Post Session: Quick Review

Bears took full control of Dalal Street in today’s trade and ended the session with cut of around a percentage point on likely widening in fiscal deficit target.  D-Street was abuzz with news of a big stimulus package which could be as big as $7.7 billion. The extra spending was estimated to widen the fiscal deficit for the financial year ending next March to 3.7% of GDP from a budgeted target of 3.2%. Broader indices too suffered deep cuts. The market breath was in favour of declines, with one stock advancing against four declining ones. Escalating tensions between North Korea and the United States is keeping investors on their feet.  The benchmarks made a gap-down start breaching their crucial 31,700 (Sensex) and 9,900 (Nifty) levels. Sentiments remained dampened as investors turned jittery on expectation of government to tinker its fiscal deficit target for FY18 by announcing an economic stimulus to revive the economy. Chief Economic Adviser (CEA) Arvind Subramanian has said that Indian economy continues to face multiple challenges and stressed on the need to tackle them on various fronts, such as exchange rate, public investments while maintaining macroeconomic stability. He said that there are lots of challenges ahead with growth slowing down and investment not picking up. He also identified rising level of stressed assets to be a key area of concern.

Separately, foreign investors remained in exit mode as they have already pulled out nearly Rs 5,500 crore from stock markets so far this month due to geopolitical concerns and a tendency to take profit. The net outflow by Foreign Portfolio Investors (FPIs) follows withdrawal of Rs 12,770 crore from equities in August. Prior to that, they had pumped in over Rs 62,000 crore in the past six months. According to the latest depository data, the FPIs withdrew a net Rs 5,492 crore ($855 million) during September 1-22. Investors took note that the southwest monsoon is expected to start withdrawing in a few days, ending the season with nearly normal, albeit unevenly distributed, rainfall. The India Meteorological Department (IMD) said that near-normal rainfall this season has helped the country’s kharif crops, which are grown in the monsoon season, but some parts of the country were flooded while 17% of the country received deficient showers.

On the global front, Asian markets closed mostly lower, barring Nikkei. Japanese manufacturing activity expanded in September at the fastest pace in four months as domestic and export orders picked up, a preliminary private survey showed in a sign of strengthening demand. The Markit/Nikkei Japan Manufacturing Purchasing Managers’ Index (PMI) rose to a seasonally adjusted 52.6 in September from a final 52.2 in August. The European markets were trading mostly lower barring Germany’s DAX after Chancellor Angela Merkel secured a fourth term but saw her party weakened by a surge in support for the far-right.

Back home, metal stocks were under pressure as metal prices fell in global markets in response to North Korea tensions and S&P’s downgrade of China’s credit rating. Power stocks like Tata Power Company, Torrent Power, Adani Power and Power Grid Corporation of India closed in green amid talk of sops for the sector to boost growth. The Cabinet had discussed new power scheme last week and it is likely to be called ‘Saubhagya’.

The BSE Sensex ended at 31622.68, down by 299.76 points or 0.94% after trading in a range of 31474.56 and 32016.52. There were 8 stocks advancing against 23 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 1.03%, while Small cap index was down by 1.98%. (Provisional)

The only gaining sectoral index on the BSE was Utilities up by 0.03%, while Realty down by 2.93%, Basic Materials down by 1.89%, Healthcare down by 1.64%, Capital Goods down by 1.51% and Industrials down by 1.47% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Coal India up by 1.38%, ICICI Bank up by 0.83%, Hindustan Unilever up by 0.60%, Power Grid up by 0.31% and ONGC up by 0.27%. (Provisional)

On the flip side, Adani Ports & Special Economic Zone down by 3.33%, ITC down by 2.24%, Kotak Mahindra Bank down by 2.07%, Lupin down by 2.03% and Mahindra & Mahindra down by 1.97% were the top losers. (Provisional)

Meanwhile keeping an optimistic and positive view about Indian IT industry performance in the near future, the National Association of Software and Services Companies (Nasscom) is expecting the industry to deliver a strong performance in the next fiscal, on the back of revival of financial sector investments in tech spends along with demand uptick in the US.

Outlining the industry's annual guidance in June this year, Nasscom had said the Indian IT export would grow by 7-8 per cent this fiscal, the same as the previous year, while the domestic infotech industry would expand at 10-11 per cent during the period.

Nasscom President R Chandrasekhar, praising the re-strategising done by the Indian companies, said that this would also contribute the growth of IT sector. He also highlighted the company’s focus on re-skilling employees on new digital technologies to drive growth. However, Nasscom President expressed concerns over the issues like stricter work visa regulations in key markets like the US and the UK and an uncertain business environment.

Chandrasekhar detailed the government and industry body’s various initiatives to develop the IT sector, noting features of centres of excellence (COEs) which are platform to connect companies in the emerging areas, like finding mentors. He said the industry should not be worried about protectionism as the number of visas issued has not changed.

The CNX Nifty ended at 9875.60, down by 88.80 points or 0.89% after trading in a range of 9816.05 and 9960.50. There were 14 stocks advancing against 37 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tata Power up by 1.99%, Coal India up by 1.46%, Zee Entertainment up by 0.98%, ICICI Bank up by 0.78% and Hindustan Unilever up by 0.70%. (Provisional)

On the flip side, ACC down by 3.57%, Aurobindo Pharma down by 3.41%, Adani Ports & Special Economic Zone down by 3.33%, Ambuja Cement down by 2.78% and Ultratech Cement down by 2.52% were the top losers. (Provisional)

The European markets were trading mostly in red; UK’s FTSE 100 decreased 21.21 points or 0.29% to 7,289.43, France’s CAC decreased 14.83 points or 0.28% to 5,266.46 and Germany’s DAX increased 2.22 points or 0.02% to 12,594.57.

Asian equity markets ended mostly lower on Monday as geopolitical tensions persisted and elections in Germany and New Zealand set the stage for periods of political uncertainty. Chinese stocks fell as developers slumped after a new round of government curbs to rein in the heated housing market. Meanwhile, Hong Kong stocks posted their biggest one-day loss in six weeks, with a slump in property shares hitting already fragile sentiment after the Federal Reserve’s hawkish stance and Standard & Poor’s downgrade of China’s credit rating last week. Seoul shares fell amid selling by foreign investors following a week of heated rhetoric between the leaders of the US and North Korea. Though, Japan’s Nikkei share average rose as a weaker yen lifted exporters, while expectations of economic stimulus measures after an election next month supported overall sentiment.