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Indian equity benchmarks ended the sluggish day of trade with losses of around one and half percent on Tuesday, following weakness in global peers and amid rising geopolitical tensions in Europe. Markets started the session on pessimistic note and gradually drifted lower as the session progressed amid subdued foreign flows. Foreign institutional investors (FIIs) turned net sellers to the tune of Rs 2,139.02 crore on October 10, as per provisional data available on the NSE. Traders remained cautious with a private report that India's retail inflation accelerated to a five month high of 7.30% in September due to surging food prices, staying well above the Reserve Bank of India's (RBI) upper tolerance band for a ninth month. Sentiments also weighed on by a private report stating that a number of rating agencies, domestic banks, and groups have pared the forecast for India’s economic growth.

Key gauges witnessed heavy selling pressure in late afternoon session as market participants awaited September's retail inflation data, due to be released on Wednesday. Traders overlooked Prime Minister Narendra Modi’s statement that inflation in the country is much lower than that in developed countries. He said ‘Compared to developed countries, inflation is quite low, for example the British are witnessing the worst inflation in the last 50 years, Americans are facing highest inflation of the last 45 years, interest rates are very high... compared to those countries, the nation's inflation is low because buoyant economy, our country's economy is very vibrant.' Even better-than-expected Q2 performance from TCS, and a proposed share buyback plan by Infosys failed to cheer investor sentiment. Meanwhile, the government is planning to launch 7-8 production-linked incentive (PLI) schemes in the next round soon in a bid to further expand the coverage across critical manufacturing sectors, stimulate economic growth and spur job creation.

On the global front, Asian markets settled mostly lower on Tuesday following the broadly negative cues from global markets, amid the geopolitical worries surrounding the Russia-Ukraine war and the U.S.-China chip war. The sign of fresh COVID outbreaks in China and fresh lockdowns and travel restrictions is also weighing on market sentiment. European markets were trading lower as investors fretted about the impact of higher interest rates on corporate profits. The U.S. efforts to hobble China's semiconductor industry, an escalating conflict in Ukraine and China's COVID woes also added to worries over a possible global recession.

Back home, insurance industry stocks were in focus as Debasish Panda, chairman, IRDAI said the Indian insurance sector, which is growing at 11 per cent CAGR for the last five years, the momentum is expected to continue and could lead India to become the sixth largest market globally, from ten now. Auto stocks were trading lower despite the Federation of Automobile Dealers Associations (FADA) said in a major boost to the automobile sector and in a sign of recovery, retail vehicle sales this Navratri were up 57 per cent to 539,227 units, from 342,459 units during the Covid-hit 2021-22. Overall sales were 27 per cent higher than Navratri 2020 and 16 per cent above the pre-pandemic 2019 season. 

Finally, the BSE Sensex fell 843.79 points or 1.46% to 57,147.32 and the CNX Nifty was down by 257.45 points or 1.49% to 16,983.55.

The BSE Sensex touched high and low of 58,027.52 and 57,050.40, respectively. There were 2 stocks advancing against 28 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 1.61%, while Small cap index was down by 1.47%.

The top losing sectoral indices on the BSE were Realty down by 3.07%, Metal down by 3.04%, Telecommunication down by 2.45%, Information Technology down by 2.12% and TECK down by 2.11%, while there were no gaining sectoral indices on the BSE. 

The few gainers on the Sensex were Axis Bank up by 1.15% and Asian Paints up by 0.68%. On the flip side, IndusInd Bank down by 3.70%, Nestle down by 3.13%, Tata Steel down by 2.86%, Infosys down by 2.65% and HCL Technologies down by 2.47%.

Meanwhile, in order to improve ratings disclosures on bank credit to large customers, the Reserve Bank of India (RBI) said unless rating agencies disclose names of all lenders in their rating statements, banks cannot use such ratings for capital computation for making provisions. Reviewing the prudential norms for risk weights for exposures to large corporates and non-banking finance companies, a notification from RBI (Reserve Bank of India) said the new mandatory loan rating disclosures will be effective from March 31, 2023.

Issuing the notification and setting the new deadline, the regulator said despite repeated reminders, external credit assessment institutions have not been making the mandated disclosures citing lack of consent from borrowers. As part of the master circular on Basel III capital regulations, issued on April 1, 2022, the monetary authority had asked rating agencies to disclose the name of all the banks in the credit rating statements after getting the consent from borrowers from August 31, 2021. But they have not been doing so citing their inability to secure the consent from borrowers.

Such disclosures make banks eligible to compute their capital requirement for such loans and make the needed capital provisions. Such disclosures will make bank eligible to derive risk weights for their unrated exposures based on the ratings available for a specific rated debt, provided the bank's facility ranks pari passu or senior to the specific rated debt in all respects and the maturity of the unassessed claim is not later than the maturity of the rated claim.

The CNX Nifty traded in a range of 17,261.80 and 16,950.30. There were 3 stocks advancing against 47 stocks declining on the index.

The top gainers on Nifty were Axis Bank up by 1.05%, Adani Enterprises up by 0.85% and Asian Paints up by 0.48%.  On the flip side, Divi's Lab down by 5.05%, JSW Steel down by 3.84%, IndusInd Bank down by 3.76%, Eicher Motors down by 3.50% and Nestle down by 3.11% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 73.18 points or 1.05% to 6,886.13, France’s CAC decreased 38.48 points or 0.66% to 5,802.07 and Germany’s DAX decreased 107.38 points or 0.87% to 12,165.56.

Asian markets settled mostly lower on Tuesday, tracking weak Wall Street overnight on worries over aggressive policy tightening and following hawkish signals from Federal Reserve Vice Chair Lael Brainard. Flare-up in Covid-19 cases in China and escalating tensions between Russia and Ukraine also pressurizing market sentiments. Moreover, Asian Chipmakers plunged after new US measures to limit China’s access to high-end semiconductors with military uses, which wiped off billions from companies’ valuations worldwide. Chinese shares, however, gained marginally by strong earnings outlook from COSCO Shipping Holdings Company and Contemporary Amperex Technology Company.

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