Post Session: Quick Review

Indian equity benchmarks altered between green and red for most part of the day and witnessed sharp fall in late afternoon deals which forced to close the session near day’s low. That marked an end to a rally in the markets that lasted for six sessions in a row. Indices made cautious start with Finance Minister Nirmala Sitharaman’s statement that the ongoing trade wars and protectionism have generated uncertainties and will ultimately impact the flow of capital, goods and services. After that, markets witnessed some buying in afternoon deals as traders found some solace with commerce and industry minister Piyush Goyal’s statement that in a clear sign that India and the US are close to finding common ground on their outstanding trade issues that started looking intractable. Though, the buying proved short-lived as markets once again dropped into red in late trade, as anxiety remained among the investors with a report that as many as 360 infrastructure projects, each worth Rs 150 crore or more, have shown cost overruns to the tune of over Rs 3.88 lakh crore owing to delays and other reasons. The market participants overlooked the Retirement fund body, Employment Provident Fund Organisation’s (EPFO) latest ‘Provisional Estimate of Net Payroll’ data report showing that India created 10,86,113 new jobs in the month of August 2019.

On the global front, Asian markets ended higher on Tuesday, while European markets were trading in green, on growing optimism that China and the US will sign a partial trade deal next month. Back home, majority of auto stocks ended lower as automobile dealers' body Federation of Automobile Dealers Associations (FADA) said passenger vehicle retail sales in September declined 20.1 percent to 1,57,972 units against the same period last year as the onset of festival season and never-seen-before discounts failed to lift demand.

The BSE Sensex ended at 38975.59, down by 322.79 points or 0.82% after trading in a range of 38924.85 and 39426.47. There were 16 stocks advancing against 15 stocks declining on the index.(Provisional)

The broader indices ended mixed; the BSE Mid cap index fell 0.09%, while Small cap index was up by 0.52%.(Provisional)

The top gaining sectoral indices on the BSE were Healthcare up by 1.67%, Consumer Durables up by 1.56%, Bankex up by 1.04%, Oil & Gas up by 0.81% and FMCG up by 0.69%, while IT down by 7.14%, TECK down by 6.53%, Telecom down by 2.44%, Metal down by 0.51% and Auto down by 0.38% were top the losing indices on BSE.(Provisional)

The top gainers on the Sensex were ICICI Bank up by 3.06%, Bajaj Auto up by 1.17%, Power Grid up by 1.14%, HDFC up by 1.08% and Hindustan Unilever up by 1.08%.(Provisional)

On the flip side, Infosys down by 16.31%, Tata Motors - DVR down by 4.23%, Tata Motors down by 3.37%, Bharti Airtel down by 2.95% and HCL Technologies down by 2.65% were the top losers. (Provisional)

Meanwhile, Supporting India's recent decision to reduce corporate income tax, the International Monetary Fund (IMF) said that it has a positive impact on investment. Though, agency also said India should address continued fiscal consolidation and secure long-term stability of the fiscal conditions. IMF’s Director, Asia and Pacific Department, Changyong Rhee said ‘we believe India still has limited fiscal space so they have to be careful. We support their corporate income tax cut because it has a positive impact on investment.’ He said the economy is expected to grow at 6.1% this fiscal year, picking up to 7.0% in 2020, following a marked slowdown in the last two quarters in India. He added that the monetary policy stimulus and the announced corporate income tax cut are expected to help revive investment.

IMF’s Deputy Director, Asia and Pacific Department, Anne-Marie Gulde-Wolf said India should address the non-bank financial sector issues. She said ‘while there have been improvements that have been put in motion, including efforts to recapitalise the state banks, the issue of non-bank financial institution remains partly unresolved and regulatory equity is one of the issues that needs to be achieved.’ She added that government is aware of it. She also said ‘we also had a FSAP. So there are issues working at that and this is something that is why not yet fully achieved, but is entrained. While there are problems at this stage, increased attention to lending practices of non-bank financial institutions continue to be very important.’

She further said India overall has a fairly high level of debt and fiscal consolidation needs to be a priority. However, implementing fiscal consolidation in the context of a federal system is much more complicated. The level of fiscal structural issues and challenges are different in different states. So one of the ways in which the IMF is engaged in this question is it has a regional training institute that has started working with the individual states on strengthening fiscal management at the state level. In the context of surveillance engagement with India, she said, the IMF is increasingly placing emphasis on the need to better coordinate the fiscal state level activities and fiscal activities. But, she said it is a concern that the authorities are taking serious and are working at.

The CNX Nifty ended at 11589.90, down by 71.95 points or 0.62% after trading in a range of 11573.65 and 11714.35. There were 27 stocks advancing against 23 stocks declining on the index. (Provisional)

The top gainers on Nifty were Dr. Reddys Lab up by 3.49%, ICICI Bank up by 3.15%, BPCL up by 2.38%, Titan Co up by 2.28% and Cipla up by 2.14%. (Provisional)

On the flip side, Infosys down by 16.72%, Tata Motors down by 4.02%, Bharti Airtel down by 3.25%, Bajaj Finserv down by 3.16% and HCL Tech. down by 2.78% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 increased 42.86 points or 0.6% to 7,206.50, France’s CAC rose 5.22 points or 0.09% to 5,653.57 and Germany’s DAX was up by 40.91 points or 0.32% to 12,788.87.

Asian markets ended higher on Tuesday, supported by optimism over ongoing trade talks between the United States and China, the world's two largest economies. Trump and Chinese President Xi Jinping are set to participate in the Asia-Pacific Economic Cooperation meetings in Chile during mid-November, where many are anticipating first phase of the trade deal to be signed between the two countries. Hopes of upbeat earnings results from major companies this week also boosted sentiment. Chinese shares ended higher after official data showed house prices in majority of the Chinese cities increased in September. On a monthly basis, house prices increased in 53 cities out of 70. Meanwhile, Japanese markets are closed for a public holiday.