Indian bourses end in red for yet another trading session

Indian equity bourses ended in red for yet another trading session. The start of the day was positive, amid 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, soon key indices turned volatile, as India's manufacturing activity remained unchanged in September 2019, hit by subdued demand conditions domestically and externally. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) was at 51.4 in September, unchanged from August.

Markets extended their losses in the last hours of the trade. Sentiments got impacted 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. Adding more worries among traders, 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. Separately, a survey of World Economic Forum business leaders showed that the possibility of a fiscal crisis is the biggest risk to doing business globally.

On the global front, European markets were trading in red, as euro area manufacturing sector contracted at the fastest pace in nearly seven years as output, new orders and purchasing fell sharply in September. The final data from IHS Markit showed that the final manufacturing Purchasing Managers' Index dropped to 45.7 in September from 47.0 in August. Asian markets ended mostly in green, after South Korea's consumer prices declined for the first time on record in September and exports continued to fall, adding pressure on the central bank to ease monetary policy. Consumer prices fell 0.4 percent year-on-year in September after staying flat in August.

Back home, the power sector stocks ended lower, even though rating agency ICRA said that the recent announcement by the government to lower the corporate tax rate is a positive development for the power sector as it will allow power generators with cost-plus power purchase agreements (PPAs) to pass on lower tax benefit to power distribution utilities (discoms). Further, the sugar industry stocks remained in focus, after the government fixed higher sugar sale quota at 21 lakh tonne for October. The food ministry has increased the allocation for October from 19.5 lakh tonne in September keeping in view festivals of Dussehra and Diwali.

Finally, the BSE Sensex fell 361.92 points or 0.94% to 38,305.41, while the CNX Nifty was down by 114.55 points or 1.00% to 11,359.90.

The BSE Sensex touched a high and a low of 38,923.78 and 37,929.89, respectively and there were 07 stocks advancing against 24 stocks declining on the index.
The broader indices ended in red; the BSE Mid cap index slipped 1.54%, while Small cap index was down by 1.61%.

The lone gaining sectoral index on the BSE was Oil & Gas up by 0.06%, while Telecom down by 4.53%, Realty down by 3.88%, TECK down by 2.20%, Basic Materials down by 1.84% and Metal down by 1.76% were the top losing indices on BSE.

The top gainers on the Sensex were HDFC Bank up by 1.72%, Mahindra & Mahindra up by 1.71%, Maruti Suzuki up by 0.99%, HDFC up by 0.99% and Kotak Mahindra Bank up by 0.33%. On the flip side, Yes Bank down by 22.80%, Indusind Bank down by 6.30%, SBI down by 5.50%, Bharti Airtel down by 4.32% and Tata Motors - DVR down by 2.83% were the top losers.

Meanwhile, hit by subdued demand conditions domestically and externally, India's manufacturing activity remained unchanged in the month of September 2019. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - was at 51.4 in September, unchanged from August.

The report found that aggregate manufacturing production rose in the reported month, but the pace of expansion was the joint-slowest since March 2018. Further, improved technology and new business gains at some firms boosted output, while other companies lowered production due to muted demand. The report also noted that total sales rose further, but the pace of increase was among the weakest seen in the current 23-month sequence of uninterrupted expansion.

On the price front, a lack of demand for raw materials and semi-finished items acted to curb inflation in September. The rate of increase in overall cost burdens was among the weakest seen in a decade. Similarly, a marginal rise in selling prices was recorded.

Besides, the report highlighted a dip in business sentiment among Indian goods producers. The degree of optimism was the second-lowest registered in over two-and-a-half years. Some firms expect a pick-up in demand and investment in marketing to lift output in the year ahead, while others were concerned about competitive pressures and tough market conditions.

The CNX Nifty traded in a range of 11,554.20 and 11,247.90. There were 11 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were BPCL up by 4.85%, Mahindra & Mahindra up by 2.17%, HDFC Bank up by 1.85%, IOC up by 1.09% and Maruti Suzuki up by 1.05%. On the flip side, Yes Bank down by 22.22%, Zee Entertainment down by 10.79%, Indusind Bank down by 5.61%, SBI down by 5.37% and Grasim Industries down by 5.01% were the top losers.

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.