Bears hold tight grip on Indian markets

Bears held tight grip on Indian equity markets on Thursday, with Sensex and Nifty ending lower. The start of the day was negative, as the finance ministry in its latest data showed that Goods and services tax collection dropped to a 19-month low of Rs 91,916 crore in September 2019 witch was 2.67% lower than the collection in the corresponding month last year at Rs 94,442 crore and 6.4% below the last month’s figure of Rs 98,202 crore. Adding more worries, S&P Global Ratings slashed India’s Gross Domestic Product (GDP) growth projection to 6.3% for the current financial year (FY20) from 7.1% forecasted earlier, amid decline in private consumption.

Weak trade persisted during whole trading day, on the back of weak cues from the global markets. Market participants remained pessimistic, amid a report stating that the Finance Ministry made it clear that companies opting for a lower tax of 22% will not be eligible for accumulated additional depreciation and Minimum Alternative Tax (MAT) credit. The street failed to take any sense of relief with Finance Minister Nirmala Sitharaman’s statement that the Insolvency and Bankruptcy Code has improved business climate in the country by making it easier for enterprises to exit in case of difficulties.

On the global front, European markets were trading mixed, as the euro area private sector expanded at the slowest pace in more than six years in September. The final data from IHS Markit showed that the final composite output index fell to 50.1 in September from 51.9 in August. The reading was below the flash estimate of 50.4. Asian markets ended lower, after the services sector in Japan continued to expand in September, albeit at a slower rate, with a PMI score of 52.8. That's down from the 22-month high of 53.3 in August. The survey also showed that the composite index came in at 51.5, down from 51.9 in August.

Back home, the infrastructure sector stocks ended higher, amid reports that the government can create a large number of jobs by making infrastructure investment its priority and roping in the private sector in it. However, stocks related to the banking industry settled in negative territory, even though the credit rating agency, CRISIL in its latest report said that gross non-performing assets (NPAs) within the Indian banking system may further reduce to 8-8.5 percent by March 2020 from the peak of 11.5 percent in March 2018 as fresh accretion through slippages get slower and also with big ticket resolutions.

Finally, the BSE Sensex fell 198.54 points or 0.52% to 38,106.87, while the CNX Nifty was down by 45.90 points or 0.40% to 11,314.00.

The BSE Sensex touched a high and a low of 38,310.93 and 37,957.56, respectively and there were 11 stocks advancing against 20 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.30%, while Small cap index was down by 0.38%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.85%, Realty up by 1.14%, Energy up by 0.87%, PSU up by 0.52% and Consumer Durables up by 0.48%, while Metal down by 3.00%, Basic Materials down by 1.78%, Telecom down by 1.48%, Bankex down by 0.90% and Capital Goods down by 0.54% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 32.97%, Tata Motors up by 6.16%, Tata Motors - DVR up by 6.11%, ITC up by 2.23% and HCL Tech up by 1.67%. On the flip side, Vedanta down by 4.66%, Tata Steel down by 3.36%, Indusind Bank down by 2.94%, HDFC Bank down by 2.04% and Kotak Mahindra Bank down by 1.93% were the top losers.

Meanwhile, World Economic Forum (WEF) President Borge Brende has said that India is a young economy with lot of potential and has demonstrated remarkable strength and resilience amid an economic slowdown globally. Besides, he said the country can play a crucial role in the development of South Asia and sustainability of global economic growth.

Borge Brende has stated that the rise of advanced technologies has the potential to create economic and social value and it can boost the country's goal of maintaining its growth momentum while attaining greater social inclusion and regional cooperation. He also said India is very advanced from many developed economies when it comes to information technology sector, but there is a lot of scope for development in terms of infrastructure.

Meanwhile, the WEF, an international organization headquartered in Geneva, is organizing its 33rd India Economic Summit in New Delhi on October 3-4 under the theme -- 'Innovating for India: Strengthening South Asia, Impacting the World'. Artificial intelligence and drones, start-up unicorns, infrastructure, environmental reforms, gender parity, education and South Asia's economic outlook will be on top of the agenda.

The CNX Nifty traded in a range of 11,370.40 and 11,257.35. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 33.59%, BPCL up by 7.50%, Zee Entertainment up by 6.50%, Tata Motors up by 6.37% and IOC up by 2.96%. On the flip side, Vedanta down by 4.66%, Hindalco down by 4.01%, Coal India down by 3.45%, Tata Steel down by 3.41% and Indusind Bank down by 3.09% were the top losers.

European markets were trading mixed; UK’s FTSE 100 decreased 34.46 points or 0.48% to 7,088.08, while France’s CAC increased 33.92 points or 0.63% to 5,456.69.

Asian markets ended mostly lower on Thursday after Washington opened a new front in its trade wars by imposing swingeing tariffs on European goods, adding to uncertainty surrounding the US-China trade war. The US proposed to impose tariffs on $7.5 billion of goods from the European Union as part of a long-running complaint over subsidies given to the European plane maker Airbus. The Office of the US Trade Representative said that the tariffs will take effect on October 18. Weak US data also rekindled investor concerns about slowing global growth. Japanese shares ended lower as weak US data offered fresh evidence of the damaging effects of the US-China trade war. Investors also reacted to the latest survey from Jibun Bank revealing that the services sector in Japan continued to expand in September, albeit at a slower rate. Though, Hong Kong shares ended up as media reports suggested that Hong Kong will use an emergency ordinance for the first time in more than a half a century in order to ban face masks at public gatherings. Meanwhile, markets in South Korea and China were closed for public holidays.