Markets end volatile session in red terrain

Indian equity benchmarks wrapped up a volatile session on pessimistic note on Tuesday, with losses of over half a percent. The markets made a cautious opening of the day to trade choppy, impacted by the Reserve Bank of India’s (RBI) latest data report stating that investment of Indian companies in their overseas ventures declined by 47.08% to $1.54 billion in September 2018, as compared to $2.91 billion invested in their joint ventures (JVs) and wholly-owned subsidiaries (WoS) abroad during September 2017. Domestic sentiments remained under pressure, as with private report indicated that high oil prices are hurting consumers and could also have adverse implications for producers. Major emerging Asian economies such as India and Indonesia have been hit hard this year by rising crude oil prices. Adding more worries among market participants, Crisil’s latest report stated that depreciating rupee puts nearly half of the solar power capacities under implementation worth around Rs 28,000 crore at viability risk. The report also noted that import of solar modules has got costlier due to rupee fall and increased the cost of setting up solar plants.

In the last hours of the trade, the markets weaken further, as Finance Minister Arun Jaitley criticised the Reserve Bank of India for failing to check indiscriminate lending during 2008 and 2014 that has led to the present bad loan or NPA crisis in the banking industry. The traders overlooked Economic Affairs Secretary Subhash Chandra Garg’s statement that the government is trying to find ways to ensure stability of FPI fund flows into the financial markets. He also said developments like bond yield cycle, taxation reforms, in the US have not hurt Foreign Direct Investment (FDI) flow into the country. The street also failed to take any sense of relief with Commerce and Industry Minister Suresh Prabhu’s statement that the government will work on promoting the growth of the education sector to help increase the share of overall service sector in the country's economy. Meanwhile, India and Japan signed a pact to raise the scope of a bilateral currency swap arrangement to a record $75 billion, aimed at bringing in greater stability in the foreign exchange and capital markets, amid a slide in the rupee in recent months.

On the global front, European markets were trading in red, as UK mortgage approvals declined in September. According to the figures from Bank of England, the number of housing loan approvals fell to 65,269 in September from 66,101 in August. Nonetheless, this was above the expected level was 64,700. The street overlooked first estimate from the statistical office Insee showing that France's economy expanded at a faster pace in the third quarter largely driven by domestic demand and exports. GDP advanced 0.4 percent sequentially, in line with expectations, following second quarter's 0.2 percent expansion. Asian markets ended in green, after China's securities regulator said it would enhance market liquidity, and encourage share buybacks and mergers and acquisitions by listed firms. Market sentiment also got a boost amid reports that China is considering a tax cut to revive its flagging automotive market.

Back home, sugar sector stocks ended mixed after the Indian Sugar Mills Association said India’s sugar output in the current 2018/19 season is expected to be lower than earlier expectations and could drop further if more sugar gets diverted for ethanol production. The sugar output is now seen at 32 million tonnes for the season that began on October 1, down from its previous forecast of 35-35.5 million tonnes. Further, stocks related to aluminium sector remained in limelight with a report that the government is considering a proposal to increase import duty on aluminium with a view to supporting domestic players, while Airline sector remained in focus with Minister of State (MoS) for Civil Aviation Jayant Sinha urging Finance Minister Arun Jaitley to bring aviation turbine fuel (ATF) under the purview of the Goods and Services Tax (GST) regime.

Finally, the BSE Sensex lost 176.27 points or 0.52% to 33,891.13, while the CNX Nifty was down by 52.45 points or 0.51% to 10,198.40.

The BSE Sensex touched a high and a low of 34,176.36 and 33,799.79, respectively and there were 12 stocks advancing against 19 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index surged 0.91%, while Small cap index was up by 0.94%.

The top gaining sectoral indices on the BSE were IT up by 1.71%, TECK up by 1.66%, Capital Goods up by 0.95%, Industrials up by 0.87% and Realty up by 0.58%, while Energy down by 2.73%, Oil & Gas down by 1.70%, Metal down by 1.21%, Bankex down by 0.54%, Power down by 0.19% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.48%, Hindustan Unilever up by 2.00%, SBI up by 1.90%, TCS up by 1.37% and Tata Motors up by 1.11%. On the flip side, Indusind Bank down by 3.50%, Coal India down by 3.47%, Reliance Industries down by 2.84%, Sun Pharma down by 1.92% and Power Grid Corporation down by 1.79% were the top losers.

Meanwhile, expressing hope over increase in the number of direct taxpayers, Finance Minister Arun Jaitley has said that India is close to doubling its tax base in the 2014-19 period. He also said that total tax payers estimated to be 7.5 crore by the end of this financial year 2019, nearly double as compared to about 3.8 crore people were filing income tax in May 2014.

In FY 2017-18, the number of income tax returns filed increased to 6.8 crore. Finance Minister said with increase in the economic growth and the increased formalisation of the economy on the back of initiatives like demoetisation and the Goods and Services Tax (GST), the tax base has gone up.

On the Insolvency and Bankruptcy Code (IBC) process to resolve insolvency cases, Jaitley said that the key reforms such as the IBC and demonetisation have brought about moral quotient, which was badly needed in India, as the money deposited in banks after the development shows demonetisation success. He added that demonetisation made the government intent clear.

The CNX Nifty traded in a range of 10,285.10 and 10,175.35. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 3.12%, Zee Entertainment up by 2.76%, Grasim Industries up by 2.75%, Dr. Reddy’s Lab up by 2.37% and GAIL was up by 2.31%. On the flip side, HPCL down by 4.77%, Indusind Bank down by 4.20%, BPCL down by 4.13%, Cipla down by 3.80% and Indian Oil Corporation down by 3.64% were the top losers.

European markets were trading mostly in red; France’s CAC lost 21.80 points or 0.44% to 4,967.55 and Germany’s DAX dropped 31.23 points or 0.28% to 11,304.25. On the flip side, UK’s FTSE 100 was up 10.32 points or 0.15% to 7,036.64.

Asian markets ended mostly higher on Tuesday as hopes for China stimulus helped offset fresh worries over the Sino-US trade frictions. US President Donald Trump said he thinks there will be ‘a great deal’ with China on trade, but warned of more tariffs if talks next month fail to ease the trade war. Chinese shares ended higher after the securities regulator said it would enhance market liquidity, and encourage share buybacks and mergers and acquisitions by listed firms. Further, Japanese shares closed higher as the yen extended its drop against the dollar and Chinese equities rebounded on fresh attempts by Beijing to stabilize its stock markets.