Benchmarks witness bloodbath on Thursday

October F&O expiry day turned-out to be a dismal day of trade for Indian equity benchmarks, with frontline gauges ending with a cut of one percent, breaching their crucial 33,700 (Sensex) and 10,150 (Nifty) levels. Markets started the session on pessimistic note as traders remained cautious with private report stating that Indian financial markets’ liquidity position has worsened with cash deficit widening to about Rs 1.4 lakh crore this week compared with a small surplus in first week of October. Sentiments also remain dampened with a report that the latest government data shows that during the first six months of the financial year, trade deficit in oil already touched $46.6 billion, up 67% from 27.9 billion during the same period in 2017-18. Anxiety also spread among the traders, after the Income Tax Department (ITD) launched multiple raids at over 100 locations in Tamil Nadu and Andhra Pradesh as part of a tax evasion probe against mining and mineral export companies.

In second half of the trade, markets showed some recovery but it was not enough to bring markets back in green terrain. Domestic sentiments got hit with a private report stating that exchange rate movements increase the vulnerability of firms from emerging market economies, including India, which have used the proceeds of dollar bond to fund financial assets. Traders failed to take any sense of relief with Economic Affairs Secretary Subhash Chandra Garg’s statement that the non-banking financial companies’ (NBFCs) liquidity, rupee fall are temporary problems. He also noted that the government is conscious of liquidity problem but is not worried because these are temporary and would more look at taking steps to resolve these problems. Market participants shrugged off private report that corporate India’s business optimism for the October-December quarter improved marginally on expectations of higher festive season demand, implementation of the 7th Pay Commission awards and increase in minimum support price (MSP) of Kharif crops.

On the global front, European markets were trading in green, as investors digested corporate earnings and looked ahead to a rate decision by the European Central Bank (ECB). Asian markets ended mostly in red on Thursday, on the back of a sharp fall in US markets that erased all the gains made this year, as investor concerns mount that economic growth is peaking amid an uncertain geopolitical backdrop.

Back home, stocks related to telecom sector edged lower with Moody’s Investor Service in its latest report stating that Indian telecom players, who are involved in an intense competition, are unlikely to see any increase in average revenue per user (ARPU) soon. Stocks related to auto sector ended in red with a report, emphasising on the urgent need to move to a cleaner fuel as early as possible, the Supreme Court directed that only Bharat Stage VI (BS-VI) vehicles shall be sold across the country from April 1, 2020. Agri stocks remained in lime limelight, after Vice President M Venkaiah Naidu said that farmers should be provided new technology to make farming more sustainable and viable as boosting agriculture is one of the top priorities of the government, while stocks related to the pharma companies were also remained in focus, with the Competition Commission of India (CCI) policy note stating that unreasonably high trade margins contributes towards high drug prices and electronic trading of drugs could be an option to spur competitive pricing ways.

Finally, the BSE Sensex fell 343.87 points or 1.01% to 33,690.09, while the CNX Nifty was down by 99.85 points or 0.98% to 10,124.90.

The BSE Sensex touched a high and a low of 33,838.76 and 33,553.18, respectively and there were 8 stocks advancing against 23 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.58%, while Small cap index was down by 0.98%.

The top losing sectoral indices on the BSE were Telecom down by 2.90%, Realty down by 1.79%, Healthcare down by 1.59%, Basic Materials down by 1.49% and Industrials down by 1.18%, while there were no gainers on the BSE sectoral front.

The top gainers on the Sensex were Wipro up by 3.30%, Coal India up by 1.66%, Kotak Mahindra Bank up by 1.41%, Asian Paints up by 0.89% and Power Grid up by 0.16%. On the flip side, Bharti Airtel down by 6.60%, Vedanta down by 3.47%, Tata Motors down by 3.02%, Adani Ports & SEZ down by 2.98% and Yes Bank down by 2.77% were the top losers.

Meanwhile, global airlines’ body the International Air Transport Association (IATA) in its 20-year air passenger forecast has stated that India will likely displace the UK to become the third largest aviation market in the world by around 2024. It also said that the present trends in air transport suggest passenger numbers could double to 8.2 billion in 2037.

However, the Association warned that growth prospects for air transport and the economic benefits driven by aviation could be curtailed if protectionist measures are implemented by governments. Besides, it pointed out that the Asia-Pacific region will drive the biggest growth with more than half the total number of new passengers in the next 20 years coming from these markets. It noted that the growth is being driven by a combination of continued robust economic growth, improvements in household incomes and favourable population and demographic profiles.

According to the IATA, China will become the largest aviation market, displacing the United States in the mid-2020s. It also said that India will take 3rd place after the US, surpassing the UK around 2024 and Indonesia is forecast to be a standout performer - climbing from the world's 10th largest aviation market in 2017 to the 4th largest by 2030. It added that aviation market is defined in terms of traffic to, from and within a country.

The CNX Nifty traded in a range of 10,166.60 and 10,079.30. There were 14 stocks advancing against 35 stocks declining, while one stock remain unchanged on the index.

The top gainers on Nifty were Wipro up by 3.16%, HCL Tech up by 2.46%, Indian Oil Corporation up by 1.85%, Coal India up by 1.79% and Asian Paints up by 1.11%. On the flip side, Indiabulls Housing Finance down by 7.29%, Bharti Airtel down by 6.43%, UPL down by 3.75%, Vedanta down by 3.45% and Hindalco down by 3.26% were the top losers.

European markets were trading in green; UK’s FTSE 100 gained 8.07 points or 0.12% to 6,971.05, France’s CAC surged 70.33 points or 1.4% to 5,023.42 and Germany’s DAX was up by 55.23 points or 0.49% to 11,246.86.

Most of the Asian counters ended in red on Thursday after US markets plunged overnight on the back of disappointing corporate earnings results and weak economic data. Lingering geopolitical tensions, worries about the US-China trade wars and rising geopolitical tensions also dented investors’ sentiments. Japanese shares closed lower with chip-related stocks taking heavy beating after a steep fall on Wall Street pulled the Nasdaq Composite into correction territory. However, Chinese shares bucked the global weak trend to end little changed after recent heavy losses.