Markets end lower after two-day record rally

Snapping their two-day record-setting streak, Indian equity benchmarks ended Friday’s trade on a pessimistic note with losses of more than half a percent, as investors were cautious ahead of the release of the Gross Domestic Product (GDP) data for the September quarter slated for later in the day. Markets traded in negative note since the beginning, amid discouraging cues from global peers. Sentiments remained dampened with CRISIL’s report that for states, balancing the fiscal math while continuing to spend on infrastructure capital expenditure (capex) will be challenging. Selling got intensified in the afternoon session, as sentiments on the street weakened further with a private report that India's economy probably expanded at its weakest pace in more than six years in the quarter to September, as consumer demand and private investment weakened further and a global slowdown hit exports. Traders also took a note of chief Economic Adviser K V Subramanian’s statement that the cut in corporate tax rate was required to boost investments as the virtual cycle that spurs growth in the economy has not been functioning as expected for the last few quarters.

On the global front, Asian markets ended mostly lower on Friday, while European markets were trading mostly in red as investors grew fearful that China's retaliation to a US law backing Hong Kong protesters could threaten to derail negotiations on a trade truce between the two countries. Back home, power stocks remained in focus with the government’s statement that a total 31,696 Mega Watt (MW) of grid connected solar power generation capacity has been set up in the country till October 2019. Besides, shipping sector were in focus with Minister of State for Shipping Mansukh Mandaviya stating that the government has prepared a roadmap to increase the country's port capacity to over 3,300 million tonnes per annum (MTPA) by 2025. The move is part of the National Perspective Plan (NPP) for the Sagarmala Programme.

Finally, the BSE Sensex lost 336.36 points or 0.82% to 40,793.81, while the CNX Nifty was down by 95.10 points or 0.78% to 12,056.05.

The BSE Sensex touched high and low of 41,143.22 and 40,664.18, respectively and there were 3 stocks advancing against 28 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.16%, while Small cap index was up by 0.47%.

The top gaining sectoral indices on the BSE were Telecom up by 2.54%, Realty up by 0.90%, Utilities up by 0.44% and Power up by 0.40%, while Energy down by 1.46%, Metal down by 1.30%, Auto down by 1.15%, Oil & Gas down by 0.97% and Capital Goods down by 0.94% were the top losing indices on BSE.

The few gainers on the Sensex were Bharti Airtel up by 1.28%, HDFC Bank up by 0.70% and NTPC up by 0.35%. On the flip side, Tata Motors - DVR down by 2.79%, Yes Bank down by 2.50%, Hindustan Unilever down by 2.37%, Mahindra & Mahindra down by 2.12% and SBI down by 2.03% were the top losers.

Meanwhile, the government has sought Parliament approval for additional spending of Rs 21,246.16 crore in the current fiscal ending March 2020. Finance Minister Nirmala Sitharaman has tabled the first batch of Supplementary Demands for Grants for the financial year 2019-20 in both the Houses of Parliament saying of the total spend, cash outgo will be about 19,000 crore. The government has sought Rs 8,820.62 crore as grants for Union territories Jammu & Kashmir and Ladakh in lieu of the erstwhile state's share of 14th Finance Commission Award. Another Rs 4,557 crore will be infused in the IDBI Bank through recapitalisation bonds, while Rs 2,500 crore will go into recapitalsation of state-owned insurance companies.

The Union Budget for FY20, presented in July, had estimated a total government spending of Rs 27.86 lakh crore, excluding expenses of public-sector companies. Besides, the finance minister sought Rs 1,500 crore to meet the additional expenditure towards payment of pay and allowance of armed forces and another Rs 666 crore for meeting expenditure of Department of Space. As much as Rs 3,387.46 crore has been provided in the supplementary demands for grants for meeting expenditure towards salaries and cost of the ration of police. About Rs 1,000 crore has been sought for providing additional funds under the scheme for free LPG connection to poor households.

A sharp cut in corporate tax rates and lackluster growth in goods and services tax collections, amid a marked downturn in the economy, have squeezed government finances this year. The Indian economy expanded by 5% in April-June, its slowest annual pace since 2013 and the projections are that it may have slowed down further in the second quarter, making six consecutive quarters of slowing growth, a first since 2012. This despite a recent series of fiscal stimulus, including a reduction in corporate tax rates. Growth outlook has weakened sharply this year, with a crunch that started with the non-banking finance institutions spreading to retail businesses, car-makers, home sales and heavy industries. So far, the government has maintained that it will stick to the fiscal deficit target of 3.3% of GDP for 2019-20 and has no plans to revise it.

The CNX Nifty traded in a range of 12,147.40 and 12,017.40. There were 8 stocks advancing against 42 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 7.68%, Adani Ports & SEZ up by 2.54%, Bharti Airtel up by 1.33%, HDFC Bank up by 0.76% and NTPC up by 0.69%. On the flip side, Zee Entertainment down by 5.77%, Yes Bank down by 2.50%, Hindustan Unilever down by 2.48%, SBI down by 2.13% and Dr. Reddy’s Lab down by 2.11% were the top losers.

European markets were trading mostly in red; UK’s FTSE 100 decreased 9.75 points or 0.13% to 7,406.68 and Germany’s DAX fell 19.99 points or 0.15% to 13,225.59, while France’s CAC increased 2.88 points or 0.05% to 5,915.60.

Asian markets ended mostly lower on Friday on account of lack of overnight cues from Wall Street which was closed for the Thanksgiving holiday. Meanwhile, investors remained cautious amid worries that tensions between the US and China over Hong Kong could delay a potential ‘phase one’ trade deal. Japanese shares ended lower after the release of weak Japanese data. Japan reported that its factory output fell 4.2% in October, much worse than forecast and the biggest month-on-month drop since January 2018. The unemployment rate for Japan remained unchanged as expected in October, a separate communiqué revealed.