Post Session: Quick Review

Extending losses for the third straight session, Indian equity benchmarks ended Tuesday’s session in negative terrain with losses of around a percent. Markets made an optimistic start amid positive global cues. Traders took encouragement, with report that the government has stayed with the borrowing plan for the fiscal, as announced in the budget, sending a strong signal that it will try and meet the fiscal deficit target despite a sharp cut in corporate tax rate that is expected to cost Rs 1.45 lakh crore. But, traders soon turned cautious with a monthly survey showing that the manufacturing sector activity in September remained unchanged amid subdued demand conditions both domestically as well as externally. The IHS Markit India Manufacturing PMI was at 51.4 in September, unchanged from August and thereby posting its joint-lowest reading since May 2018.

Though, markets once again entered into green terrain and managed to keep their heads above water in early noon deals, as traders found solace with report that current account deficit (CAD) narrowed to $14.30, 2% of GDP, in Q1 FY20, against $15.80 billion in the year-ago quarter, on account of higher invisible receipts and subdued oil prices. However, key indices failed to hold gains and witnessed sharp sell-off in late hour of trade, as anxiety remained among the traders with the Commerce and Industry Ministry’s data showing that the eight core industries in August contracted to over three-and-half year low of 0.5%, due to decline in output of coal, crude oil, natural gas, cement, and electricity. Also, the RBI’s data showed that the country’s external debt stood at $557.4 billion in the June quarter, an increase of $14.1 billion over the quarter ended March 2019.

On the global front, Asian markets ended mostly higher on Tuesday on hopes that China and the US could work towards reaching a deal on trade and other issues in the fourth quarter. European markets were trading in red, as weak factory activity data from across the eurozone spurred fears of an economic slowdown.  Back home, stocks related to steel sector ended in red despite India Ratings and Research in its latest report stating that the reduction in raw material prices since July 2019 will provide a major respite to India steel players.   

The BSE Sensex ended at 38327.80, down by 339.53 points or 0.88% after trading in a range of 37929.89 and 38923.78. 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 1.50%, while Small cap index was down by 1.57%.(Provisional)

The only gaining sectoral indices on the BSE were Consumer Durables up by 0.04% and Oil & Gas up by 0.03%, while Telecom down by 4.36%, Realty down by 3.89%, TECK down by 2.20%, Basic Materials down by 1.87% and Metal down by 1.76% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Mahindra & Mahindra up by 2.18%, HDFC Bank up by 2.04%, Maruti Suzuki up by 1.15%, HDFC up by 0.89% and Hindustan Unilever up by 0.36%. (Provisional)

On the flip side, Yes Bank down by 22.20%, SBI down by 5.50%, Indusind Bank down by 5.37%, Bharti Airtel down by 4.33% and ONGC down by 2.81% were the top losers. (Provisional)

Meanwhile, the Controller General of Accounts (CGA) in its latest data has showed that India’s fiscal deficit touched Rs 5.54 lakh crore in the first five months (April-August) of the current financial year 2019-20 (FY20), which was 78.7% of the Budget Estimate (BE) for 2019-20. It was at 86.5% of the 2018-19 BE in corresponding month a year ago. In absolute terms, the fiscal deficit or the gap between expenditure and revenue was Rs 5,53,840 crore as on August 31. Besides, the government has pegged the fiscal deficit for FY20 at Rs 7.03 lakh crore, while aiming to restrict the deficit at 3.3% of the gross domestic product (GDP).

According to the CGA data, revenue receipts of the government during the April-August 2019 period rose to 30.7% of the BE compared to 26.9% in the corresponding period last year. In absolute terms, revenue receipts stood at Rs 6.03 lakh crore at the end of August. For the entire 2019-20, the revenue receipts has been pegged at Rs 19.62 lakh crore.

The capital expenditure was 40.3% of the BE as compares with 44.1% in the year-ago period. Total expenditure during the April-August period stood at Rs 11.75 lakh crore or 42.2% of the BE, it was 43.8% of BE in the corresponding period of the previous financial year. The government has pegged its total expenditure for the financial year 2019-20 at Rs 27.86 lakh crore.

However, the government has let go of its revenues to the tune of Rs 1.45 lakh crore by announcing cuts in corporate tax, aimed at boosting the faltering economy. Economic Affairs Secretary Atanu Chakraborty has said the government maintains the fiscal glide path with the borrowing target of Rs 2.68 lakh crore for the second half of this financial year.

The CNX Nifty ended at 11367.35, down by 107.10 points or 0.93% after trading in a range of 11247.90 and 11554.20. There were 11 stocks advancing against 39 stocks declining on the index. (Provisional)

The top gainers on Nifty were BPCL up by 4.85%, Mahindra & Mahindra up by 2.14%, HDFC Bank up by 1.92%, Maruti Suzuki up by 1.10% and Indian Oil Corporation up by 1.09%. (Provisional)

On the flip side, Yes Bank down by 22.22%, Zee Entertainment down by 10.92%, Indusind Bank down by 5.61%, SBI down by 5.35% and Grasim Industries down by 5.01% were the top losers. (Provisional)

European markets were trading in red; UK’s FTSE 100 decreased 20.54 points or 0.28% to 7,387.67, France’s CAC shed 11.94 points or 0.21% to 5,665.85 and Germany’s DAX was down by 14.20 points or 0.11% to 12,413.88.

Asian markets ended mostly higher on Tuesday following expectations of de-escalation of ongoing trade conflicts between US and China as the two nations are involved in progressive trade talks along with reports of a new Brexit deal to the European Union by the British government under the guidance of its Prime Minister, Boris Johnson. Japanese shares ended higher as Bank of Japan's quarterly tankan survey was positive with a large manufacturing diffusion index score. Among the Asian markets, Chinese and Hong Kong markets were closed for the celebrations of 70th National Day.