Markets end slightly in red on penultimate session of F&O expiry

Indian equity benchmarks ended the sluggish day of trade with marginal losses, as traders remained on sidelines ahead of September F&O expiry session due on Thursday. Investors will also keenly watch US Fed meet outcome due later in the day for fresh cues in the markets. Markets soon after a positive start turned negative, as street got cautious with a private report stating that even though India’s economy is growing at a fast pace, the ‘higher educated’ are reporting the highest rate of unemployment against the national average. The report also revealed that the unemployment scenario is most ‘severe’ in the northern states of the country. Afterwards, markets traded in a tight band as some concerns came with another private report stating that after US, India is likely to suffer highest economic damage from climate change. The report further noted that Carbon dioxide emissions are costing the Indian economy up to $210 billion every year. Traders failed to get any sense of relief the commerce ministry’s report that India will impose duties on imports within the norms of the World Trade Organisation (WTO) to protect domestic industry and boost the economy.

However, losses remain capped with report that India’s fiscal deficit during the first five months (April-August) of the current fiscal (FY19) has shown improvement. The fiscal deficit stood at 94.7% of the Budget Estimate (BE) at August-end of FY19, better than 96.1% of BE at August-end of the last financial year. Traders also got some relief with the commerce and industry ministry stating that the government’s export promotion measures, implementation of minimum standards for imports, and continued healthy inflow of remittances by non-resident Indians will help control the country’s rising current account deficit (CAD). Market participants also got some comfort with report that maintaining India’s growth forecast at 7.3% for 2018, an international development finance institution, Asian Development Bank (ADB) has said that the economy continues on a robust growth path and is likely to grow at 7.6% during 2019, as goods and services tax and demonetisation effects abate as expected.

Positive trading in European counters too helped Indian markets to cap their losses. Germany’s wholesale price inflation accelerated in August largely driven by fuel cost. The Federal Statistical Office reported that wholesale price inflation rose to 3.8% in August from 3.6% in July. This was the fastest increase in wholesale prices since April 2017. Asian markets ended mostly in green, as trade war fears faded and investors waited for cues from the Fed meeting.

On the sectoral front, banking sector stocks edged higher with Union finance minister Arun Jaitley’s statement that non-performing assets (NPA) of public sector banks (PSB) are on the decline as recoveries have picked up, but it's a challenge to loan growth. Finance minister said recoveries have not just picked up because of National Company Law Tribunal (NCLT) resolutions, but also borrowers are paying up in anticipation of losing companies. Telecom stocks traded higher after the cabinet approved the new telecom policy, now named National Digital Communications Policy (NDCP) 2018, which aims to attract $100 billion investment and create 4 million jobs in the sector by 2022. However, stocks related to sugar sector edged lower, despite the government approving Rs 4,500 crore package for the sugar industry that includes over two-fold jump in production assistance to cane growers and transport subsidy to mills for export up to 5 million tonnes in the marketing year 2018-19.

Finally, the BSE Sensex declined 109.79 points or 0.30% to 36,542.27, while the CNX Nifty was down by 13.65 points or 0.12% to 11,053.80.

The BSE Sensex touched a high and a low of 36,938.74 and 36,357.93, respectively and there were 12 stocks advancing against 19 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.42%, while Small cap index was up by 0.12%.

The top gaining sectoral indices on the BSE were Metal up by 1.73%, Realty up by 1.69%, Basic Materials up by 1.31%, Capital Goods up by 1.23% and Energy was up by 1.08%, while IT down by 1.60%, FMCG down by 1.44%, TECK down by 1.36%, Auto down by 0.99% and Consumer Discretionary Goods & Services was down by 0.31% were the top losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 4.70%, Yes Bank up by 1.73%, Reliance Industries up by 1.72%, Tata Steel up by 1.52% and Larsen & Toubro up by 1.05%. On the flip side, Tata Motors - DVR down by 3.29%, Tata Motors down by 3.15%, Wipro down by 2.91%, ITC down by 2.67% and SBI down by 2.31% were the top losers.

Meanwhile, in a bid to protect domestic industry and boost the economy, Commerce Secretary Anup Wadhawan has said that India will impose imports duties within the World Trade Organisation (WTO) norms. He said ‘we will use those options to further our interests', whether it is to develop our own economy or to protect our consumers from sub-standard products or whether to regulate some products in public interest. So, certainly those options will be exercised.’

Wadhawan stated that as far as tariff policy is concerned, India is a developing economy and it has the right under the WTO to use tariff within the bound rates. He noted that bound duty rates are tariffs over which a WTO member country cannot hike the customs duties. He said ‘developing country's infant industries' need protection. Our bound (duty rates) in the WTO have been shaped in that philosophy. We will certainly use.’

The secretary further said that these are policy instruments in the hands of policymakers and there are several concerns as far as imports are concerned. He noted that one concern is public safety and health, sub-standard products getting imported, which can harm consumers. He added that the government is taking steps put in place standards for goods to protect consumers' interest.

The CNX Nifty traded in a range of 11,145.55 and 10,993.05. There were 25 stocks in green as against 25 stocks in red on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 6.81%, UPL up by 6.13%, Vedanta up by 4.84%, Titan Company up by 2.53% and Hindalco was up by 1.95%. On the flip side, Tata Motors down by 3.09%, SBI down by 2.92%, Bharti Infratel down by 2.77%, ITC down by 2.67% and Wipro down by 2.57% were the top losers.

European markets were trading mostly in green; UK’s FTSE 100 increased 7.72 points or 0.10% to 7,515.28 and France’s CAC was up by 18.58 points or 0.34% to 5,497.68, while Germany’s DAX was down by 15.61 points or 0.13% to 12,359.05.

Asian markets ended mostly in green on Wednesday as investors awaited the United States Federal Reserve’s monetary policy decision as well as the accompanying policy statement for clues about the outlook for interest rates. The Nikkei average rose as the dollar largely stuck to tight ranges ahead of the FOMC decision due tonight. Meanwhile, China stocks closed higher as global index provider MSCI said it will consider quadrupling the weighting of Chinese big-caps in its global benchmarks and as FTSE Russell is expected to include Chinese shares in its benchmark this week. The South Korean market remained closed for Chuseok Day holiday.