Indices snap 8-day winning streak

After rallying for eight sessions in a row, Indian equity benchmarks took a breather on Thursday as it ended around half percent lower, as investors' booked profits in banking, financial services, utilities and energy stocks amid lackluster global cues. Markets made negative start and stayed in red for whole day, as traders were concerned with the RBI’s statement that the GDP is likely to contract by 8.6 percent for the July-September period, which means India will enter into a recession for the first time in history in the first half of this fiscal with two successive quarters of negative growth due to the COVID-19 pandemic. Some concerns also came with rating agency ICRA’s report that the aggregate debt of 12 major states is estimated to worsen significantly, and their capital spending might decline sharply because of lower-than-expected goods and services tax (GST) revenue and shortfall in Centre’s devolution. It added that this could lead to a 1-2 per cent contraction in Q4FY21.

Weak trade continued over the Dalal Street in second half of the session, as traders remained on sidelines ahead of the macro economic data -- industrial production and inflation data -- scheduled to be announced later in the day. Sentiments remained down-beat even after Finance Minister Nirmala Sitharaman announced 12 measures under 'AtmanirbharBharat 3.0' to revive the economy. She also said Indian economy is seeing a 'strong recovery’ taking root in the economy, as seen by increased goods and service tax collections and other metrics. The new announcements comes a day after the government approved a Rs 1.45-trillion package by extending the production-linked incentive (PLI) scheme to 10 more sectors. The latest approval is in addition to the already announced Rs 51,311-crore PLI for three sectors. With this, the total incentives under the PLI schemes come to Rs 2 trillion.

On the global front, Asian markets ended mostly lower on Thursday, as investors fretted over a continued surge in virus cases in the U.S. and Europe as well as different logistical challenges in distributing vaccines for Covid-19. Besides, a government report showed Japan core machinery orders declined more than expected in September, weighing on the prospects of a sustained recovery in business investment. Core machinery orders declined 4.4 percent on a monthly basis, in contrast to a 0.2 percent rise in August. This was the first fall in three months and worse than economists' forecast of 0.7 percent drop. Year-on-year, core machinery orders were down 11.5 percent versus an expected fall of 11.6 percent. European markets were trading lower, as confirmed cases of Covid-19 continued to rise globally and data showed the U.K. economy grew by a slower than expected pace in September from August, even before the latest restrictions on businesses.

Back home, on the sectoral front, aviation stocks were in focus with Civil Aviation Minister Hardeep Singh Puri’s statement that the cap on the number of domestic flights that Indian airlines are permitted to operate was increased from 60 per cent to 70 per cent of their pre-COVID levels. There was some reaction in oil & gas sector stocks as OPEC said global oil demand will rebound more slowly in 2021 than previously thought because of rising coronavirus cases, hampering efforts by the group and its allies to support the market.

Finally, the BSE Sensex fell 236.48 points or 0.54% to 43,357.19, while the CNX Nifty was down by 58.35 points or 0.46% to 12,690.80.

The BSE Sensex touched high and low of 43,543.96 and 43,127.55, respectively and there were 13 stocks advancing against 17 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.50%, while Small cap index was up by 1.20%.

The top gaining sectoral indices on the BSE were FMCG up by 1.39%, Capital Goods up by 1.33%, Industrials up by 1.11%, Realty up by 0.83% and Basic Materials up by 0.82%, while Bankex down by 2.05%, Finance down by 1.01%, Utilities down by 0.74%, Energy down by 0.73% and Oil & Gas down by 0.30% were the top losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 2.89%, ITC up by 1.43%, Larsen & Toubro up by 1.31%, Bajaj Finserv up by 1.06% and Tech Mahindra up by 0.81%. On the flip side, SBI down by 3.16%, Kotak Mahindra Bank down by 2.91%, Indusind Bank down by 2.41%, NTPC down by 2.31% and ICICI Bank down by 2.10% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) official has said that the country’s GDP is likely to contract by 8.6 percent for second quarter of current financial year (Q2FY21), which means India will enter into a recession for the first time in history in the first half of this fiscal with two successive quarters of negative growth due to the COVID-19 pandemic.

The pandemic-induced lockdowns had led to a steep contraction of 23.9 percent in the GDP for the April-June quarter as compared to the same period a year ago. The RBI has estimated that the economy will contract by 9.5 percent for the full fiscal year. India has entered a technical recession in the first half of 2020-21 for the first time in its history with Q2 2020-21 likely to record the second successive quarter of GDP contraction, as per the article titled 'Economic Activity Index', authored by Pankaj Kumar of the Monetary Policy Department.

It, however, added that the contraction is ebbing with gradual normalisation in activities and expected to be short-lived. It said the index is constructed from 27 monthly indicators using a dynamic factor model and suggests that the economy rebounded sharply from May/June 2020 with the reopening of the economy, with industry normalising faster than contact-intensive service sectors.

The CNX Nifty traded in a range of 12,741.15 and 12,624.85 and there were 24 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Hindustan Unilever up by 3.33%, Grasim Industries up by 2.76%, Shree Cement up by 2.70%, Hindalco up by 1.91% and ITC up by 1.43%. On the flip side, SBI down by 3.05%, Kotak Mahindra Bank down by 2.85%, Coal India down by 2.66%, Indusind Bank down by 2.60% and NTPC down by 2.10% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 24.63 points or 0.39% to 6,357.47, France’s CAC decreased 39.67 points or 0.73% to 5,405.54 and Germany’s DAX decreased 67.82 points or 0.51% to 13,148.36.

Asian markets ended mostly lower on Thursday as continued surge in corona virus infections in the US and Europe fueled doubts about a quick recovery in the global economy. Chinese shares ended lower after the country’s new bank loans fell more than expected on tightened loan quotas. Data from the People’s Bank of China showed Lenders issued 689.8 billion yuan in new yuan loans last month down from 1.9 trillion yuan in September and well short of expectations for 800 billion yuan. Meanwhile, the United States slammed China for the recent disqualification of four Hong Kong opposition lawmakers and said that sanctions will continue to be imposed on those responsible for extinguishing Hong Kong’s freedom. Japanese share ended higher as investors switched back to technology stocks, while positive sentiments were capped by data showing Japan's core machinery orders fell for the first time in three months in September and at a faster-than-expected pace.