Bourses give up gains to end flat

Indian equity bourses gave up their gains on Thursday to end the session flat. After a positive start, the markets traded firmly during morning deals, as the government data showed that foreign direct investment into India grew by 28 per cent to $16.33 billion during the first quarter of the current fiscal. Inflow of FDI during April-June of 2018-19 stood at $12.75 billion. Some support also came with reports that a top advisory body on external trade will meet next week to discuss issues related to export promotion, domestic manufacturing and competitiveness in the wake of a fall in exports of traditional, employment-generating sectors such as gems and jewellery, leather, handloom and cotton yarn and fabrics.

But in noon deals, key indices erased gains, as India Ratings and Research (Ind-Ra) believes India’s increased dependence on foreign portfolio investment (FPI) makes the country highly vulnerable to global shocks. The surplus generated in the services trade combined with remittances is insufficient to cover India’s trade deficit. Adding anxiety among market participants, domestic credit rating agency CRISIL cut India’s current financial year (FY20) Gross domestic products (GDP) growth forecast to 6.3% from its earlier forecast of 6.9%. The agency said that lower GDP growth forecast corroborates that India’s economic slowdown is deeper and more broad-based than suspected.

On the global front, European markets were trading green, even though Germany's factory orders decreased more-than-expected in July. The data from Destatis revealed that factory orders decreased 2.7 percent over the previous month in July, in contrast to an increase of revised 2.7 percent seen in June. Asian markets ended higher, as China's private sector logged its fastest growth in four months in August as both manufacturers and service providers see improved rates of activity growth. The survey data from IHS Markit showed that the Caixin composite output index climbed to 51.6 in August from 50.9 in July. Activity across the service sector advanced at a faster pace than that seen for the manufacturing sector.

Back home, the automobile industry stocks ended higher, after Union minister Nitin Gadkari assured the crisis-hit automobile industry of all possible support from the government, including taking up the demand of GST reduction with finance minister Nirmala Sitharaman. However, stocks related to the banking sector ended in red terrain, as the Reserve Bank of India (RBI) has made it mandatory for banks to link all new floating-rate loans for housing, auto and MSMEs to external benchmark like repo from October 1, a move aimed at ensuring faster transmission of policy rate cuts to borrowers.

Finally, the BSE Sensex lost 80.32 points or 0.22% to 36,644.42, while the CNX Nifty was up by 3.25 points or 0.03% to 10847.90.

The BSE Sensex touched a high and a low of 36,898.99 and 36,541.88, respectively and there were 19 stocks advancing against 12 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.15%, while Small cap index was up by 0.72%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 2.47%, Metal up by 2.42%, PSU up by 2.14%, Auto up by 2.13% and Utilities up by 2.01%, while Realty down by 1.77% and Bankex down by 0.91% were the only losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 7.81%, Tata Motors - DVR up by 6.71%, ONGC up by 5.17%, Yes Bank up by 4.12% and NTPC up by 3.26%. On the flip side, HDFC down by 2.67%, ICICI Bank down by 2.16%, TCS down by 1.35%, HCL Tech. down by 1.26% and Kotak Mahindra Bank down by 1.23% were the top losers.

Meanwhile, the executive director at Reserve Bank of India (RBI) for financial markets operations department, Rajeshwar Rao has blamed structural incentives for drawing companies to bank financing, preventing them from opting for issuing bonds.

Rajeshwar Rao also rued the lack of disincentives for unutilised working capital limits as one of the factors limiting corporate bond market development. He underlined that the Government, Reserve Bank and SEBI have been working on deepening the corporate bond markets, for the last two decades. The interventions delivered some successes initially, but the new issuances have plateaued in the last three years.

Rao further said that the newly formulated Insolvency and Bankruptcy Code (IBC) can also help the corporate bond market development by throwing open non-investment grade securities to the long term investors like insurance, pension and provident funds.

The CNX Nifty traded in a range of 10,920.10 and 10,816.00. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 8.08%, Coal India up by 7.30%, ONGC up by 5.29%, BPCL up by 4.52% and Yes Bank up by 3.95%. On the flip side, HDFC down by 2.81%, Indiabulls Housing Finance down by 2.25%, ICICI Bank down by 2.24%, TCS down by 1.31% and Kotak Bank down by 1.22% were the top losers.

European markets were trading mostly in green; France’s CAC increased 51.89 points or 0.94% to 5,583.96 and Germany’s DAX rose 104.56 points or 0.87% to 12,129.60, while UK’s FTSE 100 was up by 41.45 points or 0.57% to 7,269.81.

Asian markets ended mostly higher on Thursday after reports that negotiating teams from China and the US will meet in Washington in early October to look for a solution to their yearlong trade dispute. Japanese shares ended higher as Hong Kong withdrew the contentious extradition bill that sparked recent protests. Chinese shares ended up on hopes that Beijing will cut lenders' reserve requirements again to shore up the economy.