Post session; Quick review

Indian equity Markets traded with volatility throughout the day and somehow managed to end the session in green terrain on Wednesday, on the back of buying by participants. Key bourses made cautious start, as traders remain concerned with report that corporate India's merger and acquisition activity in the July-September quarter witnessed a downtrend with total deal value falling by more than half over the last year, largely owing to a slump in economic activity and lack of big ticket deals. After that, markets gained traction and traded in fine fettle, as traders reacted positively to report that the Department for Promotion of Industry and Internal Trade (DPIIT) is planning to set up a single window system to support foreign investors, who want to invest in India. The single-window system may have representatives from both the Centre and state governments. The system will help in getting all relevant approvals and clearances required by foreign investors. Meanwhile, the International Monetary Fund (IMF) sees Indian economic growth rebounding to around 7 per cent in the next financial year, supported by measures like monetary policy stimulus and corporate income tax cuts. Traders also took a note of Union Minister Nitin Gadkari’s statement that the government will soon make changes to the definition of a micro, small and medium enterprise (MSMEs) and hoped to generate five crore jobs in the MSME sector in five years. However, markets erased some of initial gains in late afternoon session as India Ratings & Research (Ind-Ra) believes that aggregate states’ fiscal deficit slippage to 2.9% of GDP in FY19 revised estimate (RE), from 2.6% in FY19 budget estimate (BE) (Ind-Ra forecast: 2.8%) is mainly due to an expansionary fiscal policy followed by the state governments. 

On the global front, Asian markets ended mostly lower on Wednesday amid renewed Brexit uncertainty after British lawmakers voted to reject a shortened time frame for approving the legislation related to Britain's withdrawal from the European Union. However, European markets were trading mostly in green. Back home, banking stocks were in focus with global rating agency Fitch’s report that banks would face a capital shortfall of about $50 billion (about Rs 3.5 lakh crore) in the event of a systemic crisis in the non-banking financial company (NBFC) sector.

The BSE Sensex ended at 39075.85, up by 112.01 points or 0.29% after trading in a range of 38866.08 and 39196.67. There were 20 stocks advancing against 11 stocks declining on the index. (Provisional)

The broader indices were ended mixed; the BSE Mid cap index fell 0.18%, while Small cap index was up by 0.24%. (Provisional)

The top gaining sectoral indices on the BSE were IT up by 1.23%, Auto up by 1.18%, Consumer Durables up by 0.87%, Power up by 0.81% and FMCG up by 0.59%, while, Telecom down by 3.08%, Oil & Gas down by 1.35%, Energy down by 1.35%, Realty down by 1.24% and Industrials down by 0.52% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were HCL Tech. up by 3.05%, Maruti Suzuki up by 2.63%, SBI up by 1.87%, TCS up by 1.46% and Hero MotoCorp up by 1.41%. (Provisional)

On the flip side, Bharti Airtel down by 3.79%, Vedanta down by 2.11%, Yes Bank down by 1.83%, ONGC down by 1.77% and Reliance Industries down by 1.43% were the top losers. (Provisional)

Meanwhile, global rating agency, Fitch Ratings in its latest study showed that amid systemic crisis in the non-banking financial company (NBFC) sector, banks may face a capital shortfall of about $50 billion (about Rs 3.5 trillion). As per a stress test conducted by Fitch, the credit profiles of the state-owned banks would come under significant pressure, and the weakest -- including those with Viability Ratings in the ‘b’ range -- would face heightened solvency risks without capital injections from the government.

It said ‘we assume that 30% of banks' NBFC exposure becomes non-performing. We view this as close to a worst-case scenario, but the figure also reflects the proportion of the sector that we believe is characterised by riskier business and financial profiles. We also assume 30% of banks' property exposure becomes non-performing, due to tight liquidity and weak sales.’ it also said the property development sector is particularly reliant on NBFC financing and added that these defaults would reverse recent progress that banks have made in reducing their non-performing asset (NPAs) ratios.

The study estimated that the banking system's gross NPA ratio would rise to 11.6% by 2020-21 from 9.3% at 2018-19. It said increased credit costs and a weaker economic environment would result in significant losses over the next two years. According to the study, the gap would rise to about $50 billion by FYE21 under the stress scenario. Banks would also be $10 billion short of the capital required to meet the regulatory minimum of 8% that is set to apply from end-March 2020. The stress test examines the potential impact on banks of liquidity pressures in the NBFC sector developing into widespread failures.

The CNX Nifty ended at 11611.25, up by 22.90 points or 0.20% after trading in a range of 11554.40 and 11651.60. There were 30 stocks advancing against 20 stocks declining on the index. (Provisional)

The top gainers on Nifty were HCL Technologies up by 3.56%, Eicher Motors up by 2.51%, Maruti Suzuki up by 2.19%, Titan Co up by 2.04% and JSW Steel up by 1.96%. (Provisional)

On the flip side, Adani Ports &SEZ down by 6.10%, Bharti Airtel down by 3.66%, Zee Entertainment down by 3.37%, Vedanta down by 2.18% and Grasim Industries down by 1.99% were the top losers. (Provisional)

European markets were trading mostly in green; UK’s FTSE 100 increased 31.50 points or 0.44% to 7,243.99 and Germany’s DAX increased 10.87 points or 0.09% to 12,765.56, while France’s CAC decreased 22.94 points or 0.41% to 5,634.75.

Asian markets ended mostly lower on Wednesday amid renewed Brexit uncertainty after UK lawmakers rejected Prime Minister Boris Johnson's plan to fast-track his Brexit accord through parliament. Chinese shares ended lower as investors kept an eye on developments surrounding Brexit and Sino-US trade talks. Moreover, Hong Kong shares ended down after a report saying China is drawing up a plan to remove Hong Kong's leader Carrie Lam after months of sometimes violent pro-democracy protests. Meanwhile, Hong Kong's consumer price index rose 3.2 percent year-on-year in September, slower than 3.5 percent increase in August, a government report showed. The latest inflation rate was the lowest since May, when it was 2.8 percent. Though, Japanese shares ended up as the yen held stable, while investors awaited the start of the corporate earnings season.