Markets Close Negative Ahead Of Expiry

Benchmark indices remained volatile and closed in the red today. The BSE Sensex declined by 80 points (down 0.44%) to 18710 while the Nifty declined by 25 points to close below the 5700 level. After a weak opening and a rather lackluster trade the market trended exactly as we had said in our mid-day market commentary. Broader indices continued to trade in the negative ahead of the October series futures expiry.

Earlier in the day European markets opened on a weak note and the FTSE continued to trade in the negative showing a decline of 0.7% at the time of this report. The DAX was trading down 0.84% while CAC had lost 0.6% in early trades. Asian markets were mixed with the Japanese Nikkei closing on a flat note while the Shanghai Composite closed down 0.87%.

Among sectoral indices, the BSE Capital Goods Index gained 0.9% by closing. The index was mainly up on the back of positive results posted by the engineering conglomerate L&T. Apart from CG, all other sectoral indices ended in the red. The CD Index was the worst performer today; it tanked nearly 1% by closing. Auto, Power, FMCG and Metals also tanked over 0.8% each today.

Amongst Sensex stocks, L&T continued its positive streak today as well. Its shares gained 2% over the better than expected earnings that it reported yesterday. ICICI Bank gained 0.5% ahead of its results on Friday. Coal India, HUL, DR Reddy’s Lab, Cipla and HDFC were among other counters that ended the day on a positive note. JIndal Steel for the second day in a row closed in the red. The stock was down 2.4% today. Shares of Hero Motocorp remained highly volatile ahead of the company’s quarterly earnings amid speculation that company may report a decline in profits. It was down nearly 2% at close. After market hours the company reported its quarterly earnings; its net profit at Rs 440 crore was in line with what was expected of it. Among other stocks, Hindalco, ITC, Gail, Tata Power and BHEL lost over 1% each.

Yes Bank rose by 3.18% to Rs 399 following a good set of numbers that it came up with early on in during the day.

Pharma Company Lupin also announced its September quarter results in which it reported record sales of Rs 2030 crore with a top line growth of 29%. The company reported s 9% growth in its net profit to Rs 290 crore. Its EBITDA margins however have declined disappointing investors. The stock had gained nearly 2% today but came down sharply after the result and closed in the red.

Despite a volatile market session, some stocks including Astral Polytechnic, HDFC Bank, Emami and Eicher Motors touched a new highs.

Kingfisher Airlines again tanked about 5% today. The reasons are obvious and do not need to be elaborated again.  Shares of Power companies including GMR Infra, JP Power, Lanco Infra and Suzlon tanked nearly 3% each. Now this is partly because investors don’t seem to be too sure about how these companies have performed in the September quarter.

Investment Bank BofA Merrill Lynch is overweight on the Auto sector and it expects RBI to cut the CRR in its meeting due next week. The investment bank has also said that reforms will be the key market driver and it does not expect any big surprises on the earnings front. On the other hand, Nomura another key investment bank has said that it does not expect any rate cut on 31^st October.

In sum the markets closed on a weak note today indicating a flat expiry of the October series. We expect volatility to continue till Thursday and thereafter speculations on rate cuts will be a key factor. Enjoy the festivities for tomorrow and watch this space for more updates to help you trade better.