Post Session: Quick Review

Indian equity benchmarks witnessed a bloodbath for fifth straight session and ended with a cut of around 1.50 percent, amid liquidity woes arising from the on-going NBFC crisis.  Both the S&P BSE Sensex and the NSE Nifty 50 settled below crucial 36,350 and 11,000 levels, respectively. Markets traded in red since the beginning, following weak Asian peers. Investors’ sentiments took a hit on industry chamber CII’s report that over 40 per cent of Indian firms expect the Reserve Bank of India (RBI) will go in for another interest rate hike in the current fiscal. A CII release said that its quarterly Business Confidence Index (BCI), conducted during July-September 2018, covered nearly 200 firms of varying sizes. In the current survey, about 42 per cent of the respondents felt that the RBI will engage in further interest rates hikes in 2018-19 as compared to the previous survey where a majority of the respondents anticipated a cut or no change in policy rates in 2018-19. Moreover, weakness in the rupee coupled with rising global crude oil prices also dampened the trading sentiment.

Domestic indices extended their downside in the second half of the day and were trading at intraday low points, as sentiments on the street weakened further with Moody's Investors Service’s latest report stating that the government’s measures to boost capital inflow in to the country is unlikely to reverse the rupee depreciation. Moody's further noted that steps to reduce non-essential goods import may provide support to contain the imports bill, but will likely have a lagged effect. Traders shrugged off report that Fitch Ratings has raised India’s growth forecast for the current fiscal to 7.8 percent, from 7.4 percent projected earlier. In its Global Economic Outlook, Fitch, however, flagged tightening of financial conditions, rising oil bill and weak bank balance sheets as headwinds to growth. The market participants failed to take support with Economic Affairs Secretary Subhash Chandra Garg’s statement that the government will “very soon” implement the second set of measures including curb on imports of non-essential items to shore up rupee to 68-70 level against the US dollar.

On the global front, Asian markets ended mostly in red on Monday, while European markets were trading in red in early deals, as investors braced for the ramifications of another round of tariffs from the two major economies. Back home, telecom sector remained in focus with private report stating that with several operators winding down their businesses, job losses in the beleaguered telecom sector have been heavy. Telcos are expected to let go of around 50,000-75,000 employees in 2018. Besides, stocks related to Oil & Gas space ended lower despite a private report stating that India the world's third-biggest oil importer, is considering reducing oil purchases to mitigate the pain of high crude prices and the declining rupee.

The BSE Sensex ended at 36305.02, down by 536.58 points or 1.46% after trading in a range of 36216.95 and 36945.50. There were 7 stocks advancing against 24 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index down by 2.40%, while Small cap index was down by 2.72%. (Provisional)

The few gaining sectoral indices on the BSE were IT up by 2.06%, TECK up by 1.37% and Energy up by 0.44%, while Realty down by 5.10%, Auto down by 3.75%, Telecom down by 3.30%, Consumer Disc down by 3.03% and Healthcare down by 2.71% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were TCS up by 5.00%, Coal India up by 2.07%, Infosys up by 1.91%, Reliance Industries up by 1.57% and NTPC up by 0.66%.  (Provisional)

On the flip side, HDFC down by 6.28%, Mahindra & Mahindra down by 6.13%, Indusind Bank down by 4.75%, Bharti Airtel down by 4.48% and Adani Ports &SEZ down by 4.25% were the top losers. (Provisional)

Meanwhile, global rating agency, Fitch Ratings has raised India’s growth forecast for FY19 to 7.8 per cent from 7.4 per cent earlier. The upward revision in growth forecast for current fiscal comes in the backdrop of GDP expanding 8.2 per cent in April-June quarter, higher than Fitch’s expectation of 7.7 per cent. This robust performance was partly attributable to a powerful base effect, with GDP growth dampened in April-June quarter of 2017 by companies de-stocking ahead of the rollout of the goods and services tax.  Growth forecast for 2019-20 and 2020-21 fiscals, however, have been cut by 0.2 percentage points to 7.3 per cent.

However the rating agency, in its Global Economic Outlook, has highlighted rising oil bill and higher interest rates as key concerns. It expects inflation to rise to the upper end of the central bank’s target band (4 per cent, plus-minus 2 per cent) on relatively high demand-pull pressures and rupee depreciation. Fitch said the Indian rupee has been the worst-performing major Asian currency so far this year.

Further, the rating agency said that the fiscal policy should remain quite supportive of growth in the run-up to elections likely to be held in early 2019. The investment/GDP ratio has stopped trending down, helped by ramped-up public infrastructure outlays, in particular by state-owned enterprises (SOEs).

The CNX Nifty ended at 10967.40, down by 175.70 points or 1.58% after trading in a range of 10943.60 and 11170.15. There were 7 stocks advancing against 43 stocks declining on the index. (Provisional)

The top gainers on Nifty were TCS up by 4.53%, Coal India up by 2.14%, Infosys up by 1.84%, Tech Mahindra up by 1.82% and Reliance Industries up by 1.20%.  (Provisional)

On the flip side, Indiabulls Housing Finance down by 7.55%, Eicher Motors down by 7.47%, Mahindra & Mahindra down by 6.65%, HDFC down by 6.56% and Indusind Bank down by 5.01% were the top losers.

European markets were trading in red; UK’s FTSE 100 decreased 17.42 points or 0.23% to 7,472.81, France’s CAC fell 12.70 points or 0.23% to 5,481.47 and Germany’s DAX was down by 47.43 points or 0.38% to 12,383.45.

Asian markets ended mostly in red on Monday as Beijing cancelled upcoming talks with the Washington and a new round of tariffs between China and the United States came into effect, ending hopes of a resolution to the trade dispute. Washington had announced 10 percent duties on $200 billion of Chinese imports, which prompted Beijing to respond with tariffs on $60 billion of US goods. On Friday, the Wall Street Journal reported that China had called off planned trade talks with the US in the wake of a new round of duties. Meanwhile, trading activity was subdued as markets in Japan, South Korea, China and Taiwan were closed for public holidays.