Post Session: Quick Review

Snapping three-session gaining run, Indian equity benchmarks ended Wednesday’s trade on a pessimistic note, with Sensex and Nifty slipping below their crucial 37,500 and 11,050 levels, respectively. Key indices made cautious start and traded flat with negative bias, as investors were cautious with Moody's Investors Service’s statement that the economic measures announced by Finance Minister Nirmala Sitharaman are unlikely to provide some form of confidence and improve business sentiment and consumer sentiment. Moody's, which has lowered India's gross domestic product (GDP) forecast to 6.4% for FY20, said there is significant uncertainty in terms of the growth prospects both because of domestic as well as external factors. Selling further crept in with a private report indicating that India's economic growth momentum is expected to slip further as there is no quick fix solution for the structural issues that the economy is facing. It added that the lackluster growth in the Index of Industrial Production (IIP) is expected to prevail as the manufacturing sector is facing multiple challenges which will take time to get resolved.

The selloff deepened in the late afternoon deals and local barometer gauges traded at intraday low levels, after India Ratings and Research (Ind-Ra) revised India's gross domestic product (GDP) growth in current financial year downwards to 6.7 per cent -- marking a six-year low -- from its earlier forecast of 7.3 per cent. The agency expects FY20 to be the third consecutive year of subdued growth pushed by a slowdown in consumption demand, delayed and uneven progress of monsoon so far, decline in manufacturing growth, inability of Insolvency and Bankruptcy Code to resolve cases in a time-bound manner and rising global trade tension adversely impacting exports. Moreover, steep fall in the Indian rupee against the US dollar too weighed on investors’ morale. However, the markets managed to pare some of their early losses, as traders found some solace with Federation of Indian Export Organisations’ (FIEO) statement that despite trade headwinds there is scope for a 15 percent growth in exports this fiscal. But, such a growth is possible only when the Centre can ease regulations and increased capacities can be built for increased exports to US, China and the UK.

On the global front, Asian markets ended mixed on Wednesday, while European markets were trading mostly in red, as uneasy investors watched for signs of progress on U.S.-China trade after Wall Street slid. Back home, banking stocks were in focus with global rating agency S&P’s report that given the weak credit demand from corporates and the lingering NBFC crisis, just announced recapitlisation of state-run banks will not deliver on the key objectives of higher lending and a recovering in their fortunes.

The BSE Sensex ended at 37451.44, down by 189.83 points or 0.50% after trading in a range of 37249.19 and 37687.82. There were 7 stocks advancing against 24 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell 0.94%, while Small cap index was down by 0.70%.(Provisional)

The few gaining sectoral indices on the BSE were Realty up by 2.08%, IT up by 1.35% and TECK up by 1.15%, while Metal down by 3.49%, Auto down by 1.90%, Power down by 1.44%, Basic Materials down by 1.29% and PSU down by 1.21% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were HCL Technologies up by 3.11%, Infosys up by 2.35%, Tech Mahindra up by 2.28%, HDFC up by 0.31% and Asian Paints up by 0.22%. (Provisional)

On the flip side, Yes Bank down by 7.31%, Tata Steel down by 4.20%, Vedanta down by 4.06%, Tata Motors - DVR down by 3.93% and ONGC down by 3.62% were the top losers. (Provisional)

Meanwhile, amid raft of measures announced by the government to boost the sagging economic growth, Moody's Investors Service has said these measures will provide some support to investors and business sentiments, and the acceleration of the capitalization of public sector banks to help improve the provision of credit and transmission of monetary policy easing. It said that the measures announced were an effort to stimulate slowing economic growth.

Though, it also said domestic and external headwinds to persist over the course of the year, resulting in 6.4% real Gross Domestic Product (GDP) growth in the fiscal year ending in March 2020. It added that growth rate will pick up next fiscal year to 6.8%. Recently, Moody's had revised downwards India's GDP growth forecast to 6.2% for 2019 calendar year from its previous estimation of 6.8%.

In order to revive growth momentum, the government had announced a raft of measures, including rollback of enhanced super-rich tax on foreign and domestic equity investors imposed in the Budget, exemption of startups from 'angel tax', a package to address distress in the auto sector and upfront infusion of Rs 70,000 crore to public sector banks. Also, it said Goods and Services Tax (GST) filing will be simplified further to meet the GSTN to remove further glitches in the system.

The CNX Nifty ended at 11044.35, down by 61.00 points or 0.55% after trading in a range of 10987.65 and 11129.65. There were 12 stocks advancing against 38 stocks declining on the index. (Provisional)

The top gainers on Nifty were HCL Tech. up by 2.97%, BPCL up by 2.86%, Infosys up by 2.33%, Tech Mahindra up by 2.16% and Eicher Motors up by 1.87%. (Provisional)

On the flip side, Yes Bank down by 7.21%, Tata Steel down by 4.25%, Vedanta down by 4.02%, Coal India down by 3.83% and JSW Steel down by 3.80% were the top losers. (Provisional)

European markets were trading mostly in red; France’s CAC decreased 26.29 points or 0.49% to 5,360.80 and Germany’s DAX shed 56.74 points or 0.48% to 11,673.28, while UK’s FTSE 100 was up by 25.62 points or 0.36% to 7,115.20.

Asian markets ended mixed on Wednesday amid uncertainty about the future of US-China trade relations, and on raising fears of an imminent recession following government bond yields edged back towards record lows. Meanwhile, Chinese government announced several measures to boost consumption in the country as its economy slows under the weight of its raging trade war with the US. Japanese shares ended higher, with defensive stocks rising as the downgrading of South Korea's trade status took effect. Seoul shares advanced even as Japan officially removed South Korea from a list of preferred trading partners.