Post Session: Quick Review

Indian equity markets ended first day of trading week in red territory with Sensex and Nifty settling below the psychological 58000 and 17250 levels respectively amid broad-based sell-off, tracking weakness across global markets. Markets made a gap-down opening, as domestic sentiments got hit after Reserve Bank of India's (RBI) weekly statistical supplement showed that India's foreign exchange reserves fell to $532.66 billion in the week through Sept. 30, their lowest level since July 2020. Sentiments remained dampened, as Indian rupee continued to depreciate against the US dollar due to elevated crude oil prices. However, in afternoon trade, key indices wiped out most of their losses to trade near neutral line, as traders found some solace with Economic Advisory Council to the Prime Minister (EAC-PM) member Sanjeev Sanyal’s statement that India will perhaps emerge as the strongest major economy with 7 per cent growth rate in FY23, amid fears of the world slipping into recession.

Traders took note of Union Finance Secretary T V Somanathan’s statement that India has a nano demographic window to achieve developed country status, and if it misses, it may not reach there. He said the country has to grow at a rate of 8-8.5 per cent to reach developed country status. But markets failed to cut all losses and ended day’s trade below neutral line.  Some cautiousness also came as private report projected a sharp moderation in India's growth rate for FY24 to 5.2 percent as compared to FY23, saying Indian policymakers are 'misplaced' about their optimism on the country's growth prospects. Traders ignored Central Board of Direct Taxes’ (CBDT) statement that gross collection of tax on corporate and individual earnings jumped nearly 24 percent so far in the current fiscal year that started on April 1, 2022.

On the global front, European markets were trading mostly in red amid heightened geopolitical tensions and expectations that the Federal Reserve will move ahead with further interest rate hikes. All Asian markets ended lower after stronger than expected U.S. employment data raised grave concerns over the outlook for interest rates. Treasury yields also advanced following the release of the data, with the yield on the benchmark ten-year note moving higher for the third straight session. Back home, investors awaited Tata Consultancy Services (TCS) to report its financial results and kick off the corporate earnings season later in the day.

The BSE Sensex ended at 57,991.11, down by 200.18 points or 0.34% after trading in a range of 57,365.68 and 58,125.01. There were 11 stocks advancing against 19 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was declined 0.87%, while Small cap index was down by 0.58%. (Provisional)

The only gaining sectoral indices on the BSE were IT up by 0.91% and TECK was up by 0.73%, while Consumer Durables down by 1.43%, Power down by 1.30%, Utilities down by 1.12%, FMCG down by 1.01% and Realty was down by 0.98% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Axis Bank up by 3.00%, TCS up by 1.96%, Wipro up by 1.20%, Tech Mahindra up by 0.80% and HCL Tech up by 0.79%. On the flip side, Asian Paints down by 1.91%, ITC down by 1.78%, Titan Company down by 1.68%, Reliance Industries down by 1.04% and HDFC down by 1.02% were the top losers. (Provisional)

Meanwhile, Expressing confidence over the country’s economic growth, Economic Advisory Council to the Prime Minister (EAC-PM) member Sanjeev Sanyal has said that India will perhaps emerge as the strongest major economy with 7 per cent growth rate in FY23, amid fears of the world slipping into recession. He observed that India can grow at 9 per cent in an external conducive environment like in early 2000s when the global economy was growing. He added ‘We are clearly entering an environment where many countries around the world will be facing much slower growth or even slipping into recession. This is due to a combination of factors ranging from tighter monetary policy to higher energy costs, as well as disruptions caused by the Ukraine war.’

Sanyal emphasised that the cumulative impact of supply side reforms over many years by the Modi government has meant that India's economy is currently much more flexible and resilient than it used to be. He noted that if India gets an external environment like the one it had during 2002-03 to 2006-07 when the global economy was growing, global inflationary pressures were muted, then its economy is capable of delivering 9 per cent growth. He said ‘But obviously, we are not in that environment right now. So given that situation 7 per cent GDP growth rate is a good performance’.

However, the EAC-PM member cautioned against pushing growth unnecessarily ‘when the highway has so many bumps and hurdles in the way’. On the Indian rupee touching a historic low last week, he said ‘I don't think we should get too fussed about looking at just the dollar INR exchange rate’. According to him, there is obviously a very sharp strengthening of the US dollar against all currencies and in that circumstance, the rupee actually is appreciating against all currencies except dollar. Noting that the Reserve Bank is correct in allowing the rupee to find its level while at the same time using the reserves to smoothen the volatility, he said the central bank should not defend a particular level, it should however, use its reserves to control volatility.

The CNX Nifty ended at 17,241.00, down by 73.65 points or 0.43% after trading in a range of 17,064.70 and 17,280.15. There were 16 stocks advancing against 34 stocks declining on the index. (Provisional)

The top gainers on Nifty were Axis Bank up by 2.80%, TCS up by 1.75%, HDFC Life Insurance up by 1.21%, Maruti Suzuki up by 0.95% and Eicher Motors up by 0.94%. On the flip side, Tata Motors down by 3.93%, Tata Consumer Products down by 3.04%, Hero MotoCorp down by 2.07%, Asian Paints down by 1.97% and ITC down by 1.87% were the top losers. (Provisional)

European markets were trading mostly in red, UK’s FTSE 100 decreased 35.71 points or 0.51% to 6,955.38 and France’s CAC was down by 32.36 points or 0.55% to 5,834.58. On the flip side, Germany’s DAX was up by 20.25 points or 0.16% to 12,293.25.

Asian markets settled lower on Monday, weighed down by weakness in Wall Street last Friday after the report showed US non-farm payroll employment jumped by 263,000 jobs in September, beating expectations of an increase of 250,000 jobs. Better-than-expected US jobs data reinforced expectations for more aggressive interest rate hikes from the US Federal Reserve. In the meantime, investors will be eyeing at the US inflation data and minutes of the Fed’s September meeting scheduled this week. Moreover, lingering worries surrounding the Russia-Ukraine war also dented market sentiment. Chinese shares dropped ahead of a pivotal Communist Party congress. Chinese chipmakers leading the declines after Washington unveiled new export controls on Friday that restrict the sale of semiconductors made with US technology unless vendors obtain an export license. While, Japan, South Korea, Taiwan, and Malaysia markets were closed for holidays.