Benchmark indices end Tuesday's volatile session on flat note

Indian equity benchmarks, after swinging between gains and losses, ended flat with negative bias on Tuesday, amid lack of directional cues from domestic as well as global markets. Key gauges made an optimistic start and managed to trade above neutral lines in morning session, as the Reserve Bank of India (RBI) has decided to extend by six months the enhanced borrowing facility provided to banks to meet liquidity shortage till March 31, 2021 amid the ongoing economic woes created by the coronavirus pandemic. Traders also took some solace as the Ministry of Corporate Affairs has extended the duration of several schemes till 31.12.2020 in view of the continued disruption caused due to the COVID-19 pandemic in certain parts of the country and to provide greater Ease of Doing Business.

However, volatility struck bourses in late morning session, as ratings agency ICRA revised its forecast for the contraction in India's FY21 GDP to 11 per cent from its earlier assessment of 9.5 per cent. The ratings agency cited the elevated levels of Covid-19 infections at the end of Q2FY21. Domestic investors also turned cautious as the Reserve Bank has postponed the meeting of the Monetary Policy Committee (MPC), the all-important interest rate-setting panel, over a possible lack of quorum as the appointment of independent members is delayed. Trading sentiments remained in lackluster mood in late afternoon deals after the World Bank said the coronavirus pandemic is expected to lead to the slowest growth in more than 50 years in East Asia and the Pacific as well as China, while up to 38 million people are set to be pushed back into poverty. The bank said the region this year is projected to grow by only 0.9%, the lowest rate since 1967.

On the global front, Asian markets were trading mixed, as investors pinned hopes on a new U.S. coronavirus relief bill and looked ahead to the first U.S. presidential debate between Republican incumbent Donald Trump and Democratic challenger Joe Biden, set to take place later today. European markets were trading lower, as investors looked for cues from the final round of Brexit trade talks as well as the upcoming U.S. presidential debate. The European Union and Britain have indicated that a post-Brexit deal was still some way off as negotiations recommenced over implementing their Withdrawal Agreement. Covid-19 news flow and developments on the latest U.S. stimulus measures also remained on investors' radar. Back home, on the sectoral front, defence stocks were in focus after the government unveiled a new Defence Acquisition Procedure with a focus on significantly boosting indigenous production. Under the new policy, the offset guidelines have also been revised facilitating preference to defence majors offering to manufacture products in India over relevant components. Select telecom stocks ended in green as outgoing TRAI chief RS Sharma said the telecom sector, backed by strong demand for services and its ability to adapt swiftly to changes even amid disruptions, has a bright future ahead.

Finally, the BSE Sensex fell 8.41 points or 0.02% to 37,973.22, while the CNX Nifty was down by 5.15 points or 0.05% to 11,222.40.

The BSE Sensex touched high and low of 38,235.94 and 37,831.35, respectively and there 10 stocks advancing against 20 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.16%, while Small cap index was down by 0.01%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.97%, Metal up by 1.81%, Energy up by 0.89%, Basic Materials up by 0.87% and Consumer discretionary up by 0.56%, while Telecom down by 2.13%, Utilities down by 1.53%, FMCG down by 1.42%, Bankex down by 1.25% and Power down by 0.91% were the top losing indices on BSE.

The top gainers on the Sensex were Ultratech Cement up by 3.08%, TCS up by 2.55%, Tata Steel up by 2.51%, Titan Company up by 2.48% and HDFC up by 1.83%. On the flip side, ONGC down by 3.82%, Indusind Bank down by 3.37%, Power Grid down by 2.89%, Axis Bank down by 2.82% and HCL Technologies down by 2.69% were the top losers.

Meanwhile, domestic rating agency ICRA has further revised down its Gross Domestic Product (GDP) estimate for the country and now expects the Indian economy to contract by 11 percent in FY21. The agency, which was earlier estimating a contraction of 9.5 percent, said the revision has been done as the rate of new COVID-19 infections remains elevated. It can be noted that some analysts have pegged the economy to contract by up to 14 percent after the release of the official GDP data for Q1FY21 which showed a 23.9 percent decline. The RBI is yet to give its estimate on the GDP and has been maintaining that it will be contracting.

The rating agency has stated that if the number for Q1FY21 gets revised down after data for the small businesses and less formal sectors becomes available, the overall GDP outcome for FY21 could be even worse than estimated by the 11 percent contraction. For the ongoing second quarter, it is maintaining its earlier estimate of a contraction of 12.4 percent. Besides, it has revised its projections for Q3FY21 and Q4FY21 and now expects contractions of 5.4 percent and 2.5 percent, respectively, in the two quarters which will imply a full year contraction of 11 percent.

As per the report, construction, trade, transport, hotels, communications and services related to broadcasting will recover with the longest lag and continue to underperform the rest of the economy. Activity in some sectors, especially those like travel, tourism and recreation, where social distancing is difficult, will depress economic activity. Additionally, it said the continued economic uncertainty and health concerns would result in a prolonged impact on consumption and investment decisions. It added that the revenue shock being experienced by the Central and the state governments would limit the extent of fiscal support that may be forthcoming and result in protracted fears about deferral of both the capex and the release of timely payments.

The CNX Nifty traded in a range of 11,305.40 and 11,181.00 and there were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 5.31%, Ultratech Cement up by 3.32%, Hero MotoCorp up by 2.85%, Titan Company up by 2.66% and TCS up by 2.49%. On the flip side, UPL down by 3.49%, ONGC down by 3.48%, Indusind Bank down by 3.46%, Power Grid down by 3.21% and Axis Bank down by 2.79% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 28.31 points or 0.48% to 5,899.62, France’s CAC fell 9.19 points or 0.19% to 4,834.08 and Germany’s DAX was down by 61.33 points or 0.48% to 12,809.54.

Asian Markets ended mixed on Tuesday as investors looked ahead to the first US presidential debate between Donald Trump and Joe Biden set for later in the day and also eyed progress of a fiscal stimulus package in Washington. Further, renewed concerns about a surging corona virus cases around the globe and uncertainty about the presidential election added more pressure on market sentiment. Japanese shares ended marginally higher, tracked by Wall Street’s gains overnight. However, shares in Japanese telecoms giant Nippon Telegraph & Telephone (NTT) lost 2.9 percent on reports that it is preparing for a takeover of its mobile phone carrier NTT DoCoMo. Report showed overall consumer prices in the Tokyo area were up 0.2 percent year-on-year in September. That was shy of expectations for an increase of 0.3 percent, which would have been unchanged from the August reading. South Korean shares closed higher ahead of a three-day Chuseok holiday, with lower domestic corona virus infections aiding sentiment.