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Key indices slide on caution ahead of Fed statement

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Caution ahead of the outcome of a monetary policy meeting of the US Federal Reserve pulled equity key benchmark indices in India lower. The barometer index, the S&P BSE Sensex, fell 213.68 points or 0.78% to settle at 27,039.76. The Nifty fell 61.70 points or 0.75% to settle at 8,171.20. High volatility was witnessed during the latter part of the trading session as the Sensex regained the psychological 27,000 mark after falling below that level in intraday trade. The market may continue to remain volatile tomorrow, 29 October 2015, as traders roll over positions in the futures & options (F&O) segment from the near month October 2015 series to November 2015 series. The October 2015 derivatives contracts are set to expire tomorrow, 29 October 2015.

Banking and power sector stocks led decline for the two key benchmark indices which remained in negative zone throughout the trading session. With a third straight day of decline, the Nifty hit two-week closing low and the Sensex reached its lowest closing level in almost two weeks.

Axis Bank tumbled on concerns regarding the private sector bank's slippages in Q2 September 2015. Concerns about Axis Bank's slippages weighed on stocks of other banks. Shares of pharma major Lupin extended its post-result slide.

The Fed is widely expected to leave benchmark interest rates unchanged near zero after the conclusion of its two-day monetary policy meeting today, 28 October 2015. The Fed's statement may provide clues on the timing of the first interest rate hike in nearly a decade. The Fed has held its benchmark short-term interest rate near zero since December 2008. The ultra-loose monetary policy in the US has encouraged heavy investment in higher-yielding emerging markets. However, emerging market investors have been worried that once the US starts raising interest rates, it will drain liquidity from global emerging markets, including India and redirect it to developed economies.

The Sensex fell 213.68 points or 0.78% to settle at 27,039.76, its lowest closing level since 15 October 2015. The index fell 333.48 points, or 1.22% at the day's low of 26,919.96. The barometer index fell 89.46 points or 0.33% at the day's high of 27,163.98.

The Nifty fell 61.70 points or 0.75% to settle at 8,171.20, its lowest closing level since 14 October 2015. The index fell 101.10 points, or 1.23% at the day's low of 8,131.80. The index fell 23.80 points, or 0.29% at the day's high of 8,209.10.

The market breadth indicating the overall health of the market was negative. On BSE, 1,486 shares fell and 1,165 shares rose. A total of 183 shares were unchanged. The BSE Mid-Cap index fell 0.55%. The BSE Small-Cap index fell 0.01%. The decline in both these indices was lower than the Sensex's decline in percentage terms.

The total turnover on BSE amounted to Rs 2693 crore, lower than turnover of Rs 2809.03 crore registered during the previous trading session.

Among the sectoral indices, the S&P BSE Consumer Durables index (up 1.63%), the S&P BSE Teck index (up 0.37%), the S&P BSE IT index (up 0.36%), the S&P BSE FMCG index (down 0.03%), the S&P BSE Metal index (down 0.06%), the S&P BSE Capital Goods index (down 0.39%), the S&P BSE Oil & Gas index (down 0.41%), the S&P BSE Healthcare index (down 0.5%), the S&P BSE Auto index (down 0.65%) outperformed the Sensex. The S&P BSE Realty index (down 1.24%), the S&P BSE Power index (down 1.48%) and the S&P BSE Bankex (down 2.53%), underperformed the Sensex.

Most pharmaceutical stocks edged higher. Cipla (up 1.64%), Wockhardt (up 1%), Strides Arcolab (up 0.97%), Divi's Laboratories (up 0.84%), Piramal Enterprises (up 0.82%), Aurobindo Pharma (up 0.63%), Cadila Healthcare (up 0.28%), IPCA Laboratories (up 0.20%) and GlaxoSmithKline Pharmaceuticals (up 0.04%), edged higher. Sun Pharmaceutical Industries (down 0.49%), Dr Reddy's Laboratories (down 1.79%) and Glenmark Pharmaceuticals (down 1.85%) edged higher.

Shares of pharma major Lupin extended its post-result slide. The stock fell 1.83% at Rs 1,910. The stock had dropped 5.25% to settle at Rs 1,945.65 yesterday, 27 October 2015, after the company reported weak Q2 results. On a consolidated basis, Lupin's net profit fell 35.1% to Rs 408.80 crore on 2% rise in net sales to Rs 3178.30 crore in Q2 September 2015 over Q2 September 2014. The result was announced during market hours yesterday, 27 October 2015.

Shares of oil exploration and production firms declined. Cairn India (down 2.75%), Oil India (down 1.40%) and Reliance Industries (down 0.21%), edged lower. ONGC rose 1.41% to Rs 251.60.

Shares of public sector oil marketing companies also edged lower. HPCL (down 1.4%), BPCL (down 0.59%) and Indian Oil Corporation (down 0.18%) edged lower.

In the global commodities markets, Brent for December settlement was currently up 35 cents at $47.16 a barrel. The contract had fallen 73 cents or 1.53% to settle at $46.81 a barrel during the previous trading session.

Auto stocks were mixed. Ashok Leyland (down 1.83%), Eicher Motors (down 1.71%), Mahindra & Mahindra (down 1.62%), TVS Motor Company (down 1.58%), Bajaj Auto (down 0.47%), edged lower. Maruti Suzuki (India) (up 0.02%), Tata Motors (up 0.74%) and Escorts (up 0.90%), edged higher.

