Indian bourses continue to trade under pressure

Indian bourses remained under heavy selling pressure in afternoon session, on macro factors like weakening rupee and rising crude oil prices. The sentiments remained sluggish with survey indicating that the India’s services sector expanded at a slower pace in September as higher fuel costs and stronger US dollar made imported goods expensive. The seasonally-adjusted Nikkei India Services Business Activity Index touched 50.9 in September, down from 51.5 recorded in August. The mood of the markets remain impacted by Exporters’ body Federation of Indian Export Organisations’ (FIEO) statement that the growth of country’s exports is likely to slow in the coming months owing to various domestic and global factors. It said Indian exports have always been influenced by the growth in global trade and therefore, the subdued global trade forecast of 3.9% in 2018 and 3.7% in 2019 will have adverse bearing on export.

Investors failed to draw any sense of relief with Finance Ministry indicating that gross direct tax collection in the first six months of the financial year grew 16.7 per cent to Rs 5.47 lakh crore. The broader indices were too capitulating to selling pressure with heavy losses of around 2%. On the sectoral front, Telecom stocks were trading lower after TRAI’s report indicated that the gross revenue of telecom service providers and the licence fee collected by the government dropped by around 10% to Rs 58,401 crore and Rs 2,929 crore, respectively, on year-on-year basis, during the April -June period of 2018.

On the global front, Asian markets are trading in red, as upbeat U.S. economic data drove 10-year U.S. Treasury yields to their highest level since 2011 and also raised concerns about the outlook for interest rates. Back home, the BSE Sensex is currently trading at 35288.07, down by 687.56 points or 1.91% after trading in a range of 35116.82 and 35820.53. There were 7 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index dropped 1.93%, while Small cap index was down by 2.03%.

The few gaining sectoral indices on the BSE were Capital Goods up by 0.27% and Metal up by 0.14%, while Energy down by 4.45%, IT down by 2.65%, Oil & Gas down by 2.39%, TECK down by 2.28% and Realty down by 2.05% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 2.16%, Larsen & Toubro up by 1.70%, Tata Motors - DVR up by 1.16%, Vedanta up by 0.79% and Axis Bank up by 0.79%. On the flip side, Reliance Industries down by 6.28%, Hero MotoCorp down by 5.34%, TCS down by 3.77%, Indusind Bank down by 2.67% and Adani Ports &SEZ down by 2.58% were the top losers.

Meanwhile, amid continuous depreciation of Indian rupee against dollar, the Reserve Bank of India (RBI) has relaxed overseas borrowing norms for state-run Oil Marketing Companies (OMCs). The Central Bank eased policy on borrowing from overseas to allow state-owned fuel retailers to raise up to $10 billion external debt for working capital needs. As of now, OMCs were not allowed to raise external commercial borrowing (ECB) for working capital needs on a long-term basis. They could raise a maximum of one-year overseas loan by way of buyers credit, repay it within 12 months and raise it again thereafter.

Now, the Central Bank has allowed them to raise ECB of minimum maturity of 3 or 5 years. The move comes at a time when international oil prices have hit four-year high of near $85 per barrel and the rupee plummeted to close at an all-time low of Rs 73.34 to a US dollar on October 3, 2018. The RBI also lifted the individual borrowing limit set at $750 million under the ECB framework.

Indian Oil Corporation (IOC), Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) will be allowed to raise overseas funds with a minimum average maturity period of 3 or 5 years under the automatic route. With oil prices climbing to four-year high and the rupee plunging to new lows, imports have come costlier. Oil companies now need a higher working capacity to meet their monthly import requirements. Besides, India is 81% dependent on imports to meet its oil needs.

The CNX Nifty is currently trading at 10656.55, down by 201.70 points or 1.86% after trading in a range of 10591.15 and 10754.70. There were 9 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 2.46%, Yes Bank up by 2.28%, Larsen & Toubro up by 1.49%, Vedanta up by 1.00% and Tata Steel up by 0.65%. On the flip side, Eicher Motors down by 6.57%, Reliance Industries down by 5.98%, Hero MotoCorp down by 5.27%, Tech Mahindra down by 3.61% and TCS down by 3.43% were the top losers.

Asian markets are trading in red; Nikkei 225 decreased 135.34 points or 0.56% to 23,975.62, Hang Seng decreased 491.53 points or 1.85% to 26,599.73, Taiwan Weighted decreased 145.03 points or 1.35% to 10,718.91, Jakarta Composite decreased 108.35 points or 1.88% to 5,759.39, KOSPI decreased 35.08 points or 1.54% to 2,274.49 and Straits Times decreased 39.24 points or 1.22% to 3,228.16.