Benchmarks end F&O expiry session on pessimistic note

Indian equity markets truly depicted the choppiness of F&O expiry session on Thursday with key gauges ending the session with a cut of over half a percent. Markets extended previous session journey and ended in red terrain for seventh times in last eight sessions, breaching their crucial 11,000 (Nifty) and 36,400 (Sensex) levels. Markets started the session on a positive note with traders getting some comfort from the United Nations Conference on Trade and Development (UNCTAD) expectation that India’s economy to grow 7% in calendar year 2018 compared with 6.2% in 2017. The body said that an expansion in services and higher demand for exports has led to a moderate recovery in industrial production. Some support also came with Finance Minister Arun Jaitley’s statement that India has large avenues of growth to sustain a GDP increase of 7-8 per cent for two decades, unlike any other major economy.

However, markets lost momentum and pared all their gains to enter into red terrain as traders turned cautious with a United Nations trade report stating that the world economy remains on a shaky ground a decade after the 2008 financial crisis as the global economic growth is spasmodic and many economies are operating below potential. Domestic sentiments continued to hit with a private report stating that the Reserve Bank of India (RBI) is likely to raise interest rates in early October, despite relatively tame inflation, to prop up a retreating rupee. Some concerns also came after Moody’s investor service expecting US sanctions on Iran to be credit negative for Indian refiners with the estimated total decline in earnings for the Indian refiners to be about $400-$500 million. The move is also expected to increase refiners’ exposure to oil price volatility. Traders overlooked Federation of Indian Export Organisations (FIEO) President G K Gupta’s statement that higher tariffs coupled with the depreciating rupee will provide double protection to domestic industry and enable it to compete with imports. Besides, he added that it will give a push to Indian manufacturing as well.

Weak opening in European counters too dampened sentiments after France's consumer confidence weakened to the lowest level in more than two years in September. As per survey results from the statistical office Insee, the consumer sentiment index fell to 94 in September from revised 96 in August. This was the lowest since April 2016. Asian markets ended in red, as investors reacted to the US Federal Reserve's decision to hike interest rate by 25 basis points. The Fed cited citing realized and expected labor market conditions and inflation as the reasons for the rate decision.

Back home, banking stocks ended in red terrain, even though the Finance Ministry said that it would examine the capital demands raised by public sector banks including Punjab National Bank and Central Bank. Telecom sector stocks edged lower despite report that the government is expecting to attract $100 billion in investments and generate four million jobs in the telecom sector as it approved a new policy for the industry. The policy also envisages 50 Mbps of broadband connectivity to every citizen in five years. Further, consumer durable stocks remained in focused, amid reports that hike in custom duty to 10% on compressors, used for air conditioners and refrigerators, can be a set back and may have an impact on the coming festive season sales.

Finally, the BSE Sensex declined 218.10 points or 0.60% to 36,324.17, while the CNX Nifty was down by 76.25 points or 0.69% to 10,977.55.

The BSE Sensex touched a high and a low of 36,711.62 and 36,238.23, respectively and there were 13 stocks advancing against 18 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index lost 2.19%, while Small cap index was down by 1.97%.

The only gaining sectoral indices on the BSE were IT up by 0.77% and TECK up by 0.65%, while Realty down by 2.79%, Capital Goods down by 1.99%, Auto down by 1.86%, Industrials down by 1.80% and Healthcare was down by 1.66% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 2.16%, Coal India up by 1.39%, Asian Paints up by 0.97%, Power Grid Corporation up by 0.93% and Infosys up by 0.88%. On the flip side, Yes Bank down by 9.14%, Tata Motors - DVR down by 3.69%, Maruti Suzuki down by 3.68%, Tata Motors down by 3.32% and Axis Bank down by 2.79% were the top losers.

Meanwhile, in a bid to reduce fears of liquidity crunch in the economy, the Reserve Bank of India (RBI) has said that there is surplus liquidity in the system, and it would ensure adequate liquidity in the system by using various available instruments depending on market conditions.

To ensure durable liquidity, the central bank is going to conduct another open market operation (OMO), after one OMO which was already conducted in the previous week. The RBI also eased statutory liquidity ratio (SLR) requirement with effect from October 1, 2018, which would supplement the ability of individual banks to avail of liquidity, if required, from the repo markets against high-quality collateral and consecutively, improve the distribution of liquidity in the financial system as a whole.

Concerns of liquidity crunch were triggered following defaults by an IL&FS group company. It spread to non-banking financial companies (NBFCs), which in turn roiled financial markets.

The CNX Nifty traded in a range of 11,089.45 and 10,953.35. There were 19 stocks in green as against 31 stocks in red on the index.

The top gainers on Nifty were Bharti Infratel up by 3.23%, TCS up by 2.00%, Ultratech Cement up by 1.70%, Asian Paints up by 1.09% and Infosys up by 0.90%. On the flip side, Yes Bank down by 9.01%, Indiabulls Housing Finance down by 5.83%, Bajaj Finance down by 4.59%, Bajaj Finserv down by 3.82% and Maruti Suzuki down by 3.30% were the top losers.

European markets were trading mostly in red; France’s CAC decreased 3.17 points or 0.06% to 5,509.56 and Germany’s DAX lost 14.74 points or 0.12% to 12,371.15. On the flip side, UK’s FTSE 100 was up by 14.70 points or 0.20% to 7,526.19.

Asian markets ended mostly in lower on Thursday as the United States Federal Reserve Chairman Jerome Powell's comments on inflation after the central bank decided to increase interest rates. The Federal Reserve raised interest rates by 25 basis points and hinted at another rate hike this year and a few more in 2019. Meanwhile, China stocks ended lower after data showed industrial profit growth in China continuing to slow in August and after the Federal Reserve lifted rates, while news of A-share inclusion in FTSE Russell indexes failed to boost sentiments. Japanese market closed down as investors opted withdrawing profit off the table following recent gains and as weak cues from Wall Street overnight.