Sensex, Nifty remain under pressure; Yes Bank top loser

Mirroring weak trend of European markets, Indian equity indices remained under pressure in late afternoon session, with heavy sell-off witnessed in Realty and Capital Goods stocks. Losses led by the major industry leaders like Yes Bank and Tata Motors, also kept the markets down. 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.

The trade remained sluggish even though the RBI eased mandatory cash requirement rules for banks and assured jittery markets it would provide durable liquidity amid growing worries of a potential credit crunch in the economy. Traders also 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.  In scrip specific development, TVS Motor Company gained after the company launched the new 2018 TVS Apache RTR 160 4V in Sri Lanka.

On the global front, European markets were trading in red; 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. The score was forecast to remain unchanged at August's initially estimated value of 97. Further, Asian markets were also trading in red, as investors reacting 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.

The BSE Sensex is currently trading at 36319.62, down by 222.65 points or 0.61% after trading in a range of 36255.73 and 36711.62. There were 12 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.83%, while Small cap index was down by 1.60%.

The few gaining sectoral indices on the BSE were IT up by 0.77%, TECK up by 0.67% and Metal up by 0.41%, while Realty down by 2.83%, Capital Goods down by 2.14%, Industrials down by 1.76%, Healthcare down by 1.59% and Auto down by 1.56% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 2.17%, Tata Steel up by 1.31%, Asian Paints up by 1.28%, SBI up by 1.10% and Coal India up by 1.06%. On the flip side, Yes Bank down by 8.34%, Tata Motors down by 3.36%, Tata Motors - DVR down by 3.20%, ONGC down by 2.55% and Maruti Suzuki down by 2.45% 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 is currently trading at 10982.75, down by 71.05 points or 0.64% after trading in a range of 10957.80 and 11089.45. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were TCS up by 2.10%, Tata Steel up by 1.55%, BPCL up by 1.48%, Titan up by 1.41% and SBI up by 1.29%. On the flip side, Yes Bank down by 8.51%, Indiabulls Housing Finance down by 6.15%, Tata Motors down by 3.45%, Bajaj Finance down by 3.35% and Bajaj Finserv down by 3.25% were the top losers.

Asian markets were trading mostly in red; Shanghai Composite decreased 15.03 points or 0.54% to 2,791.78, Nikkei 225 plunged 237.05 points or 1% to 23,796.74, Straits Times lost 5.35 points or 0.17% to 3,233.75 and Hang Seng fell 101.20 points or 0.37% to 27,715.67. On the flip side, KOSPI increased 16.26 points or 0.69% to 2,355.43, Jakarta Composite gained 39.78 points or 0.67% to 5,913.05 and Taiwan Weighted was up by 60.00 points or 0.54% to 11,034.19.

European markets were trading mostly in red; France’s CAC decreased 14.55 points or 0.26% to 5,498.18 and Germany’s DAX was down by 68.35 points or 0.55% to 12,317.54. On the flip side, UK’s FTSE 100 was up by 1.84 points or 0.02% to 7,513.33.