Benchmarks end sharply lower amid weak global cues

Falling for third session in a row, Indian equity benchmarks registered sharp losses of over two percent on Monday, on account of heavy selling in front line blue chip counters. Markets made flat-to-positive start, as traders took some support with CII’s business outlook survey showing that India Inc’s business sentiment has improved during July-September quarter as the government gradually unlocked the economy and business activity resumed. Some support also came with Commerce and Industry Minister Piyush Goyal’s statement that several multinational firms in sectors such as electronics, retail, e-commerce, and automotive, among others, have shown interest in shifting their base to India. He also said the government is working hard to institutionalize more investor friendly reforms to support and facilitate investments into India. After that, key gauges struggled to find direction and traded near neutral lines, as surging domestic cases of the novel coronavirus and sluggish trade across Asian equities kept investors cautious.

Frontline indices came under heavy selling pressure in late afternoon session and ended near day’s low, as traders got anxious with after Reserve Bank of India’s data has showed that country's foreign exchange reserves declined by $353 million to $541.660 billion in the week ended September 11. During the reporting week, the fall in reserves was due to a decline in foreign currency assets (FCAs), a major component of the overall reserves. Investor sentiment also took a hit after a report released by the Finance Ministry stated that India's total external debt increased by 2.8 percent to $558.5 billion at the end of March mainly on account of a rise in commercial borrowings. The external debt stood at $543 billion at end-March 2019. Traders overlooked report that the COVID-19 pandemic has provided a unique opportunity to both India and Japan to further strengthen economic ties by enhancing cooperation in areas like software development, modern technology, infrastructure and manufacturing.

On the global front, Asian markets ended lower on Monday, as investors kept a watchful eye on U.S. fiscal stimulus negotiations, Covid-19 vaccine development and escalating tensions between Washington and Beijing. European markets were trading lower, as surging cases of Covid-19 in Europe prompted renewed lockdown measures in some countries and cast doubt over the economic recovery. Back home, on the sectoral front, majority of banking stocks fell as domestic rating agency India Ratings and Research revised its outlook on the country's banking sector to negative for the second half of this fiscal from stable due to the likely increase in stressed assets, credit costs and weak earnings. Stocks related to leather sector were in focus with Council for Leather Exports (CLE) Chairman Aqeel Ahmed Panaruna said the country's exports of leather and footwear items are expected to see continuous improvement in the growth rate in the coming months on account of increasing demand in global markets.

Finally, the BSE Sensex fell 811.68 points or 2.09% to 38,034.14, while the CNX Nifty was down by 254.40 points or 2.21% to 11,250.55.

The BSE Sensex touched high and low of 38,990.76 and 37,938.53, respectively and there were 3 stocks advancing against 27 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 3.43%, while Small cap index was down by 3.61%.

The top losing sectoral indices on the BSE were Telecom down by 5.77%, Realty down by 5.70%, Metal down by 4.75%, Auto down by 4.03% and Healthcare down by 3.87%, while there were no gainers on the BSE sectoral front.

The top gainers on the Sensex were Kotak Mahindra Bank up by 0.86%, Infosys up by 0.67% and TCS up by 0.57%. On the flip side, Indusind Bank down by 8.67%, Bharti Airtel down by 5.81%, Tata Steel down by 5.58%, ICICI Bank down by 5.15% and Mahindra & Mahindra down by 4.90% were the top losers.

Meanwhile, Minister of State for Finance Anurag Singh Thakur has said that the total non-tax revenue collected by the Central Government, so far, during this financial year (FY21) is Rs 84,023.78 crore (Provisional). He said the total corporate tax collection so far during FY21 is Rs 95,533 crore, while the total GST collection in the current financial year is Rs 3,59,112 crore. Besides, he said the total market borrowings of the central government so far this financial year stands at Rs 7.06 lakh crore.

Thakur has stated that the overall expenditure of government stood at Rs 10,54,209 crore as on July 31, 2020. He also listed out few expenditure items related to fighting COVID-19 pandemic, including Rs 8,575.17 crore under 'India COVID-19 Emergency Response and Health System Preparedness package' to provide support to all states and UT governments for COVID-19 management, National Centre of Disease Control (NCDC), among others, by Ministry of Health & Family Welfare. The expenditure also included Rs 20.81 crore by Ministry of Ayurveda, Yoga and Naturopathy Unani, Siddha and Homoeopathy (AYUSH), Rs 102.88 crore by Ministry of Home Affairs and Rs 19.34 crore by Ministry of Civil Aviation.

The minister further said Rs 2,454.56 crore was spent on procurement of masks and PPE Kits for healthcare workers and other frontline workers by Ministry of Health & Family Welfare; Rs 1.35 crore by Ministry of Ayurveda, Yoga and Naturopathy Unani, Siddha and Homoeopathy (AYUSH) and Rs 58.05 crore by Ministry of Home Affairs. Apart from the specific expenditure items, he noted that two packages, one amounting to Rs 1.70 lakh crore under Pradhan Mantri Garib Kalyan Yojana and AtmaNirbhar Programme, being a special economic and comprehensive package amounting to Rs 20 lakh crore have been announced to fight COVID-19. He added that the total capital expenditure during the current financial year 2020-2021 is Rs 1,11,849 crore as on July 31, 2020.

The CNX Nifty traded in a range of 11,535.25 and 11,218.50 and there were 3 stocks advancing against 47 stocks declining on the index.

The few gainers on Nifty were TCS up by 0.78%, Infosys up by 0.47%, Kotak Mahindra Bank up by 0.25%. On the flip side, Indusind Bank down by 8.55%, Tata Motors down by 7.81%, Hindalco down by 7.24%, Tata Steel down by 6.17% and JSW Steel down by 5.98% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 202.69 points or 3.37% to 5,804.36, France’s CAC fell 159.18 points or 3.2% to 4,819.00 and Germany’s DAX was down by 408.93 points or 3.12% to 12,707.32.

Asian markets ended down on Monday on concerns about the global economic recovery due to a resurgence of corona virus infections in Europe, with a lack of US stimulus also weighing on sentiment. Chinese shares ended lower after Chinese central bank (PBOC) left its benchmark lending rate for corporate and household loans unchanged for the fifth straight month. HSBC and Standard Chartered's Hong Kong shares settled down after Private reports that they and other banks moved large sums of allegedly illicit funds over nearly two decades despite red flags about the origins of the money. Meanwhile, Japanese market was closed for a holiday.