Post Session: Quick Review

Indian equity benchmarks reversed all of their strong gains seen in previous session and turned out to be a disappointing session of trade, where frontline gauges ended with a cut of over two percent amid weak global cues. The decline in the markets was the result of heavy losses in Metal and Realty stocks, and caution ahead of key economic data for August IIP and September CPI. Markets opened with heavy losses, as traders turned cautious with a report stating that private equity and venture capital (PE/VC) investments in India declined 23% to $6.7 billion in the third quarter of this year as investors adopted a cautious approach. On a year to date basis however, PE/VC investments in India are higher by 17.4% and the investment tally also looks set to surpass the previous year high driven by some large deals in the pipeline, provided there is no major macro setback. Traders also reacted negatively to a report which stated that despite three fortnights organised by the government to clear the goods and services tax (GST) refunds of exporters, input tax credit refund worth Rs 15,000 crore and atleast Rs 8,000 crore of integrated GST refunds are stuck with the government.

Markets continued a downward trajectory in the last leg of trade, as sentiments on the street weakened further with United Nations report stating that India lost $80 billion from natural disasters in 20 years and also ranks fourth among the top 10 countries that reported economic losses due to disasters. Adding to the fears, International Monetary Fund Managing Director Christine Lagarde warned countries of the perils of a trade or a currency war, saying they could be detrimental to global growth and hurt ‘innocent bystanders.’ Traders paid no heed to World Bank Official’s statement that an orderly depreciation of the rupee would increase competitiveness and relieve some of the pressures in capital market.

On the global front, Asian markets ended lower on Thursday, while European markets were trading in red, following steep losses in the U.S. overnight amid fears over rapidly rising interest rates and an expected slowdown in global growth. Back home, aviation sector stocks ended higher with report that the central government slashed the excise duty on aviation turbine fuel (ATF) from 14% to 11%. This comes as a relief to the aviation industry that has been hit hard by high fuel prices. The duty change would come into force with effect from the October 11, 2018. Besides, insurance sector was in focus with the Insurance Regulatory and Development Authority of India (IRDAI) in favour of allowing 100 percent foreign direct investment (FDI) in insurance intermediaries in addition to insurance brokers.

The BSE Sensex ended at 34048.99, down by 711.90 points or 2.05% after trading in a range of 33723.53 and 34325.18. There were 3 stocks advancing against 28 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index dropped 2.28%, while Small cap index was down by 1.38%. (Provisional)

The only gaining sectoral indices on the BSE were Oil & Gas up by 2.91% and Energy up by 0.28%, while Metal down by 3.91%, Realty down by 3.06%, IT down by 2.99%, Basic Materials down by 2.81% and TECK down by 2.72% were the top losing indices on BSE. (Provisional)

The few gainers on the Sensex were Yes Bank up by 2.82%, ONGC up by 2.22% and Hindustan Unilever up by 0.62%. (Provisional)

On the flip side, SBI down by 5.79%, Tata Steel down by 4.73%, Mahindra & Mahindra down by 4.60%, Vedanta down by 4.36% and Infosys down by 3.48% were the top losers. (Provisional)

Meanwhile, the International Monetary Fund (IMF) Director of Fiscal Affairs Department, Vitor Gasper has said that India’s debt is lower than the best or emerging market economies in the world, while the global debt has reached a new record high of $182 trillion in 2017. According to the latest IMF data, in India, private debt in 2017 was 54.5% of the Gross Domestic Product (GDP) and the general government debt was 70.4% of the GDP, a total debt of about 125 of the GDP. In comparison, debt of China was 247% of the GDP. So, the country’s debt is substantially less than the global debt as percentage of world GDP.

Gasper noted that there is a positive relation between the debt to GDP ratio and the level of GDP per capita. If you compare around the world with the best economies or emerging market economies, the level of debt in India is lower. He added that debt in advanced economies, since the global financial crisis, has increased quite substantially while the private sector has been very gradually leveraging.  In the last few years in India private debt has declined from almost 60% to 54.5.

IMF Director of Fiscal Affairs Department further said ‘So, it's very stable. So, what you do see is that emerging market economies, which is where India is, there's a very fast buildup in private debt with a slowdown in the last two years, but India is basically steady. So, India is not an emerging market economy where leveraging is progressing fast.’ According to him, in emerging market economies private debt has risen much faster than public debt.

The CNX Nifty ended at 10250.50, down by 209.60 points or 2.00% after trading in a range of 10138.60 and 10335.95. There were 9 stocks advancing against 41 stocks declining on the index. (Provisional)

The top gainers on Nifty were HPCL up by 16.21%, Indian Oil up by 5.73%, BPCL up by 4.75%, GAIL India up by 4.06% and Yes Bank up by 3.08%. (Provisional)

On the flip side, Indiabulls Housing Finance down by 9.12%, Bajaj Finserv down by 6.20%, SBI down by 6.08%, Tata Steel down by 5.08% and Hindalco down by 4.63% were the top losers. (Provisional)

European markets were trading in red; UK’s FTSE 100 shed 129.09 points or 1.84% to 7,016.65, France’s CAC dipped 73.18 points or 1.43% to 5,133.04 and Germany’s DAX dropped 149.91 points or 1.3% to 11,562.59.

Asian markets ended lower on Thursday, mirroring a sell-off on Wall Street overnight as renewed trade tensions between Washington and Beijing dampened the outlook for economic growth and company profits. Japanese shares hit a one-month low, hit by a sell-off in global shares and as a profit forecast cut by industrial equipment maker Yaskawa Electric Corp added to investor worries over global growth. Meanwhile, Chinese stocks hit multi-year lows to join a global rout.