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Indian equity benchmarks were closed with losses for the second straight day on Wednesday amid heightened volatility, due to profit-booking at higher levels. Weakness across sectors, led by consumer durables, basic materials, metal and utilities shares pulled the markets lower. After making cautious start, markets slipped into the red, as traders got anxious with a private report stating that rising global commodity prices, led by crude, coal and metals, will shave a lot off the current account leading to higher imports and a rise in current account deficit, which is likely to print at 1.3 per cent of the GDP or $40 billion, up from 0.9 per cent surplus last fiscal. Selling further crept in, as International Monetary Fund downgraded its 2021 economic growth forecast for Asia after the highly infectious Covid-19 delta variant caused a spike in cases in parts of the region. Traders also took a note of rating agency Crisil’s report stated that gross non-performing assets (NPAs) of Indian banks may rise to 8-9 percent in the current financial year (FY22) but this will be much below the FY18 levels when NPAs reached a peak of 11.2 percent.

However, key gauges manage to trimmed some losses in last minutes of trading session, as traders took some support with Services Export Promotion Council (SEPC) stating that the country’s services exports are expected to reach over $240 billion during 2021-22 on account of healthy performance by segments such as professional and management consulting services, audio visual, freight transport services, and telecommunications. Some support also came with Minister of State for Electronics and IT Rajeev Chandrasekhar’s statement that the government is looking at rolling out a five-year strategic perspective plan to make India a significant tech player. Meanwhile, GST Council is likely to consider one single tax rate for online gaming, racecourses, casinos and that could be as high as 28%.

On the global front, Asian markets ended mostly lower on Wednesday as investors fretted about slowing growth amid supply chain bottlenecks. The International Monetary Fund on Tuesday slashed its 2021 economic growth outlook for Asia and warned that supply chain disruptions, inflation pressures and a looming fresh wave of COVID-19 infections pose downside risks. However, it raised the economic growth outlook for 2022. European markets were trading mostly in green, as expectations for Fed tightening pulled back somewhat after weak U.S. factory production data.  Back home, on the sectoral front, fertiliser industry stocks were in focus amid a private report that Chinese authorities are imposing new hurdles for fertilizer exporters amid growing concerns over surging power prices and food production, move likely to impact India. Stocks related to aviation industry were in action as the data from the Director General Civil Aviation (DGCA) said it seems that the Indian aviation industry is moving towards pre-COVID days as with the domestic air passengers footfall is up by about 80 per cent in September compared to the same month last year.

Finally, the BSE Sensex fell 456.09 points or 0.74% to 61,259.96 and the CNX Nifty was down by 152.15 points or 0.83% to 18,266.60.       

The BSE Sensex touched high and low of 61,880.36 and 61,109.29, respectively and there were 7 stocks advancing against 23 stocks declining on the index.         

The broader indices ended in red; the BSE Mid cap index fell 1.91%, while Small cap index was down by 2.31%.

The lone gaining sectoral index on the BSE was Telecom up by 2.93%, while Consumer Durables down by 3.36%, Basic Materials down by 2.51%, Metal down by 2.31%, Utilities down by 2.24% and Consumer Discretionary down by 2.15% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 4.03%, SBI up by 2.35%, Indusind Bank up by 0.56%, Bajaj Finance up by 0.46% and Axis Bank up by 0.44%. On the flip side, Titan Company down by 2.97%, Hindustan Unilever down by 2.63%, NTPC down by 2.27%, Larsen & Toubro down by 2.13% and Power Grid Corporation down by 2.12% were the top losers.

Meanwhile, with healthy performance by segments such as professional and management consulting services, audio visual, freight transport services, and telecommunications, Services Export Promotion Council (SEPC) has said that India’s services exports are expected to reach over $240 billion during 2021-22. It is also seeking incentives from the government. SEPC Chairman Maneck Davar said that during the first five months of the current fiscal year, exports from the sector increased 14 per cent to $95 billion. He noted that services exports may increase even further when the tourism sector is opened up later in the year.

In 2020-21, services exports dipped by three per cent to $206 billion. He added that the recovery of the service sector is largely based on the performance of sectors such as professional and management consulting services, audio visual and related services, freight transport services, telecommunications, computer and information services. He also said the target of $1 trillion services exports by 2030 set by the government is feasible but there is a need to look at sectors other than IT and ITeS for growth. The need of the hour is to provide a level-playing field with manufacturing and incentives to tide over the pandemic.

Davar said ‘Unless the government focuses on the sector in the forthcoming Foreign Trade Policy (FTP) by announcing scheme-based export incentives and provides interim relief by continuing with the existing schemes in the short run, the sector will lose the momentum it has gained in the first five months of 2021-22’. He added that services exports to an extent grow in line with merchandise exports as many services work as a facilitator for goods exports, such as transport and logistics services, distribution services, banking and insurance services, and aviation.

The CNX Nifty traded in a range of 18,458.30 and 18,209.35 and there were 11 stocks advancing against 39 stocks declining on the index.   

The top gainers on Nifty were Bharti Airtel up by 3.99%, SBI up by 2.66%, Tata Motors up by 1.62%, Indusind Bank up by 0.76% and Adani Ports & SEZ up by 0.60%. On the flip side, Hindalco down by 3.94%, BPCL down by 2.66%, Titan Company down by 2.61%, Bajaj Finserv down by 2.34% and Hindustan Unilever down by 2.30% were the top losers.

European markets were trading mostly in green; UK’s FTSE 100 increased 2.39 points or 0.03% to 7,219.92 and Germany’s DAX increased 16.52 points or 0.11% to 15,532.35, while France’s CAC decreased 7.03 points or 0.11% to 6,662.82.

Asian markets ended mostly lower on Wednesday after the International Monetary Fund has downgraded its 2021 economic growth forecast for Asia to 6.5%, down 1.1% point from its projection made in April, as a spike in Delta variant cases hit consumption and factory output. However, it raised the economic growth outlook for 2022. Chinese shares declined amid lingering concerns around monetary policies and Evergrande Group's debt crisis. Although, China's central bank PBoC kept its benchmark Loan Prime Rate (LPR) unchanged for the 18th consecutive month. The one-year LPR remained at 3.85% and five-year LPR at 4.65%, the bank said. Japanese shares ended marginally higher following gains in Wall Street overnight, but they gave up most gains after data showed the country's export growth weakened to its slowest in seven months in September.

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