Post Session: Quick Review

Indian equity markets traded in red throughout the day and ended in red amid weak global cues and after RBI maintains status quo on repo rate. Nifty gave up 10,050 mark to end at nearly two month closing low. The market breadth was in favour of declines with one stock advancing against two declining ones. The benchmarks made a pessimistic start and traded in red in early deals as sentiments were dampened after National Council of Applied Economic Research (NCAER) enlightened that India Inc’s confidence dived due to Goods and Services Tax (GST) trouble in the second quarter (July-September) of the current financial year. Its Business Confidence Index (BCI) fell 12.9% from the earlier quarter, while year-on-year, the index fell 11.1%. The report added that there was deterioration in political sentiment during October, over July, with its Political Confidence Index (PCI) showing a quarter-on-quarter (q-o-q) fall of 12.4%. The significant downturn in sentiment during the September quarter reflected disquiet in the business sector from the ongoing GST transition. Selling extended in last hour of trade after the Reserve Bank of India (RBI) kept its key lending rate - the repo rate - unchanged at 6 percent, but warned about lurking inflation worries in the new year, amid signs that costlier food and fuel prices could pinch household budgets. The six member Monetary Policy Committee (MPC), headed by RBI Governor Urjit Patel, ignored calls from business leaders to cut interest rates to boost investment and accelerate growth in the broader economy that has shown signs of revival in the last few months.

Investors took note that the public debt of the central government rose by 2.53% to Rs 65.65 lakh crore in the July-September quarter compared to the previous quarter. Internal debt constituted 93% of public debt at end-September 2017, while marketable securities accounted for 82.6% of the public debt. The street shrugged off a private report that the level of optimism among India’s chief financial officers for the October-December period has seen an improvement and this in turn will translate to an uptick in capex as well as other investments. The Composite CFO Optimism Index for the fourth quarter of this year increased 3.1% over the July-September quarter. Select stocks from leather, textiles, agriculture products and carpets industry were buzzing in today’s trade as government yesterday announced incentives worth a total Rs 8,450 crore to boost exports and employment in labour-intensive sectors in the mid-term review of the five-year foreign trade policy (FTP) that was rolled out in 2015. Incentives under the Merchandise Export from India Scheme (MEIS) have been raised to 4% from 2% for leather, textiles, agriculture products and carpets.

On the global front, Asian markets closed mostly in red. Bank of Japan board member Takako Masai advocated sticking with ultra-easy monetary policy due to uncertainty over how fast inflation will rise, while warning that the central bank should remain on guard against the possible side-effects. China’s banking regulator issued draft rules on commercial banks’ liability risk management with an aim to improve lenders’ risk assessment framework and safeguard the banking system in the new market environment. The European markets were trading lower as investors monitored corporate earnings and fresh economic data.

Back home, metal stocks lost shine following correction in commodities prices in international market as investors raised doubts over China demand for metals. Mixed reaction was witnessed in aviation stocks on International Air Transport Association (IATA) report that with rising air passenger numbers, as much as 1% of the global GDP - translating into $861 billion - is projected to be spent on air transport in 2018. Separately, rating agency ICRA reported that the domestic airlines industry is expected to trim its aggregate net loss by up to 90% to Rs 100 crore in FY18 from around Rs 1,000 crore a year-ago period aided by expected strong peak season demand in the remaining half of this fiscal.

The BSE Sensex ended at 32618.27, down by 184.17 points or 0.56% after trading in a range of 32565.16 and 32804.75. There were 6 stocks advancing against 25 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.92%, while Small cap index was down by 0.66%. (Provisional)

The few gaining sectoral indices on the BSE were Energy up by 0.62%, IT up by 0.37% and TECK up by 0.04%, while Metal down by 1.99%, Telecom down by 1.50%, Basic Materials down by 1.35%, PSU down by 1.34% and Bankex down by 1.14% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Reliance Industries up by 1.93%, Maruti Suzuki up by 1.26%, Hindustan Unilever up by 1.18%, Infosys up by 0.77% and Power Grid up by 0.12%. (Provisional)

On the flip side, Sun Pharma down by 2.50%, SBI down by 2.16%, ICICI Bank down by 2.03%, ONGC down by 1.54% and HDFC down by 1.50% were the top losers. (Provisional)

Meanwhile, India's economy though showed signs of recovery in Q2FY18 but overall business sentiment in the country during the same period got hit by the new Goods and Services Tax (GST) regime. As per the National Council of Applied Economic Research’s (NCAER) latest survey, its Business Confidence Index (BCI) fell 12.9 % from the earlier quarter and 11.1% on year-on-year basis, due to GST.

The survey said that significant downturn in sentiment during the September quarter showed nervousness of corporate leaders around this new landmark change. It further pointed to the decline in Political Confidence Index (PCI) too. Its PCI index fell 12.4% on quarter on quarter basis. As per the report, Business Confidence Indices of the consumer durables and intermediate goods sectors witnessed 20.5% and 14.1%, drops respectively, on a quarter-on-quarter basis, while the confidence in consumer non-durables and capital goods sectors declined by 9.9% and 9.2%, respectively, on a quarter-on- quarter basis.

The survey result also pointed that the decline in BCI was driven by deterioration in sentiment in all the four components and that are-- overall economic conditions, financial position of firms, present investment climate and present capacity utilization and added that overall sentiment regarding production, domestic sales, export, imports of raw materials and pre-tax profit remained subdued in October versus July.

The CNX Nifty ended at 10040.65, down by 77.60 points or 0.77% after trading in a range of 10033.35 and 10104.20. There were 13 stocks advancing against 37 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tech Mahindra up by 1.85%, Reliance Industries up by 1.62%, Maruti Suzuki up by 1.37%, HCL Tech up by 1.30% and Hindustan Unilever up by 1.27%. (Provisional)

On the flip side, Bosch down by 3.99%, Hindalco down by 3.15%, Bharti Infratel down by 2.81%, Eicher Motors down by 2.74% and Vedanta down by 2.29% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 9.03 points or 0.12% to 7,318.47, Germany’s DAX decreased 113.09 points or 0.87% to 12,935.45 and France’s CAC decreased 23.98 points or 0.45% to 5,351.55.

Asian equity markets ended mostly in red on Wednesday as bond yields tumbled, metals prices plunged sharply, oil eased on supply worries and the Japanese yen gained ground on Middle East concerns as well as worries over a possible US government shutdown. Chinese stocks fell after a senior researcher at the People's Bank of China urged central banks to tighten monetary policies. Further, Japanese shares ended sharply lower as geopolitical worries and concerns over a potential government shutdown in the US helped fuel demand for safe-haven assets.