Post Session: Quick Review

Indian equity benchmarks witnessed a bloodbath for second straight session and ended with losses of over one and half percent, on fears that a surge in crude prices following attacks on Saudi oil facilities could hurt the economy further. Markets made a pessimistic start, as traders remain concerned with a private report indicating that lose-monetary policy alone cannot arrest the deepening slump, instead government must take demand-boosting measures, especially in rural areas, by frontloading expenditure primarily through the national rural employment scheme. It also warned that any attempt to trim government spending to maintain the fiscal numbers will be severely detrimental to growth. Selling further crept in with report that investments through participatory notes (P-notes) in the Indian capital market stood at Rs 79,088 crore in August-end, registering the third consecutive month-on-month decline.

Key indices continued its free fall during the final hour of trade, as traders reacted negatively to credit rating agency, India Ratings and Research’s (Ind-Ra) report stating that the recent set of measures to stimulate growth announced last week would yield only limited short-term benefits. It also said that the weakness in the economy has largely been caused by demand-side headwinds, which have been exacerbated by structural bottle-necks. Weakness in the rupee against the US dollar also rattled investor sentiment. The street overlooked Commerce and Industry Minister Piyush Goyal’s statement that India and the US are in continuous dialogue and working towards early resolution of trade related issues.

On the global front, Asian markets ended mostly lower on Tuesday, while European markets were trading mostly in red as crude oil prices continued to gain in the aftermath of drone attacks on Saudi Arabia oil establishments. Back home, aviation stocks were in focus with a private report indicating that domestic airlines may have to hike fares two weeks ahead of the busy travel season if oil prices remain elevated over next few days. A poor set of macro data from China also stoked further hit sentiment.

The BSE Sensex ended at 36509.73, down by 613.58 points or 1.65% after trading in a range of 36419.09 and 37169.56. There were 3 stocks advancing against 28 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell 1.89%, while Small cap index was down by 1.89%. (Provisional)

The top losing sectoral indices on the BSE were Auto down by 4.04%, Realty down by 3.74%, Metal down by 2.77%, Bankex down by 2.57% and PSU down by 2.43%, while there were no gainers on the BSE sectoral front. (Provisional)

The top gainers on the Sensex were Hindustan Unilever up by 0.95%, Infosys up by 0.63% and Asian Paints up by 0.62%. (Provisional)

On the flip side, Hero MotoCorp down by 6.29%, Tata Motors down by 5.17%, Tata Steel down by 4.94%, Tata Motors - DVR down by 4.75% and Axis Bank down by 4.65% were the top losers. (Provisional)

Meanwhile, terming the low Gross Domestic Product (GDP) growth of 5 per cent as a ‘surprise’, the Reserve Bank of India (RBI) Governor Shaktikanta Das has expressed confidence that the economy will look up with a host of measures taken by the government. In order to give a boost to the economy, he said that the central bank has been cutting rates, as slowdown was visible for past few months. The RBI slashed benchmark interest rate four times consecutively since January 2019. The central bank reduced the repo (short term lending) rate by 1.10 percentage points during the year.

Das said “I think with right measures taken, things should improve. It's a positive trend that the government is responding very fast and I don't think we have heard the last from the government with regard to dealing with the current economic situation ... My expectation is that it will be a continuous process and they would definitely be dealing with other challenges”.

With regard to structural reforms, he said the RBI has already pointed out in its annual report. He added “I think one major thing would be agriculture marketing. Definitely, I would expect some action from the government with regard to reforms in agricultural marketing”. Besides, the government announced a slew of measures in three dosages which include a special window for real estate, export incentives, bank consolidation and sops for MSMEs and the automobile sector.

Expressing concern over the Q1 GDP numbers, he said the numbers definitely looked much worse because the RBI had projected 5.8 per cent. He said “I think almost everybody had projected not below 5.5 per cent or so, but the number 5 per cent is a surprise.” He also said the second quarter growth of all advanced economies was lower than the first quarter so there is a deceleration. He said “But again I am not trying to justify our slowdown through the prism of the global slowdown although global slowdown does impact growth and results in slowdown we have domestic issues also”.

The CNX Nifty ended at 10826.90, down by 176.60 points or 1.60% after trading in a range of 10796.50 and 11000.10. There were 6 stocks advancing against 44 stocks declining on the index. (Provisional)

The top gainers on Nifty were GAIL India up by 1.85%, Hindustan Unilever up by 0.97%, Titan Co up by 0.91%, Asian Paints up by 0.70% and Infosys up by 0.62%. (Provisional)

On the flip side, Hero MotoCorp down by 6.25%, Tata Steel down by 5.01%, Tata Motors down by 4.98%, Axis Bank down by 4.68% and Maruti Suzuki down by 4.57% were the top losers. (Provisional)

European markets were trading mostly in red; France’s CAC decreased 2.61 points or 0.05% to 5,599.62 and Germany’s DAX fell 35.68 points or 0.29% to 12,344.63, while UK’s FTSE 100 increased 10.58 points or 0.14% to 7,331.99.

Asian markets ended mixed on Tuesday, a day after oil prices spiked and global markets slipped following a weekend attack on Saudi Arabian oil facilities. Investors also remained on the sidelines ahead of key central bank meetings this week in the U.S. and Japan. Chinese shares ended lower ahead of the next round of US-China trade talks scheduled to start in Washington on Thursday. Singapore shares finished lower on reports that the country's non-oil domestic exports declined at a slower than expected pace in August. Meanwhile, Japanese shares ended marginally higher, led by energy-related stocks as oil prices soared after attacks on Saudi oil facilities knocked out nearly half of global oil output.