Markets snap four-day winning run
Snapping four straight days of gains, Indian equity benchmarks settled in the red on Thursday as IT, banking and healthcare stocks declined amid weak cues from global markets. The benchmarks traded in a range-bound with a negative bias for most part of the day, as the International Monetary Fund (IMF) in its report on the Asia-Pacific region has slashed this year's economic forecast for Asia, reflecting a sharper-than-expected contraction in countries like India, a sign the coronavirus pandemic continues to take a heavy toll on the region. While the IMF upgraded next year's growth forecast, it warned the recovery will be sluggish and patchy with countries dependent on tourism seen taking a particularly hard hit. Some anxiety also came with a private report that the government expects the fiscal deficit to be close to 7 percent of GDP or thereabouts in the current financial year. The general deficit is unlikely to be lower than 11 percent, with the state government borrowings estimated at 4 percent levels.
However, losses were limited as some support came with Reserve Bank Governor Shaktikanta Das’ statement that the country is at the doorstep of economic revival on the back of accommodative monetary and fiscal policies being pursued by the central bank and the government. More stimulus hopes also added support to the markets. Some support also came with Economic Affairs Secretary Tarun Bajaj’s statement that the government is open to further stimulus measures to boost the coronavirus-hit economy. Meanwhile, the Reserve Bank announced an on tap Targeted Long-Term Repo Operations (TLTRO) scheme of up to Rs 1 lakh crore to enable banks to provide liquidity support to a host of sectors, including agriculture, retail, drugs and pharmaceuticals and MSMEs.
On the global front, Asian markets ended on a mixed note on Thursday, following the weak cues from Wall Street amid worries that U.S. lawmakers may not reach an agreement on a new stimulus bill before the U.S. presidential election on November 3. Investor sentiments was also dampened after the International Monetary Fund or IMF lowered its 2020 growth forecast for the Asia-Pacific region. European markets were trading lower, as new coronavirus cases continued to surge, U.S. stimulus hopes faded and the FBI warned of election interference by Iran and Russia, raising the risk of a disputed election result. Besides, market research group Gfk said its forward-looking consumer sentiment index for Germany fell more-than-expected to -3.1 from -1.7 in October. Back home, on the sectoral front, rubber industry stocks were in focus as the commerce ministry recommended for continuation of anti-dumping duty on a Chinese synthetic rubber for five more years with a view to guard domestic players from cheap imports. Agriculture industry stocks also were in watch as Government-owned FCI and state procurement agencies have bought 106.88 lakh tonnes of paddy so far in the kharif marketing season for Rs 20,180 crore.
Finally, the BSE Sensex fell 148.82 points or 0.37% to 40,558.49, while the CNX Nifty was down by 41.20 points or 0.35% to 11,896.45.
The BSE Sensex touched high and low of 40,721.57 and 40,309.05, respectively and there 11 stocks advancing against 19 stocks declining on the index.
The broader indices ended in green; the BSE Mid cap index rose 0.54%, while Small cap index was up by 0.85%.
The top gaining sectoral indices on the BSE were Telecom up by 2.53%, Power up by 2.05%, Utilities up by 1.84%, Capital Goods up by 1.54% and Industrials up by 1.35%, while IT down by 0.70%, Bankex down by 0.59%, Healthcare down by 0.40%, Energy down by 0.36% and TECK down by 0.33% were the top losing indices on BSE.
The top gainers on the Sensex were NTPC up by 3.10%, Bharti Airtel up by 2.77%, Bajaj Finance up by 2.47%, Axis Bank up by 1.80% and Tata Steel up by 1.50%. On the flip side, Indusind Bank down by 3.10%, ICICI Bank down by 1.76%, Infosys down by 1.58%, Titan Company down by 1.23% and HDFC Bank down by 1.13% were the top losers.
Meanwhile, Reserve Bank of India (RBI) Governor Shaktikanta Das has said that Indian economy is nearing revival from the coronavirus disease (covid-19) pandemic. He also said that banks and non-banking financial companies (NBFCs) should have adequate capital in today's day and age when the country's economy is at the brink of revival.
Das said ‘as COVID-19 pandemic set in we had alerted and asked banks and NBFCs to undertake stress tests in the context of coronavirus. I had myself interacted with banks and NBFCs on the need to build up capital buffers proactively and adequately capitalise their financial entities, so that they not only strengthen their inherent resilience to tide over financial stress but also have adequate capital to support growth, to ensure credit flow is maintained’.
RBI Governor further said banking and NBFCs need governance reforms in the present day. He noted that banks that have robust governance practices, internal control systems, risk assessment and do not undertake smart accounting are the ones that are never overleveraged. He said they not only survive but they grow in every crisis. He added that it's not just ownership, irrespective of ownership of banks, and governance reforms is ownership agnostic, and it is required.
The CNX Nifty traded in a range of 11,939.55 and 11,823.45 and there were 22 stocks advancing against 28 stocks declining on the index.
The top gainers on Nifty were NTPC up by 4.13%, Tata Motors up by 3.07%, Bharti Airtel up by 2.86%, Indian Oil Corporation up by 2.70% and Bajaj Finance up by 2.29%. On the flip side, Hero MotoCorp down by 3.03%, Indusind Bank down by 2.99%, ICICI Bank down by 1.62%, Titan Company down by 1.43% and Hindalco Industries down by 1.21% were the top losers.
European markets were trading lower; UK’s FTSE 100 decreased 10.77 points or 0.19% to 5,765.73, France’s CAC decreased 4.13 points or 0.09% to 4,849.82 and Germany’s DAX decreased 25.20 points or 0.2% to 12,532.44.
Asian markets ended on a mixed note on Thursday amid concerns about stalled negotiations over a new round of US fiscal stimulus. United States President Donald Trump has casted doubt on the prospects of a bipartisan, multi-trillion-dollar stimulus deal before US Election Day. Japanese shares ended down as the yen firmed up after top United States intelligence officials said that both Russia and Iran have obtained US voter information and taken actions to influence public opinion ahead of the November 3 presidential election. Further, concerns over surging Covid-19 pandemic cases worldwide with the death of a volunteer participating in Covid-19 vaccine clinical trials also dented market sentiment.
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