Indian indices settle below neural lines

Indian equity indices ended Monday’s session below their neutral lines. The start of the day was sluggish, impacted with RBI’s report showing that India's forex reserves declined by $388 million to $428.572 billion for the week ended September 20 due to a slide in core currency and gold assets. In the week to September 20, foreign currency assets, a major component of overall reserves declined by $125 million to $396.670 billion. Traders remained worried amid report that India had a ‘worrisome’ debt burden of over Rs 88 lakh crore at the first financial quarter of 2019 with the government apparently having no inkling to deal with the country’s economic slowdown.

However, key benchmarks managed to cut some of their losses in the last hour of the trade after capital markets regulator SEBI eased its norms for buyback of shares by listed companies, especially those having subsidiaries in housing finance and NBFC segments. The markets also took some support with a report that the World Bank in its Doing Business 2020 report ranked India as one of the ‘top 20 improvers’ based on the number of reforms which aid ease of doing business. It said that India’s achievements this year build on a sustained multi-year reform effort. Since 2003/04, India has implemented 48 reforms captured by Doing Business.

On the global front, European markets were trading mostly in green, after Eurozone unemployment rate unexpectedly dropped in August to its lowest level in more than a decade. The preliminary data from Eurostat showed that the seasonally adjusted unemployment rate fell to 7.4 percent from 7.5 percent in July. Asian markets ended mostly in red territory, as Japan's industrial production declined at a faster-than-expected rate in August. The preliminary data from the Ministry of Economy, Trade and Industry showed that Industrial production fell 1.2 percent month-on-month in August.

Back home, the automobile industry stocks ended lower, after credit rating agency, India Ratings and Research (Ind-Ra) in its latest report revised its outlook on the automobile sector to stable-to-negative from stable for the remaining FY20. The agency is expecting high, single-digit volume de-growth in the range of 8%-9% Y-o-Y in total domestic volumes in FY20. Further, stocks related to the realty industry also fell, amid a private report stating that housing sales in Q3 2019 saw a quarterly decline of 20% across the top 7 Indian cities - from 68,600 units in Q2 2019 to 55,080 units in Q3 2019.

Finally, the BSE Sensex fell 155.24 points or 0.40% to 38,667.33, while the CNX Nifty was down by 37.95 points or 0.33% to 11,474.45.

The BSE Sensex touched a high and a low of 38873.12 and 38,401.09, respectively and there were 13 stocks advancing against 18 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index lost 1.13%, while Small cap index was down by 1.21%.

The top gaining sectoral indices on the BSE were Telecom up by 3.86%, TECK up by 2.45%, IT up by 2.33%, Energy up by 1.27% and Oil & Gas up by 0.55%, while Bankex down by 2.64%, Healthcare down by 1.57%, Realty down by 1.53%, Consumer Durables down by 1.02% and Basic Materials down by 0.87% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 5.29%, HCL Tech up by 3.76%, Infosys up by 2.93%, ITC up by 2.69% and TCS up by 2.06%. On the flip side, Yes Bank down by 15.06%, Indusind Bank down by 6.84%, SBI down by 3.68%, ICICI Bank down by 3.51% and Sun Pharma down by 3.02% were the top losers.
Meanwhile, the government will soon set up a working group on the proposed new industrial policy which is aimed at promoting emerging sectors and modernising existing industries. The policy will also look to reduce regulatory hurdles and making India a manufacturing hub. Earlier, the Department for Promotion of Industry and Internal Trade (DPIIT) had prepared the policy and sent it for the Union Cabinet approval, but certain new suggestions have been made with regard to the policy.

The working group will rework on it and submit the same to the DPIIT. The group will have members from different government departments of the Centre and states, as well as from industry chambers, including the Confederation of Indian Industry (CII). This will be the third industrial policy after the ones released in 1956 and 1991. It will replace the industrial policy of 1991 which was prepared in the backdrop of the balance of payment crisis. The DPIIT had initiated the process of formulation of a new industrial policy in May 2017. The new policy will subsume the National Manufacturing Policy (NMP).

It was proposed that the new policy would aim at making India a manufacturing hub by promoting Make in India. The department had floated discussion paper on the policy with an aim to create jobs for the next two decades, promote foreign technology transfer and attract $100 billion FDI annually. It had outlined several constraints to industrial growth -- inadequate infrastructure; restrictive labor laws; complicated business environment; slow technology adoption; low productivity; challenges for trade; and inadequate expenditure on R&D and innovation.

The CNX Nifty traded in a range of 11,508.25 and 11,390.80. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 6.93%, HCL Tech up by 3.61%, UPL up by 3.30%, Infosys up by 2.81% and ITC up by 2.45%. On the flip side, Yes Bank down by 14.36%, Indusind Bank down by 6.13%, SBI down by 3.63%, ICICI Bank down by 3.43% and ZEEL down by 3.31% were the top losers.

European markets were trading mostly in green; France’s CAC increased 3.18 points or 0.06% to 5,643.76 and Germany’s DAX increased 6.19 points or 0.05% to 12,387.13, while UK’s FTSE 100 was down by 15.39 points or 0.21% to 7,410.82.

Asian markets ended mostly lower on Monday on account of investors awaiting the cues from central bank meetings, both US Fed and Bank of Japan, later this week. Moreover, tensions revolving around the effects of escalating Sino-US trade war weighed on the sentiments. Japanese shares ended lower following reports that Donald Trump’s administration is deeply thinking about imposing severe new restrictions on investments in China. Further, Chinese shares ended lower on speculations that US may curb Chinese companies' access to its capital markets that may boost the ongoing trade war between these nations. Among the Asian markets, Taiwan markets were closed on account of warning of Typhoon Mitag storm and severe rains in some of its areas.