Hero MotoCorp slipped 0.12% to Rs 2,617.30. Hero MotoCorp has launched its new scooter Duet in the southern markets. The company has launched two versions of the scooter, with the base LX version priced at Rs 48,400 ex-showroom Bangalore and the higher version VX priced at Rs 49,900 ex-showroom Bangalore.

Most IT stocks edged higher after the rupee dropped against the dollar. Tech Mahindra (up 2.16%), Oracle Financial Services Software (up 1.52%), HCL Technologies (up 0.86%), Infosys (up 0.25%), MphasiS (up 0.17%) and CMC (up 0.03%), edged higher. TCS (down 0.2%), Hexaware Technologies (down 0.28%), MindTree (down 0.68%) and Persistent Systems (down 2.47%) edged lower. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.

In the foreign exchange market, the partially convertible rupee was currently hovering at 65.015, compared with its close of 64.96 during the previous trading session.

IT major Wipro rose 0.56% to Rs 578.40 after the company announced winning a five-year IT contract from Coop Norge Handel AS, a leading retailer in Norway. The company made announcement before market hours today, 28 October 2015.

Power sector stocks declined. JSW Energy (down 3.62%), NTPC (down 2.19%), GMR Infrastructure (down 2.15%), Tata Power (down 1.9%), Jaiprakash Power Ventures (down 1.72%), Reliance Infrastructure (down 1.37%), Adani Power (down 1.15%), CESC (down 1.09%), Reliance Power (down 1.01%) and NHPC (down 0.28%), edged lower. Torrent Power rose 0.05%.

Coal India fell 0.72%. GAIL (India) slipped 0.98%. Rashtriya Chemicals & Fertilizers (RCF) shed 0.4%. Coal India during market hours today, 28 October 2015, announced that Coal India (CIL), GAIL (India), Rashtriya Chemicals & Fertilizers (RCF) and Fertilizer Corporation of India (FCL) have entered into a joint venture agreement to establish and operate new coal gasification based fertilizer complex (ammonia urea complex) at Talcher along with power plant and associated facilities at Talcher unit of FCIL.

Axis Bank tumbled on concerns regarding the private sector bank's slippages in Q2 September 2015. The stock dropped 7.36% at Rs 482.95. The stock hit high of Rs 495.70 and low of Rs 477 in intraday trade. The stock had ended almost unchanged after seeing intraday volatility yesterday, 27 October 2015, in the wake of the announcement of the bank's second quarter results. According to a post earnings research report of a domestic brokerage, Axis Bank sold loans aggregating about Rs 1820 crore to asset reconstruction companies (ARCs) for net consideration of about Rs 650 crore in Q2 September 2015. Axis Bank's gross slippages were Rs 589 crore or 1% of loans in Q2 September 2015 which was lower than gross slippages of Rs 1190 crore or 2.1% of loans in Q1 June 2015. However, adjusted for Rs 1820-crore sale to ARCs, gross slippages were about Rs 2400 crore or 4% of loans in Q2 September 2015, according to the brokerage. Axis Bank's net profit rose 18.93% to Rs 1915.64 crore on 13.75% rise in total income to Rs 12001.01 crore in Q2 September 2015 over Q2 September 2014. The result was announced during market hours yesterday, 27 October 2015.

Concerns about Axis Bank's slippages weighed on stocks of other banks. ICICI Bank (down 4.3%), Yes Bank (down 2.91%), IndusInd Bank (down 2.75%), Federal Bank (down 0.62%) and City Union Bank (down 0.46%), edged lower. HDFC Bank (up 0.14%) and Kotak Mahindra Bank (up 1.54%), edged higher.

Among PSU bank stocks, Punjab National Bank (down 2.9%), State Bank of India (down 2.67%), Bank of Baroda (down 2.41%), Allahabad Bank (down 2.33%), Indian Bank (down 2.33%), Dena Bank (down 2.31%), Canara Bank (down 1.95%), Syndicate Bank (down 1.8%), Bank of India (down 1.71%), Union Bank of India (down 1.62%), Punjab and Sind Bank (down 1.46%), Andhra Bank (down 1.12%), United Bank of India (down 0.9%), Bank of Maharashtra (down 0.74%), Corporation Bank (down 0.34%), Vijaya Bank (down 0.27%), Central Bank of India (down 0.06%) and IDBI Bank (down 0.06%), edged lower. UCO Bank rose 3.89%

Key benchmark indices edged lower for the third consecutive trading session. The Sensex has declined 431.05 points or 1.57% in the preceding three trading sessions from its close of 27,470.81 on 23 October 2015. The Sensex has risen 884.93 points or 3.38% in this month so far (till 28 October 2015). The Sensex has fallen 459.66 points or 1.67% in this calendar year so far (till 28 October 2015). From a 52-week low of 24,833.54 hit on 8 September 2015, the Sensex has risen 2,206.22 points or 8.88%. The Sensex is off 2,984.98 points or 9.94% from a record high of 30,024.74 hit on 4 March 2015.

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First Published: Wed, October 28 2015. 16:42 IST