Post Session: Quick Review

Indian equity benchmarks sank in a sea of red on Tuesday, with losses of around a percent, on the back of sustained selling across sectors, tracking sell-off in the global market. Markets halted three consecutive sessions of gaining streak and drifted below their crucial 35,500 (Sensex) and 10,700 (Nifty) levels. Key gauges traded on feeble note since the beginning, as traders took note of a report which signaled only a temporary truce, stated the Reserve Bank of India (RBI) and the government on Monday agreed to refer to an expert committee the contentious issue of appropriate size of reserves that the RBI must hold, while restructuring of stressed loans of small businesses would be considered by the central bank. Sentiments remained weak with Moody’s Investors Service stating that the Reserve Bank of India’s decision to allow lenders more time to adhere to additional capital buffer norms under Basel 3 is credit negative for the country’s state-run banks. Also, the decision to restructure stressed micro, small and medium enterprises (MSME) loans of up to Rs 250 million has the potential for having negative implications for the credit profiles of Indian banks.

Markets continued a downward trajectory in the last leg of trade, and traded at day’s low point, as sentiments on the street weakened further with reports that India has slipped two places to rank 53rd on a global annual talent ranking released by IMD Business School Switzerland. The top slot has been retained by the Alpine nation itself. Investors’ sentiments were also pessimistic as Sebi asked listed companies to disclose detailed reasons for delay in submission of financial results to the stock exchanges within one working day of the stipulated deadline. Traders also reacted negatively to a survey by the UK India Business Council (UKIBC) which showed that ‘Quality of bureaucracy’ is rated as the weakest component of India’s business environment for the fourth year running. The traders overlooked the RBI’s statement that it will inject Rs 8,000 crore into the system through purchase of government securities on November 22. The OMO operation will help ease tight liquidity situation triggered by series of default by group companies of IL&FS.

Asian markets ended lower on Tuesday, while European markets were trading in red, pressured by sharp losses on Wall Street as technology firms tumbled on worries about slackening demand. Back home, sugar sector stocks ended mixed, as Industry body ISMA stated that India's sugar production fell by 15 per cent to 1.16 million tonnes till November 15 of the current marketing year that started last month as many mills have not yet started crushing operation in this season.

The BSE Sensex ended at 35444.74, down by 330.14 points or 0.92% after trading in a range of 35416.18 and 35731.67. There were 4 stocks advancing against 27 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell 1.13%, while Small cap index was down by 0.99%. (Provisional)

The top losing sectoral indices on the BSE were Metal down by 2.90%, Basic Materials down by 2.03%, IT down by 1.72%, Healthcare down by 1.68% and TECK down by 1.62%, while there were no gaining stocks on BSE. (Provisional)

The top gainers on the Sensex were Indusind Bank up by 1.33%, Adani Ports &SEZ up by 1.19%, Mahindra & Mahindra up by 0.20% and HDFC Bank up by 0.12%. (Provisional)

On the flip side, Yes Bank down by 6.02%, Tata Steel down by 3.19%, Vedanta down by 2.96%, Wipro down by 2.69% and NTPC down by 2.55% were the top losers. (Provisional)

Meanwhile, amid recent liquidity concerns, the Reserve Bank of India (RBI) has decided to infuse Rs 8,000 crore through purchase of the government securities (G-secs) under Open Market Operations (OMO) on November 22, 2018. The Central Bank has decided this based on an assessment of prevailing liquidity conditions and also of the durable liquidity needs going forward. The OMO will help ease tight liquidity situation triggered by series of default by group companies of Infrastructure Leasing & Financial Services (IL&FS).

As part of the OMO, RBI will purchase government securities maturing in 2021 bearing interest rate of 7.80%, 2024 (8.40%), 2026 (8.33%), 2028 (8.60%) and 2032 (8.28%). The Central Bank said it has the right to decide on the quantum of purchase of individual securities and can also accept offers for less than Rs 8,000 crore. It may as well purchase marginally higher than the aggregate amount due to rounding-off effect and it can also accept or reject any or all the offers either wholly or partially without assigning any reason. The eligible participants should submit their offers in electronic format on the RBI Core Banking Solution (E-Kuber) system on November 22.

RBI had earlier stated that the system liquidity will move into deficit in the second half of 2018-19 and the evolving liquidity conditions would determine its choice of instruments for both transient and durable liquidity management. OMOs are the tools which can be used to either inject or drain liquidity from the system. It is employed to adjust rupee liquidity conditions in the market on a durable basis.

The CNX Nifty ended at 10652.70, down by 110.70 points or 1.03% after trading in a range of 10640.85 and 10740.85. There were 6 stocks advancing against 44 stocks declining on the index. (Provisional)

The top gainers on Nifty were GAIL India up by 2.76%, Indusind Bank up by 1.30%, Adani Ports &SEZ up by 1.27%, Bajaj Finance up by 0.50% and Zee Entertainment up by 0.47%. (Provisional)

On the flip side, Yes Bank down by 6.08%, Hindalco down by 5.67%, Indiabulls Housing Finance down by 3.71%, Dr. Reddys Lab down by 3.44% and Wipro down by 3.42% were the top losers. (Provisional)

European markets were trading in red; UK’s FTSE 100 decreased 35.92 points or 0.52% to 6,964.97, France’s CAC fell 42.47 points or 0.86% to 4,942.98 and Germany’s DAX dropped 130.98 points or 1.18% to 11,113.56.

Asian markets ended lower on Tuesday as global growth worries persisted and a sell-off in technology stocks continued on worries about slackening demand. Chinese shares ended lower as investors remained skeptical about the outcome of a meeting between US President Donald Trump and Chinese President Xi Jinping at the G20 summit in Argentina later this month. Further, Japanese shares hit a three-week low, with a sell-off in technology stocks and news of Nissan Chairman Carlos Ghosn's arrest weighing on markets. Meanwhile, the markets in Malaysia and Indonesia are closed in observance of the birth of the prophet Muhammad.