Global cues drag Nifty below 8,750; BSE Midcap index gains 0.5%

Benchmark indices ended lower amid weak global cues, along with selling pressure in IT and financials leading the declines.

The benchmark S&P Sensex closed at 28,221 levels, down 114 points or 0.4%. Nifty50 index fell 25 points, or 0.3%, to close at 8,744 levels. The broader markets, however, outperformed the frontline indices, with S&P BSE Midcap and Smallcap gaining 0.5% and 0.6%, respectively.

Markets made a firm opening today on news that the International Monetary Fund (IMF) raised projections for India’s economic growth by 0.2 percentage points to 7.6% for 2016-17 and 2017-18.

However, India's services industry lost momentum last month from August's robust performance as growth in domestic and foreign demand waned, a survey showed on Wednesday.

On Tuesday, markets reacted positively to the RBI's decision to cut the repo rate by 25 basis points (bps), to 6.25%, in its bi-monthly monetary policy review.

According to Jimeet Modi of SAMCO Securities, “The rate cut could have been triggered due to normal monsoon, slowdown in global growth expectations, lower domestic inflationary expectations in the near term and global liquidity inflows that prompted the decision to cut interest rates so that the capital formation in the economy further picks up with lower cost of capital. However, a slight caution on account of payout of 7th pay commission could trigger some inflationary pressures was visible from the tone but overall the pronouncement of accommodative monetary policy is positive for the Indian economy and the stock market in the medium to long term.”

In overseas stock markets, Asian shares and gold retreated on Wednesday and bond yields were near two-week highs as markets were rattled by a media report flagging the possible withdrawal of the European Central Bank's bond buying program.

MSCI's broadest index of Asia-Pacific shares outside Japan slipped 0.3% in early trading. Japan's Nikkei extended gains to 0.6 per cent, aided by a weaker yen. China markets are closed for the National Day holiday.

Bloomberg reported on Tuesday that the European Central Bank (ECB) would probably wind down its 80 billion euro ($90 billion) monthly bond purchases gradually before ending its quantitative easing programme, citing unnamed officials at euro zone countries' central banks.

Back home, Asian Paints, SBI, Tata Motors, HUL and Maruti Suzuki gained between 1%-2%. However, ONGC, Axis Bank, M&M, Bajaj Auto and Infosys slipped between 1%-2%.

Maruti Suzuki India rose after the company said its total production rose 24% to 1.46 lakh units in September 2016 over September 2015.

MIDCAP & SMALLCAP STOCKS OUTPERFORM

Shares of frontline tyre stocks like MRF, Ceat, Goodyear India and Balkrishna Industries were touched their new highs after the natural rubber prices hit six-month low.

Shares of paint manufacturers rose on expectation of healthy earnings growth for the quarter ended September 2016 (Q2FY17).

Asian Paints, Berger Paints India, Kansai Nerolac Paints and Shalimar Paints ended higher between 1% and 4% on the BSE.

Bombay Burmah Trading Corporation hit a new high of Rs 673 in intra-day trade, after the company said its board approved fund raising plan up to Rs 250 crore.

Tourism Finance Corporation of India rallied 12% after Insync Capital Partners LLP bought less than 1% stake in the company though open market on Tuesday.

NBCC hit a new high of Rs 299 in intra-day trade after the state-owned construction firm said that it has secured total business amounting of Rs 1,117 crore in the month of September, 2016.

Alembic Pharmaceuticals moved higher by almost 3% after the drug maker receives Establishment Inspection Report (EIR) from US drug regulator for its formulation facility located at Panelav, Gujarat.


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