Fears of a setback to the economic reforms process in the wake of Bharatiya Janata Party's (BJP) drubbing in Bihar assembly elections and prospects of hike in interest rates by the US Federal Reserve at its next monetary policy review in December 2015 pulled key benchmark indices lower. At 13:25 IST, the barometer index, the S&P BSE Sensex, was off 301.48 points or 1.15% at 25,963.76. The 50-unit Nifty 50 index was off 91.95 points or 1.16% at 7,862.35. The Sensex was currently hovering below the psychological 26,000 level. It had reclaimed that mark for a brief period in mid-morning trade. Earlier, the Sensex slipped below the psychological 26,000 level after a weak opening triggered by BJP's drubbing in Bihar assembly elections.
Concerns about pick up in inflation also weighed on the domestic bourses after the finance ministry announced the imposition of a Swachh Bharat Cess at the rate of 0.5% on all services presently liable to service tax. The Swachh Bharat or Clean India cess will be applicable from 15 November 2015. The proceeds from this cess will be exclusively used for Swachh Bharat initiatives.
Meanwhile, a poor showing of BJP-led National Democratic Alliance (NDA) in the Bihar assembly elections has raised concerns among investor that the opposition parties may disrupt the Centre's economic reform process. The pre-poll alliance between the Janata Dal (United), Rashtriya Janata Dal and Congress scored a stunning win in the Bihar assembly elections for which counting took place yesterday, 8 November 2015, dealing a major blow to the ruling NDA government at the Centre. The NDA won just 58 seats of which the BJP won 53 seats in the Bihar assembly elections. With the opposition, emboldened by the victory in Bihar, unlikely to let Parliament function smoothly in the winter session, the fate of key legislation aimed at furthering the government's reform agenda remains uncertain. The BJP-led NDA has a comfortable majority in Lok Sabha, but lags in numbers in the Rajya Sabha, the upper house, where members are elected by the strength of legislators in the states. The NDA was hoping that a good performance in some of the state assembly elections would help it consolidate its position in the Rajya Sabha, which in turn could help it push through important legislation in the upper house. At present, the Congress is the single largest party in the Rajya Sabha with 67 seats. The BJP has 48 members in the 245-member house and the NDA 60 members.
The market breadth indicating the overall health of the market was negative. On BSE, 1,257 shares declined and 1,116 shares rose. A total of 120 shares were unchanged. The BSE Mid-Cap index was currently down 0.03%. The decline in this index was lower than Sensex's decline in percentage terms. The BSE Small-Cap index was currently up 0.24%, outperforming the Sensex.
Tata Power Company rose 1.7% after the company reported turnaround Q2 September 2015 results. The company reported consolidated net profit of Rs 247.31 crore in Q2 September 2015 compared with net loss of Rs 77.75 crore in Q2 September 2014. Total income declined 10.55% to Rs 8549.15 crore in Q2 September 2015 over Q2 September 2014. The company announced results during market hours today, 9 November 2015.
Tata Power Company said that the board of directors of the company approved the re-appointment of Mr. Anil Sardana as CEO & Managing Director of the company for a period of 5 years with effect from 1 February 2016 subject to approval of the shareholders of the company.
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Capital goods stocks were mixed. BEML (up 0.55%), Havells India (up 0.54%), Bharat Electronics (up 2.4%), Thermax (up 2.89%), Crompton Greaves (up 0.41%) and Siemens (up 0.27%) gained. Alstom T&D India (down 1.34%) and ABB India (down 1.55%) declined.
L&T dropped 1.63%. The company said it has entered into an in principle agreement with Adani Kattupalli Ports (AKPPL), a subsidiary of Adani Ports & Special Economic Zone (APSEZ), for strategic sale of its Kattupalli port in Tamil Nadu. L&T's subsidiary L&T Shipbuilding (LTSB) operates the Kattupalli port. An agreement has been reached to handover the operations of the port to AKPPL.
Shares of Adani Ports & Special Economic Zone dropped 1.39%.
Bharat Heavy Electricals (Bhel) lost 3.15% at Rs 185.70, with the stock extending previous trading session's decline triggered by the company reporting poor Q2 earnings. The stock had fallen 1.24% to settle at Rs 191.80 on Friday, 6 November 2015, in the wake of the company's announcement of the poor Q2 earnings. Bhel reported net loss of Rs 204.90 crore in Q2 September 2015 compared with net profit of Rs 124.84 crore in Q2 September 2014. Total income declined 0.45% to Rs 6311.23 crore in Q2 September 2015 over Q2 September 2014.
Meanwhile, Bhel after market hours on Friday, 6 November 2015 said it has secured prestigious orders, cumulatively valued at Rs 4614 crore for setting up two supercritical thermal power projects in Andhra Pradesh.
Metal and mining stocks dropped in the wake of weak China trade data for October 2015. Bhushan Steel (down 2.85%), Jindal Steel & Power (down 0.7%), Vedanta (down 1.14%), Tata Steel (down 0.25%), NMDC (down 0.27%), Hindalco Industries (down 2.1%), Steel Authority of India (down 2.76%), and National Aluminium Company (down 3.03%) edged lower. JSW Steel (up 0.63%) and Hindustan Zinc (up 1.01%) gained. China is the world's largest consumer of steel, copper and aluminum.
China's exports fell 6.9% year-over-year in dollar terms in October 2015, following a decline of 3.7% in the previous month. Imports in October saw a sharper-than-expected 18.8% fall from a year earlier, extending the 20.4% on-year decrease in September.
Meanwhile, in the global commodities markets, High Grade Copper for December 2015 delivery was currently off 0.36% at $2.234 per pound on the COMEX.
Housing Development and Infrastructure (HDIL) shed 4.07% after the company reported weak Q2 results. Consolidated net profit fell 6.6% to Rs 57.79 crore on 20.39% decline in total income to Rs 242.67 crore in Q2 September 2015 over Q2 September 2014. The result was announced on Saturday, 7 November 2015.
In overseas stock markets, key benchmark indices in emerging Asia were mostly in red after robust US jobs data for October 2015 bolstered expectations of the US Federal Reserve hiking interest rates at its next monetary policy review in December 2015. Investors in emerging markets, including India are worried that once the Fed starts raising interest rates, it will drain liquidity from global emerging markets and redirect it to developed economies. 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. The next monetary policy review from the Fed is scheduled on 15-16 December 2015. The Fed-funds futures market is now pricing in 70% probability of an increase in US benchmark interest rate in December 2015.
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