Post Session: Quick Review

Indian equity benchmarks remained under pressure throughout the session and ended with losses of over a percent amid weak global cues. Sensex and Nifty slipped below their crucial 38,600 and 11,450 levels, respectively. Traders were cautious as the Asian Development Bank (ADB) sharply cut India's growth forecast to 6.5% for the current fiscal, weighed down by the GDP growth rate dipping to a six-year low in the first quarter. Cautiousness also crept in with report that India's fiscal deficit gap is set to increase by at least 70 basis points to 4 percent of the gross domestic product (GDP) for 2019-20 after Finance Minister Nirmala Sitharaman announced a cut in corporate tax rates on September 20. The street remained disappointed as rating agency ICRA said though domestic apparel exports are expected to remain in the positive zone during rest of the year, there are multiple threats looming which could slow down the pace and make it challenging for exporters. Traders failed to get any solace with RBI Governor Shaktikanta Das’ statement that the government's recent move to slash corporate tax rate made India a very attractive destination for foreign investment. He said India's corporate tax now becomes very competitive compared to other emerging market economies in ASEAN and other parts of Asia. 

On the global front, Asian markets ended mostly in red, while European markets were trading in red, after US Democrats launched formal impeachment proceedings against Donald Trump and on renewed worries about trade as the president adopted a hard line on China. Back home, stocks related to Auto sector ended lower with report that bank loans to finance vehicle purchases in India has slipped to 4.9% year-on-year at the end of July, less than half of the growth recorded in the year-ago period, indicating a slump in demand for cars and trucks which is in sync with the overall private consumption slowdown.

The BSE Sensex ended at 38572.28, down by 524.86 points or 1.34% after trading in a range of 38510.97 and 39087.20. 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 1.84%, while Small cap index was down by 1.62%. (Provisional)

The top gaining sectoral indices on the BSE were Power up by 0.87%, Utilities up by 0.45%, IT up by 0.29%, Energy up by 0.10% and TECK up by 0.05%, while Auto down by 3.68%, Realty down by 3.43%, Metal down by 2.68%, Consumer Discretionary Goods & Services down by 2.15% and PSU down by 2.08% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Power Grid up by 3.99%, TCS up by 1.91%, NTPC up by 1.52%, HCL Tech. up by 0.54% and Hindustan Unilever up by 0.53%. (Provisional)

On the flip side, SBI down by 7.54%, Tata Motors down by 6.11%, Tata Motors - DVR down by 6.01%, Yes Bank down by 4.73% and Maruti Suzuki down by 4.50% were the top losers. (Provisional)

Meanwhile, terming the government's recent move to slash corporate tax rate as a bold measure and a highly positive step, the Reserve Bank of India (RBI) Governor Shaktikanta Das has said that it made India a very attractive destination for foreign investment. He said ‘India's corporate tax now becomes very competitive compared to other emerging market economies in ASEAN and other parts of Asia. So far as international investors are concerned, so far as FDI is concerned, I think India stands definitely in a very competitive position, and would be able to attract higher investments.’

About domestic investors, he said, they now have more cash so they will be able to undertake more capital expenditure. He also said they can invest more and some of them can deleverage their liabilities which will add strength to their balance sheets. In the biggest reduction in 28 years, the government on September 20 cut corporate tax rate by almost 10 percentage points as it looked to pull the economy out of a six-year low growth and a 45-year high unemployment rate by reviving private investments with a Rs 1.45 lakh crore tax break. Base corporate tax for existing companies has been reduced to 22% from the current 30%.

Besides, the three-day monetary policy committee meeting will begin on October 1 amid expectations of rate cut to be announced on October 4 in a bid to revive the sagging economy. Earlier, Das had said the government has limited fiscal space to support growth, but low inflation can help the monetary authority ease policy rates further and help boost the economy. The RBI has already cut rates four times to the tune of 110 basis points this year to push growth.

The CNX Nifty ended at 11431.80, down by 156.40 points or 1.35% after trading in a range of 11416.10 and 11564.95. There were 13 stocks advancing against 37 stocks declining on the index. (Provisional)

The top gainers on Nifty were Power Grid up by 3.91%, TCS up by 2.01%, NTPC up by 1.56%, Indian Oil Corp. up by 1.23% and HCL Tech. up by 0.72%. (Provisional)

On the flip side, SBI down by 7.70%, Tata Motors down by 6.00%, Yes Bank down by 4.91%, Eicher Motors down by 4.54% and Maruti Suzuki down by 4.51% were the top losers. (Provisional)

European markets were trading in red; UK’s FTSE 100 decreased 71.93 points or 0.99% to 7,219.50, France’s CAC fell 90.24 points or 1.6% to 5,538.09 and Germany’s DAX was down by 150.36 points or 1.22% to 12,156.79.

Asian markets ended mostly lower on Wednesday as concerns grew about the US-China trade war sapping economic growth around the world. US lawmakers called for an impeachment inquiry into President Donald Trump, increasing the prospects of prolonged political uncertainty in the world's largest economy. Japanese shares ended lower as the safe-haven yen strengthened against the dollar on worries about escalating trade dispute and political uncertainty in the United States after the launch of a formal impeachment inquiry against President Donald Trump. Further, Chinese shares closed down after US President Donald Trump delivered a stinging rebuke to China's trade practices on Tuesday at the United Nations General Assembly and said he would not accept a ‘bad deal’ in trade talks with the country.