delivering the key-note address at seminar in Mumbai organized by the Confederation of Real Estate Developers' Associations of India on the role of banking and finance in real estate development.

Oriental Bank of Commerce jumped 8.08% after the state-run bank's net profit rose 3.39% to Rs 301.31 crore on 2.35% growth in total income to Rs 5454.13 crore in Q2 September 2015 over Q2 September 2014. The result was announced during market hours today, 2 November 2015. On absolute basis, Oriental Bank of Commerce's gross non-performing assets (NPAs) stood at Rs 8557.76 crore as on 30 September 2015, slightly lower than Rs 8577.04 crore as on 30 June 2015 and sharply higher than Rs 6643.80 crore as on 30 September 2014. The ratio of gross NPAs to gross advances stood at 5.7% as on 30 September 2015, lower than 5.85% as on 30 June 2015 and higher than 4.74% as on 30 September 2014. The ratio of net NPAs to net advances stood at 3.55% as on 30 September 2015 as against 3.76% as on 30 June 2015 and 3.29% as on 30 September 2014.

The bank's provisions and contingencies declined 11.19% to Rs 569.42 crore in Q2 September 2015 over Q2 September 2014. Provision coverage ratio as on 30 September 2015 stood at 61.53%.

Among private sector banks, Axis Bank (up 0.78%), Yes Bank (up 1.44%), IndusInd Bank (up 0.42%) edged higher. Kotak Mahindra Bank (down 0.53%) and HDFC Bank (down 1.01%) fell.

ICICI Bank rose 0.32%, with the stock extending gains registered during the previous trading session triggered by good Q2 September 2015 results. The stock had risen 2.04% to settle at Rs 277 on Friday, 30 October 2015, in the wake of the result announcement. ICICI Bank's net profit rose 11.85% to Rs 3030.11 crore on 8.17% growth in total income to Rs 16106.22 crore in Q2 September 2015 over Q2 September 2014.

Metal and mining stocks declined as China's manufacturing data pointed to slowing activity. Bhushan Steel (down 1.25%), Jindal Steel & Power (down 1.87%), Vedanta (down 3.1%), Tata Steel (down 3.28%), NMDC (down 3.65%), Hindalco Industries (down 2.86%), Steel Authority of India (down 3.37%), JSW Steel (down 2.27%), Hindustan Zinc (down 1.24%) and National Aluminium Company (down 1.42%) edged lower. China is the world's largest consumer of steel, copper and aluminum.

Activity in China's manufacturing sector unexpectedly contracted in October for a third straight month, an official survey showed on Sunday, 1 November 2015. The official Purchasing Managers' Index (PMI) was at 49.8 in October, the same pace as in previous month. A reading below 50 points suggests contraction. Meanwhile, another data showed, the Caixin/Markit China Manufacturing PMI edged up to 48.3 in October from 47.2 in September.

Pharma stocks declined. Cipla (down 1.68%), Glenmark Pharmaceuticals (down 0.71%), Lupin (down 1.51%), Sun Pharmaceutical Industries (down 2.59%), Cadila Healthcare (down 1.42%) declined. Aurobindo Pharma (up 1.81%) and Wockhardt (up 4.02%) rose.

Dr Reddy's Laboratories rose 0.19%. Dr Reddy's Laboratories said the company has launched pain killer product Nise D spray. It will be available in two convenient pack sizes -- pocket pack at Rs 99 and home pack for Rs 130. By launching Nise D spray the company has strengthened its over the counter (OTC) portfolio in India. In India, the market for pain relief products is approximately Rs 1700 crore as per the A C Nielsen Retail measurement study.

GlaxoSmithKline Pharmaceuticals shed 2.42% after net profit fell 25.35% to Rs 96.05 crore on 6.52% decline in total income to Rs 731.43 crore in Q2 September 2015 over Q2 September 2014. The result was announced on Saturday, 31 October 2015.

Auto stocks witnessed a mixed trend after announcing monthly sales volume data. Maruti Suzuki India rose 0.48%. The company's total sales rose 29.1% to 1.34 lakh units in October 2015 over October 2014. Domestic sales rose 24.7% to 1.21 lakh units in October 2015 over October 2014. Exports jumped 90.4% to 13,146 units in October 2015 over October 2014.

