Markets end in red ahead of the FOMC meet; metal & oil shares drag

Benchmark indices have closed lower for the second straight day, amid weak global cues, with capital goods, metal and oil shares leading the decline.

Market participants have turned cautious ahead of the US FOMC meet which begins today. The Bank of Japan's meeting on interest rate decision is also scheduled on Friday.

Further, markets will remain volatile this week ahead of the October derivatives expiry on Thursday.

The 30-share Sensex ended lower by 109 points at 27,253 while the Nifty slipped 28 points at 8,233.

The broader markets, however, outperformed the benchmark indices- BSE Midcap and Smallcap indices were up 0.2%. Market breadth remained weak with 1,446 losers and 1,265 gainers on the BSE.

In the currency front, the rupee was marginally down by three paise at 64.99 against the dollar due to month-end demand for the US currency from importers.

MARKET VIEW

According to Ranak Merchant, Technical Analyst -- Strategies of Sushil Financial Services, “Markets continued to trend upwards albeit with a slower pace.

"Although the 200 Day EMA of 8,186 & the gap down level of 8225 stood surpassed, benchmark Nifty is yet to cross above its 200 Day SMA of 8,380 for the next run towards target of 8,530 to unfold.

The week remains particularly cautious as the ongoing results season is met with the US Fed policy meet, Bank of Japan meet and NSE Derivatives Expiry."

She further adds, "Volatility is definitely on the cards as seen from the India VIX up a notch of near 7% to above 17.

"While resistance has been established in the 8,350-8,380 support is seen in the 8,186-8,225 arena.

"Bank Nifty saw a brief breach above the multiple tops of 17950 but is yet to close above the same.

"Meanwhile the 200 Day EMA of 17,700 would act as immediate support. Trade cautious and keep leverage in check with trailing stop losses and continue book part profits to reduce cost of holding."

MACRO-ECONOMIC ANNOUNCEMENTS

Finance Minister Arun Jaitley said today that there is no cause for concern on fiscal deficit and the government will meet its target for the current fiscal despite certain challenges on the disinvestment front.

Reserve Bank of India Deputy Governor H R Khan said today that the central bank was considering new measures in debt markets, including working on a trading platform for repos and corporate bonds and looking at building bond indexes.

The government will apply a 5% withholding tax to offshore rupee bonds for foreign investors, in line with the rate applied to domestic debt, Manoj Joshi, joint secretary at the finance ministry, told reporters on Tuesday.

INDIGO IPO

The Rs 3,136-crore initial public offering of InterGlobe Aviation, the company that operates the country’s most-profitable airline IndiGo, is off to a good start.

The issue has already been covered nearly 70 per cent, including the anchor book.

GLOBAL MARKETS

Asian shares fell on Tuesday after a four-week rally ran out of steam as investors took cover ahead of central bank meetings in the United States and Japan later in the week, while disappointing US home sales weighed on the dollar.

European markets were set to open flat to lower, with earnings from major companies such as Deutsche Bank and Novartis in focus.

MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.7%.

China's main indexes slid more than 2% at one point, pressured by concerns about weak bank profits and growing bad loans, but pared losses by early afternoon.

Japan's Nikkei eased 0.8%, though it remained near a two-month high.

SECTORS & STOCKS

BSE Consumer Durables, Capital Goods, Metal and Oil & Gas indices were down almost 1% each.

The top losers from the Sensex pack were Lupin, ONGC, GAIL, HDFC, BHEL and Tata Steel. On the gaining side, Maruti Suzuki, Sun Pharma, Wipro, HDFC Bank and Cipla were up 1-3%.

Reliance Industries today became the first corporate to sign the revised listing agreement with the BSE as mandated under the newly introduced Listing Regulation notified by SEBI. The stock slipped by 1%.

Hero Moto rose by 0.2%. Buoyed by a double-digit growth in the ten-day long Navratra-Dussehra period, two-wheeler market leader Hero MotoCorp is aiming to sell nearly 600,000 units in retail sales this month.

Bajaj Auto, India's second largest two-wheeler manufacturer, has given its only cruiser bike the much needed upgrade by launching the Avenger at Rs 84,000 (ex-showroom, Delhi).

Shares of Bajaj Auto gained 0.4%.

Among other shares, Solar Industries surged 12%, erasing most of its Monday’s loss, after local mutual funds bought three percent stake in the company through open market.

NIIT Technologies moved higher by 5% after the company said it has signed a long term strategic agreement with Dubai based airline flydubai.

Q2 RESULTS IMPACT

Lupin dipped over 5% on the BSE after the company reported 35% year on year (YoY) decline in its consolidated net profit at Rs 409 crore for the quarter ended September 30, 2015 (Q2FY16), due to single digit growth in net sales and lower other income.

Vedanta ended marginally lower after the company reported a 40.6% fall in consolidated net profit for the quarter ended Septermber 30 at Rs 974 crore.

Maruti Suzuki India moved higher by almost 3% after the company reported 42% year on year (YoY) jump in net profit at Rs 1,226 crore for the quarter ended September 30, 2015 (Q2), on back of higher volumes.

Axis Bank ended flat after the bank reported a 19% increase in second-quarter profit, in line with estimates, while its bad loans remained stable.

TVS Motor jumped 13% after the auto major reported net profit of Rs 116 crore for the quarter ended September 30, 2015 up 22% compared to Rs 95 crore in the corresponding quarter last fiscal on the back of higher EBITDA margins.

With Reuters input

Image: Anxious investors. Photograph: Reuters