Sensex, Nifty end with minor gains in volatile session

Indian equity benchmarks settled marginally higher in a volatile session on Wednesday led by gains in index heavyweights Tech Mahindra, Titan and Nestle. Markets made a cautious start and fluctuated between green and red in first half of the session, as traders got anxious with Nobel Laureate Abhijit Banerjee’s statement that India is among the worst performing economies in the world and the government’s economic stimulus was inadequate to tackle the problem. But, he said that the country will see a revival in growth in the July-September quarter of the current fiscal. He said the country's economic growth was slowing down even before the Covid-19 pandemic hit. The sentiments remained in lackluster mood as private report stated that the steady rise in caseloads and the spillover effects of the strict lockdown measures will continue to undermine economic growth in the country. It said even if the growth takes the form of a V-shape, the level of Gross Domestic Product (GDP) will matter.

However, in the second half of the session, key gauges managed to trade in green terrain, as traders found support as the Reserve Bank of India (RBI) has extended by six months the additional flexibility provided to states to raise funds through market borrowing and overdraft, with an aim to help state governments tide over the financial problems triggered by the COVID-19 pandemic. Though, weak global market cues and rising Covid cases kept the investor sentiment subdued and gains in check. Meanwhile, the Securities and Exchange Board of India (Sebi) has extended the special dispensations given to companies wanting to go public. The regulator has said the validity of Sebi observations for initial public offerings (IPOs) expiring between October 1, 2020 and March 31, 2021 will be extended till March 31, 2021.

On the global front, Asian markets ended mostly lower on Wednesday as concerns over rising coronavirus infections and the uncertainty surrounding the U.S. election result offset data from China indicating a steady recovery for the economy. The latest survey from the National Bureau of Statistics showed that the manufacturing sector in China continued to expand in September, and at a faster rate, with a manufacturing purchasing managers index score of 51.5. That beat expectations for 51.2 and is up from 51.0 in August. It also moves further above the boom-or-bust line of 50 that separates expansion from contraction. European markets were trading lower, as revised data from the Office for National Statistics showed the U.K. economy contracted at a record pace in the second quarter though the decline was less severe than previously estimated. Due to the coronavirus containment measures, gross domestic product fell 19.8 percent sequentially. The rate was revised from a 20.4 percent fall estimated initially. However, separate reports showed German unemployment declined for a third month in September while retail sales rose much more than expected in August.

Back home, on the sectoral front, stocks related to Chemical sector were in focus as Chemicals & Fertilizers Minister D V Sadananda Gowda said it is a good time to invest in India's chemical sector that has huge growth potential. He also said the Indian Chemical and Petrochemical industry has huge potential to play a significant role by 2025 and the sector can alone contribute $300 billion to the GDP as compared to $160 billion at present. There was some buzz in banking stocks as the RBI deferred the implementation of the capital conservation buffer (CCB) requiring banks to set aside additional reserves of 0.625 percent by a further six months due to the COVID-19 pandemic.

Finally, the BSE Sensex rose 94.71 points or 0.25% to 38,067.93, while the CNX Nifty was up by 25.15 points or 0.22% to 11,247.55.

The BSE Sensex touched high and low of 38,236.34 and 37,828.11, respectively and there 14 stocks advancing against 16 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.05%, while Small cap index was up by 0.04%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.72%, FMCG up by 1.42%, Capital Goods up by 0.99%, Industrials up by 0.65% and Healthcare up by 0.45%, while Telecom down by 2.86%, Metal down by 1.92%, Oil & Gas down by 1.90%, Energy down by 0.82% and Realty down by 0.60% were the top losing indices on BSE.

The top gainers on the Sensex were Tech Mahindra up by 2.84%, Titan Company up by 2.83%, Nestle up by 1.92%, Hindustan Unilever up by 1.68% and HDFC Bank up by 1.57%. On the flip side, Bharti Airtel down by 3.34%, Tata Steel down by 2.77%, Indusind Bank down by 1.77%, Mahindra & Mahindra down by 1.07% and Sun Pharma down by 1.01% were the top losers.

Meanwhile, India Ratings and Ratings (Ind-Ra) in its latest report has said that the auto ancillary sector's revenue is likely to decline 16-20 percent in the current financial year (FY21), with both the domestic market as well as exports expected to see a contraction in demand. Also, it has maintained a negative outlook for the auto ancillary sector for the October-March period of 2020-21.

According to the report, auto ancillaries with high exposure to the commercial vehicle segment are expected to continue to be the worst impacted, about those with a higher two-wheeler, passenger vehicle, or tractor segment exposures. It said although demand from the after-market segment is also likely to remain subdued, it would be the least affected. However, it stated that the performance in the October-March period of 2020-21 is expected to be better than the previous half, as auto demand has shown a gradual improvement in both domestic and export markets. It added that a recovery to pre-COVID-19 levels is expected by the second half of this fiscal stoked by an improvement in demand from OEMs and exports.

Further, Ind-Ra expects auto ancillaries to record revenue growth of 12-15 percent y-o-y in 2021-22, as most auto ancillaries have taken cost-cutting measures to curtail fixed costs in FY21. However, it said lower operating leverage could constrain profitability margins by 200-250 basis points Year-on-Year. It has also maintained a negative outlook on its rated portfolio for 2020-21 based on the expectations of a continued weaker-than-envisaged operating performance and credit metrics amid a challenging economic environment.

The CNX Nifty traded in a range of 11,295.40 and 11,184.55 and there were 20 stocks advancing against 29 stocks declining, while 1 stock remains unchanged on the index.

The top gainers on Nifty were Grasim Industries up by 2.99%, Tech Mahindra up by 2.79%, Titan Company up by 2.55%, Nestle up by 1.93% and Dr. Reddys Lab up by 1.92%. On the flip side, BPCL down by 9.00%, Bharti Airtel down by 3.66%, Tata Steel down by 3.07%, JSW Steel down by 3.06% and IndusInd Bank down by 2.14% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 4.89 points or 0.08% to 5,892.61, France’s CAC fell 18.92 points or 0.39% to 4,813.15 and Germany’s DAX was down by 44.54 points or 0.35% to 12,781.28.

Asian markets ended mostly lower on Wednesday on concerns over uncertainty surrounding the election result in the world’s largest economy. During the debate Republican President Donald Trump and his Democratic rival Joe Biden battled fiercely over Trump's leadership on the corona virus pandemic, the economy and the integrity of the upcoming election. Further, lingering worries about the spread of corona virus infections too added pressure on market sentiment. Data from China showed that its factory activity expanded at a faster pace in September, bolstering a steady recovery for the Chinese economy. The manufacturing sector in China continued to expand in September, albeit at a slower rate, the latest survey from Caixin revealed with a manufacturing PMI score of 53.0, down from 53.1 in August. Markets in Seoul were closed for Chusok - Full Moon Festival holiday.