Indian equities end lower amid weak global cues
Indian equity benchmarks ended by over a percent each lower on Wednesday, weighed down by the weakness in banking, finance, metal and realty stocks amid weak global cues. Markets made slightly negative start but soon managed to wipe out all the losses to trade in green, as some respite came with Niti Aayog Vice Chairman Rajiv Kumar exuding confidence that India's economic growth would be in positive territory in the second half of this fiscal, and will do even better than a large part of the world in 2021-22. However, buying proved short-lived as markets once again entered into negative terrain and stayed in red for rest of the day, as traders turned anxious with the central bank’s statement that Indian states are racking up more debt to fund the prospect of wider budget deficits as they step up spending to fight the virus pandemic.
Local gauges extended their losses in late afternoon session, as some anxiety remained among traders with Finance Minister Nirmala Sitharaman’s statement that there were visible signs of revival in the economy but the GDP growth may be in the negative zone or near zero in the current fiscal (FY21). She also said the economy saw a contraction in the April-June quarter, but demand has picked up in the festival season. Sentiments remained down-beat after UNCTAD said that Global foreign direct investment (FDI) flows fell 49% in the first half of 2020 compared to 2019 due to the economic fallout from COVID-19. Separately, Union Minister Piyush Goyal said the Commerce and Industry Ministry is working with states and local bodies to make it easier for businesses to get licences, permissions and approvals. He also said that the government is looking at addressing problems of quality so that domestic products can be recognised for high quality.
On the global front, Asian markets settled mostly lower on Wednesday, while European markets were trading lower, as coronavirus infections grew rapidly in Europe and the United States, igniting fears of possible strict lockdown measures that could damage already fragile economic recoveries. Uncertainty over the impending US presidential election also weighed on investors' sentiment. Back home, on the sectoral front, stocks related to chemical sector were in focus with ratings agency ICRA’s report that with most basic chemical and petrochemical players having a diverse range of end-user industries, the impact of coronavirus disease (covid-19) slowdown is likely to be moderated.
Finally, the BSE Sensex fell 599.64 points or 1.48% to 39,922.46, while the CNX Nifty was down by 159.80 points or 1.34% to 11,729.60.
The BSE Sensex touched high and low of 40,664.35 and 39,774.60, respectively and there 4 stocks advancing against 26 stocks declining on the index.
The broader indices ended in red; the BSE Mid cap index fell 0.93%, while Small cap index was down by 0.76%.
The only gaining sectoral indices on the BSE were Telecom up by 2.90% and Capital Goods up by 0.30%, while Bankex down by 2.28%, Finance down by 2.25%, Metal down by 2.15%, Realty down by 1.98%, Healthcare down by 1.33% were the top losing indices on BSE.
The top gainers on the Sensex were Bharti Airtel up by 4.26%, Mahindra & Mahindra up by 1.17%, Maruti Suzuki up by 0.33% and Larsen & Toubro up by 0.12%. On the flip side, Indusind Bank down by 3.45%, HDFC down by 3.44%, ICICI Bank down by 3.34%, Tech Mahindra down by 3.00% and Bajaj Finance down by 2.41% were the top losers.
Meanwhile, with pick-up in demand and manufacturing, union finance minister Nirmala Sitharaman has said that she expects India to become one of the fastest-growing economies by FY22. However, she expects a near-zero percent growth in the third and fourth quarters of FY21 with steady and sustainable growth.
She highlighted that the government’s top priority is to generate employment and asset creation by way of big infrastructure push and public spending. With a surge in Foreign Direct Investment (FDI) by 13 percent during April-August this year compared to the same period last year, the government expects to fund the big infrastructure projects through public spending as part of top priority for employment and asset creation.
She also highlighted that India has near 100 percent FDI allowed via automatic route for 95 percent of the sectors, lowest corporate tax for manufacturing at 15 percent, and has also simplified labour and agriculture laws to attract investments.
The CNX Nifty traded in a range of 11,929.40 and 11,684.85 and there were 9 stocks advancing against 41 stocks declining on the index.
The top gainers on Nifty were Bharti Airtel up by 3.38%, UPL up by 2.80%, Mahindra & Mahindra up by 1.16%, Eicher Motors up by 1.12% and Hero MotoCorp up by 0.86%. On the flip side, HDFC down by 3.50%, Indusind Bank down by 3.18%, ICICI Bank down by 3.16%, Adani Ports & SEZ down by 3.13% and Dr. Reddy's Laboratories down by 3.13% were the top losers.
European markets were trading lower; UK’s FTSE 100 decreased 83.23 points or 1.45% to 5,645.76, France’s CAC fell 114.83 points or 2.43% to 4,615.83 and Germany’s DAX was down by 332.20 points or 2.75% to 11,731.37.
Asian markets settled mostly lower on Wednesday as concerns about surging corona virus pandemic cases in the US and Europe kept investors cautious. Market sentiments weakened further by tracking overnight losses in Wall Street after US President Donald Trump acknowledged the much-needed COVID-19 stimulus would likely come after the November 3 presidential election. However, Chinese shares ended higher due to expectations of a speedy economic recovery from the Covid-19 pandemic. Seoul shares ended higher after its consumer confidence index jumped to 91.6 from 79.4 in September, the most since the global financial crisis in another upbeat sign for the economy as it rebounds from a pandemic-driven recession.
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