Metal shares and index heavyweight HDFC led losses for key benchmark indices. The barometer index, the S&P BSE Sensex, lost 118.78 points or 0.45% at 26,538.05, as per the provisional closing data. The losses for the Sensex were higher in percentage terms than those for the 50-unit CNX Nifty index. The Nifty shed 15 points or 0.19% at 8,050.80, as per the provisional closing data. The Nifty provisionally closed above the psychological 8,000 level after falling 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 raised its outlook on India's banking system to stable from negative because of the gradual improvement in the operating environment for Indian banks.
Earlier, the Nifty hit 4-1/2-week low when it dropped 70.20 points or 0.87% at the day's low of 7,995.60 in mid-afternoon trade. The Sensex hit 4-week low when it dropped 278.57 points or 1.04% at the day's low of 26,378.26 in mid-afternoon trade.
The Sensex and the Nifty edged lower for the 6th straight trading session.
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, 1,531 shares fell and 1,163 shares rose. A total of 122 shares were unchanged. The BSE Mid-Cap index was provisionally up 0.08%, outperforming the Sensex. The BSE Small-Cap index was provisionally down 0.2%. The decline in both these indices was lower in percentage terms than the Sensex's fall.
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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Shares of many public sector banks reversed losses after global credit rating agency Moody's Investors Service raised 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 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%.
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.
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