Markets remain under pressure post RBI policy outcome

Indian equity benchmarks remained under pressure in late afternoon session, after the Reserve Bank of India (RBI) kept the repo rate unchanged at 6.5%. However, the MPC changed the stance from ‘Neutral’ to ‘Calibrated Tightening’. Weak opening in European markets along with heavy sell off in the broader indices, also weighed on the sentiments. Adding some worries, Fitch Ratings in its latest report said that the acquisitions of distressed Indian steel assets could significantly increase the leverage of the acquiring companies, which also face the risk of domestic output being displaced by a substantial increase in imports from the escalation of trade barriers. Domestic sentiments also got hit with a private report indicating that amidst the erratic distribution of monsoon rains and with the possibilities of as many as 254 districts facing drought like situation, the total kharif cereals production likely to decline marginally by 1.71% compared to last kharif.

The markets participants paid no heed towards Finance Minister Arun Jaitley’s statement that the government is determined to contain the crisis at the IL&FS at the earliest so that it does not leave any adverse impact. The street even overlooked a report that salaries in the country are projected to increase by 10% in 2019, the highest in the Asia Pacific region. The report also noted that the pharmaceuticals sector has the highest projected salary increase for 2019 at 10.3%. On the sectoral front, IT stocks were trading higher, buoyed by NASSCOM Vice Chairman Keshav R. Murugesh’s statement that the Indian IT and Business Process Management (BPM) industry is likely to see 8% growth in revenue during the financial year 2018-19 (FY19) to reach at $167 billion as against $154 billion in fiscal 2017-18.

On the global front, European markets were trading in red, as the German construction sector saw a loss of growth momentum in September. The data from IHS Markit revealed that the construction Purchasing Managers' Index came in at 50.2 in September, down from 51.5 in August. Asian markets were trading in red, as investors fret about rising bond yields globally and weigh the risks from growing US-China tensions after reports that the Chinese military embedded tiny chips into servers used by companies including Apple and Amazon. However, both companies denied the claims of supply chain attack. Back home, in scrip specific development, Force Motors traded higher after the company entered into final contractual arrangement in respect of transfer of immovable properties and obtained delivery supplies movable properties and other assets from MAN Trucks India.

The BSE Sensex is currently trading at 34577.64, down by 591.52 points or 1.68% after trading in a range of 34562.52 and 35118.54. There were 5 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.85%, while Small cap index was down by 1.33%.

The few gaining sectoral indices on the BSE were Consumer Durables up by 0.96%, IT up by 0.70% and TECK up by 0.57%, while Oil & Gas down by 11.80%, Energy down by 7.42%, PSU down by 6.19%, Utilities down by 2.71% and Metal down by 2.65% were the top losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 2.00%, Infosys up by 1.30%, TCS up by 0.90%, Sun Pharma up by 0.43% and HDFC Bank up by 0.41%. On the flip side, ONGC down by 15.62%, Reliance Industries down by 4.82%, SBI down by 4.47%, Bajaj Auto down by 3.35% and Mahindra & Mahindra down by 3.34% were the top losers.

Meanwhile, the apex body, the National Association of Software and Services Companies’ (NASSCOM) Vice Chairman Keshav R. Murugesh has expressed confidence that the Indian IT and Business Process Management (BPM) industry is likely to see 8% growth in revenue during the financial year 2018-19 (FY19) to reach at $167 billion as against $154 billion in fiscal 2017-18.

Murugesh also listed the facts of the industry, noting that the industry is capitalising on newer technologies and re-skilling. He further added that the back office segment (BPM) has the largest base in the world, generating $32.5 billion revenue with 1.2 million employees across the country. He also said that the industry is focusing on intelligent operations -- process and domain expertise combined with digital technology.

However, the Vice Chairman reiterated that the major row over data privacy should be addressed and compliance with the European Union's General Data Protection Regulation is a regulatory requirement. He also noted that digital is the key area for clients and service providers, while companies eye strategic acquisitions.

The CNX Nifty is currently trading at 10382.50, down by 216.75 points or 2.04% after trading in a range of 10375.65 and 10540.65. There were 11 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were Titan up by 3.37%, Indusind Bank up by 1.91%, Bharti Infratel up by 1.50%, Dr. Reddy’s Lab up by 1.36% and Infosys up by 1.16%. On the flip side, HPCL down by 21.97%, BPCL down by 19.55%, Indian Oil Corporation down by 14.61%, ONGC down by 14.27% and GAIL India down by 9.36% were the top losers.

All Asian markets were trading in red; Nikkei 225 plunged 191.90 points or 0.81% to 23,783.72, Hang Seng decreased 51.30 points or 0.19% to 26,572.57, Taiwan Weighted declined 201.79 points or 1.92% to 10,517.12, Jakarta Composite fell 20.30 points or 0.35% to 5,736.32, KOSPI lost 6.97 points or 0.31% to 2,267.52 and Straits Times was down by 25.58 points or 0.8% to 3,206.01.

All European markets were trading in red; UK’s FTSE 100 dropped 52.97 points or 0.72% to 7,365.37, France’s CAC dipped 23.66 points or 0.44% to 5,387.19 and Germany’s DAX was down by 101.83 points or 0.84% to 12,142.31.