Post Session: Quick Review

Indian equity benchmarks took a breather after two days of stellar rally and ended Tuesday’s session on flat note. Markets started off with marginal gains, as traders took some support with NITI Aayog vice chairman Rajiv Kumar’s statement that India has become a more attractive investment destination following the reduction in corporate tax rates but relocation of units from competitors such as China will depend on other factors as well, such as the ability of states to make their environment more business-friendly. He added that this measure would help restore growth momentum in the second half of the economy. He expects the second half of FY20 (October 2019-March 2020) to clock higher than 7.5% GDP growth. But traders soon turned cautious with former Union finance minister Yashwant Sinha’s statement that contraction in demand and reluctance to invest led to the current slowdown in the Indian economy. He said some corporates are sitting on a pile of cash, but are not making investments, thus affecting demand. The sentiments remained in lackadaisical mood with West Bengal Finance Minister Amit Mitra’s statement that the current slowdown in the economy is due to ‘structural’ changes and not ‘cyclical’. He added the structural changes have been ushered in due to demonetisation and ‘faulty’ GST implementation along with the collapse of IL&FS which crippled the NBFC sector. 

On the global front, Asian markets ended mostly higher on Tuesday, while European markets were trading mostly in green, as investors looked forward to the next round of US-China trade talks, set to resume in couple of weeks. Back home, Auto sector remained in focus with the rating agency ICRA in its latest report stating that the automotive industry, which accounts for almost half the manufacturing GDP of India, is likely to be one of the key beneficiaries of recent corporate tax revision.

The BSE Sensex ended at 39095.93, up by 5.90 points or 0.02% after trading in a range of 38913.06 and 39306.37. There were 16 stocks advancing against 15 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index fell 0.46%, while Small cap index was up by 0.18%. (Provisional)

The top gaining sectoral indices on the BSE were IT up by 2.31%, TECK up by 2.00%, Energy up by 1.52%, FMCG up by 0.45% and Healthcare up by 0.33%, while Capital Goods down by 1.81%, Metal down by 1.71%, PSU down by 1.61%, Bankex down by 1.25% and Realty down by 1.20% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Infosys up by 3.88%, Reliance Industries up by 3.10%, Tech Mahindra up by 3.00%, Tata Motors up by 2.78% and Maruti Suzuki up by 1.97%. (Provisional)

On the flip side, SBI down by 3.68%, Axis Bank down by 3.04%, Larsen & Toubro down by 2.99%, Hero MotoCorp down by 2.36% and ONGC down by 2.28% were the top losers. (Provisional)

Meanwhile, amid India's Gross Domestic Product (GDP) growth slowed to over six years at 5% in Q1FY20, former Union finance minister Yashwant Sinha has said contraction in demand and reluctance to invest have led to the current slowdown in the Indian economy. He said some corporates are sitting on a pile of cash, but are not making investments, thus affecting demand.

He also said figures, data and statistics put out in the country are not seen as reliable anymore and several international agencies like the IMF and the World Bank have raised questions over them. He added that corporate, PSU sectors have suffered in the last one year. The demand in the economy, which is the growth engine, has come crashing down.

Sinha further said cash is not an issue with corporates. Some corporates are not investing because they depend on bank loans for investment and banks have withdrawn some of their facilities. But, he said there are some corporate firms who are sitting on cash, but are not investing and the major reason behind this that is there is no demand.

The CNX Nifty ended at 11588.30, down by 11.90 points or 0.10% after trading in a range of 11539.20 and 11655.05. There were 22 stocks advancing against 28 stocks declining on the index. (Provisional)

The top gainers on Nifty were Infosys up by 3.89%, Zee Entertainment up by 3.66%, Tech Mahindra up by 3.10%, Reliance Industries up by 3.01% and Tata Motors up by 2.74%. (Provisional)

On the flip side, JSW Steel down by 4.19%, SBI down by 4.06%, Eicher Motors down by 3.84%, Indian Oil Corporation down by 3.08% and Axis Bank down by 3.08% were the top losers. (Provisional)

European markets were trading mostly in green; France’s CAC increased 15.25 points or 0.27% to 5,646.01 and Germany’s DAX rose 21.54 points or 0.17% to 12,363.87, while UK’s FTSE 100 was down by 15.47 points or 0.21% to 7,310.61.

Asian markets ended mostly higher on Tuesday as investors looked forward to the next round of US-China trade talks, set to resume in couple of weeks. Chinese shares ended higher on optimism that policymakers will step up efforts to stabilize economic growth. China cut its new one-year benchmark lending rate for the second month in a row on Friday, as the central bank seeks to lower borrowing costs to support smaller firms affected by the trade war and wider slowdown. Meanwhile, Japanese shares ended almost flat as traders returned to their desks after a long holiday weekend. Investors shrugged off survey results from IHS Markit showing that Japan's private sector expanded at a slightly slower pace in September as manufacturing activity contracted further amid rising external headwinds.