Indices snap 2-day gaining trend

Snapping a two-day rising streak, Indian equity benchmarks ended with losses of more than half percent each on Thursday, as border tensions with China and a negative trend in global peers, following US Fed's caution on economic recovery, dented investor appetite. The benchmarks staged a gap down opening as the Organisation for Economic Co-operation and Development (OECD) in its Interim Economic Outlook report forecast a deeper contraction of 10.2% for India in the current fiscal, surpassing its June estimate of -7.3% in the event of a second wave of infections. Traders remain concerned with a report stated that total tax collection of the Centre, including advance tax collection for the second quarter, fell 22.5% to Rs 2,53,532.3 crore till September 15 of the current fiscal as compared to the year-ago period.

Key gauges continued to show a sluggish trend in afternoon session, with private report stated that India’s GDP is likely to contract by 8.6 percent in FY21 as against its earlier prediction of 5.8 percent, citing factors including the modest government response to the crisis for its estimate. Market participants overlooked Commerce and Industry Minister Piyush Goyal’s statement that the government is in the process of bringing out a strategy paper on boosting industrial growth which will be a road map for all businesses in the country. He said the government is in the process of rationalising the existing central labour laws into four labour codes -- on wages; industrial relations; occupational safety, health and working conditions; and social security by simplifying, amalgamating and rationalising the relevant provisions of the existing central labour laws.

On the global front, Asian markets ended in red on Thursday amid worries about the strength of the economic recovery after the U.S. Federal Reserve left interest rates unchanged and signaled rates are likely to remain at near-zero levels through 2023. In his post monetary-meeting, Federal Reserve Chairman Jerome Powell cautioned that the pace of economic recovery is expected to slow and urged for fiscal stimulus from Congress to sustain the economic recovery. Meanwhile, the Organisation for Economic Cooperation and Development or OECD has projected a smaller economic contraction for Australia this year, but lowered its growth forecast for Australia in 2021. European markets were trading lower, as Brexit woes and concerns about surging coronavirus cases weighed on the markets. Back home, on the sectoral front aviation stocks were in focus with DGCA data showing that passenger load factor crossed 60 per cent in August for the first time since the resumption of domestic flights in May this year. Industry-wise load factor or seat occupancy was 63.2 per cent in August. Retail industry’s stocks were also buzzing as a joint report by industry body Assocham and Primus Partners stated that the Indian retail industry is expected to driven by data-led opportunities and artificial intelligence.

Finally, the BSE Sensex fell 323.00 points or 0.82% to 38,979.85, while the CNX Nifty was down by 88.45 points or 0.76% to 11,516.10.

The BSE Sensex touched high and low of 39,234.81 and 38,926.34, respectively and there were 3 stocks advancing against 26 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.24%, while Small cap index was down by 0.53%.

The few gaining sectoral indices on the BSE were Healthcare up by 0.46%, IT up by 0.23% and TECK up by 0.07%, while Realty down by 1.87%, Metal down by 1.27%, Bankex down by 1.18%, Capital Goods down by 1.17% and Power down by 1.15% were the losing indices on BSE.

The top gainers on the Sensex were HCL Technologies up by 2.36%, Infosys up by 0.96% and Maruti Suzuki up by 0.77%. On the flip side, Bajaj Finserv down by 2.23%, Power Grid down by 2.07%, Larsen & Toubro down by 1.70%, TCS down by 1.70% and ICICI Bank down by 1.56% were the top losers.

Meanwhile, RBI Governor Shaktikanta Das has said that economic recovery is not yet fully entrenched and that the central bank is battle ready to take appropriate measures to support growth. He stated that India's economy has suffered its worst slump on record in April-June quarter of current fiscal year (Q1FY21), with the GDP contracting by 23.9% as the coronavirus-related lockdowns weighed on the already-declining consumer demand and investment. Nevertheless, he noted that high frequency indicators of agricultural activity, the purchasing managers' index that is PMI for manufacturing and certain private estimates on unemployment point to some stabilisation of economic activity in the second quarter of the current year, while of course contractions in several other sectors are also simultaneously easing.

However, Das said that the economic recovery was not yet fully entrenched and also that the recovery is likely to be gradual. He said the recovery is, however, not yet fully entrenched and moreover, in some sectors, the uptick, which was noticed in June and July they appear to have levelled off. It also said by all indications the recovery is likely to be gradual as efforts towards the reopening of the economy are confronted with rising infections.

At the same time, RBI Governor assured the industry that the RBI stands battle ready and whatever measures are required will be taken to support liquidity, growth and control price rise. According to him, the immediate policy response to COVID-19 in the country has been to prioritise the stabilisation of the economy and support quick recovery policies for durable and sustainable high growth in the medium term post the coronavirus. Besides, he said financial market conditions in India have eased significantly across segments in response to the front-loaded cuts in the policy repo rate and large system-wide as well as targeted infusion of liquidity by the central bank. 

The CNX Nifty traded in a range of 11,587.20 and 11,498.50 and there were 12 stocks advancing against 38 stocks declining on the index.

The top gainers on Nifty were Dr. Reddys Lab up by 4.22%, HCL Technologies up by 2.25%, Zee Entertainment up by 2.25%, Infosys up by 1.01% and Maruti Suzuki up by 0.74%. On the flip side, Hindalco down by 4.33%, Tata Motors down by 2.54%, Shree Cement down by 2.39%, Bajaj Finserv down by 2.20% and Adani Ports and SEZ by 2.08% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 46.03 points or 0.76% to 6,032.45, France’s CAC decreased 27.66 points or 0.55% to 5,046.76 and Germany’s DAX decreased 59.69 points or 0.45% to 13,195.68.

All the Asian markets ended lower on Thursday after the US Federal Reserve left interest rates unchanged and signaled that rates are likely to remain at near-zero levels through 2023, raising concerns about the recovery in the world's largest economy. Japanese shares ended lower, despite the Bank of Japan maintained its massive monetary policy stimulus. In its monetary policy statement, the Bank of Japan noted that the economy has started to pick up but remained in a severe situation due to the impact of the corona virus pandemic at home and abroad. Meanwhile, South Korean shares extended losses to a second consecutive day due to profit booking.