Mahindra & Mahindra (M&M) gained 1.66% after the company reported strong auto sales in October. The company's total automobile sales rose 20% to 51,383 units in October 2015 over October 2014. Domestic sales rose 21% to 48,815 units in October 2015 over October 2014. Exports rose 3% to 2,568 units in October 2015 over October 2014.

Separately, the company announced that its total tractor sales fell 12% to 28,081 units in October 2015 over October 2014. Domestic tractor sales dropped 11% to 27,280 units in October 2015 over October 2014. Exports dropped 28% to 801 units in October 2015 over October 2014.

Tata Motors rose 0.92% after the company announced that it continued to witness strong growth in certain key segments in October 2015. Total sale of Tata Motors passenger and commercial vehicles rose 1% at 43,486 vehicles, in October 2015 over October 2014. The domestic sale of Tata commercial and passenger vehicles remained flat at 38,917 units in October 2015 over October 2014. Tata Motors passenger vehicles recorded a growth of 11% to 12,798 units in October 2015 over October 2014. In commercial vehicles, M&HCV sales rose 20% at 12,504 units in October 2015 over October 2014. The Light & Small Commercial Vehicle sales however continued to reflect industry decline and fell 19% at 13,615 units in October 2015 over October 2014. The company's sales from exports rose 13% at 4,569 units in October 2015 over October 2014.

This monthly sales data pertains to the standalone operations of Tata Motors and does not includes sales of its luxury car unit Jaguar Land Rover (JLR). Tata Motors' standalone business mainly comprises of its commercial vehicles and passenger vehicles business in India.

Bajaj Auto dropped 4.65% after the company reported weak sales in October. The company's total sales fell 9% to 3.52 lakh units in October 2015 over October 2014. Motorcycles sales fell 8% to 3.08 lakh units in October 2015 over October 2014. Commercial vehicles sales dropped 10% to 44,089 units in October 2015 over October 2014. Exports dropped 19% to 1.27 lakh units in October 2015 over October 2014.

Hero MotoCorp declined 1.74%. The company informed during market hours today, 2 November 2015, that the visionary founder of the diversified Hero Group Dr Brijmohan Lall Munjal, passed away yesterday, 1 November 2015, at the age of 92. He was the Chairman Emeritus of Hero MotoCorp.

Coffee Day Enterprises (CDEL), the parent company of the Coffee Day Group which houses the coffee selling restaurants CafCoffee Day, made a weak debut on the bourses. The stock settled at Rs 270.15 on BSE, a discount of 17.64% compared with the initial public offer price of Rs 328. The stock debuted at Rs 313 on BSE, a discount of 4.57% compared with its initial public offer (IPO) price. The stock hit a high of Rs 318 and a low of Rs 266 in intraday trade. In addition to the coffee business, CDEL operates other select businesses namely, development of IT-ITES technology parks, logistics, financial services and hospitality.

Adani Ports and Special Economic Zone shed 0.15% to Rs 295.10. The stock hit high of Rs 302.65 and low of Rs 290.10 in intraday trade. The company's consolidated net profit rose 16% to Rs 667 crore on 6% rise in total income to Rs 1986 crore in Q2 September 2015 over Q2 September 2014. Consolidated cargo handled by the company rose 4% to 36 million metric tonne (MMT) in Q2 September 2015 over Q2 September 2014. The result was announced during market hours today, 2 November 2015.

Key benchmark indices edged lower for the sixth consecutive trading session today, 2 November 2015. The Sensex has declined 911.66 points or 3.31% from its close of 27,470.81 on 23 October 2015. The Sensex has fallen 940.27 points or 3.41% in this calendar year so far (till 2 November 2015). From a 52-week low of 24,833.54 hit on 8 September 2015, the Sensex has risen 1,725.61 points or 6.94%. The Sensex is off 3,465.59 points or 11.54% from a record high of 30,024.74 hit on 4 March 2015.

In overseas stock markets, European stocks reversed initial losses after a gauge of factory activity for the eurozone unexpectedly improved. Earlier during the global day, Chinese and Japanese stocks fell as China's manufacturing data pointed to slowing activity. US stocks drifted lower during the previous trading session on Friday, 30 October 2015, after a batch of weaker economic reports and mixed corporate earnings.

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