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Indian equity benchmarks witnessed a sharp decline and lost nearly two percent in the session, amid heavy broad-based sell-off. Volatility prevailed as traders rushed to square off their positions ahead of the expiry of monthly derivatives contracts due by the end of the session. Traders were anxious with report that cooking gas LPG prices may be hiked next week after under-recovery on the fuel widened to over Rs 100 per cylinder. Some concern also came with a report from the Euro-Mediterranean Center on Climate Change (CMCC) said that in India, the decline in rice and wheat yields due to climate change could lead to economic losses between 43-81 billion EUR (or 1.8-3.4% of GDP) by 2050. Traders were also concerned as foreign Institutional Investors stood as net sellers in the capital market as they offloaded shares worth Rs 1,913.36 crore on Wednesday, exchange data showed.

Market participants overlooked a private report stated that amidst the continuing market rally, the value of the foreign portfolio investors' holdings in the domestic equities jumped by $112 billion to $667 billion between April 1 and September 30, 2021, even though they have been getting increasingly jittery about the highly stretched valuations. Traders also paid no heed towards RBI report showing that the country's foreign exchange reserves surged by $58.38 billion in April-September 2021 to $635.36 billion. The forex reserves were at $576.98 billion at end-March 2021. Meanwhile, the Central Board of Direct Taxes (CBDT) stated that refunds of over Rs 1,02,952 crore have been issued to the taxpayers during the current financial year. The CBDT frames policy for the Income Tax Department.

On the global front, Asian markets settled lower on Thursday, while European markets were trading mostly lower amid concerns that high inflation may force global central banks to tighten monetary policy earlier than thought. With the Bank of Japan delivering another dovish statement, investors awaited cues from the European Central Bank meeting later in the day and the pivotal U.S. FOMC meeting next week. Back home, on the sectoral front, banking sector stocks were in focus with a private report that Indian banking sector is set to witness a fresh round of consolidation over the medium term - spread over FY22-24 period - primarily driven by large private sector banks. Energy stocks’ too were in watch as Icra in its report stated that solar energy tariff is likely to go up by 20-25 paise per unit in upcoming bids for projects as compared with rates seen over the past six months.

Finally, the BSE Sensex declined 1158.63 points or 1.89% to 59,984.70 and the CNX Nifty was down by 353.70 points or 1.94% to 17,857.25.        

The BSE Sensex touched high and low of 61,081.00 and 59,777.58, respectively and there were 6 stocks advancing against 24 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 1.38%, while Small cap index was down by 1.56%.

The lone gaining sectoral index on the BSE was Capital Goods up by 0.02%, while Realty down by 3.75%, Bankex down by 3.36%, Power down by 2.80%, Utilities down by 2.68% and Finance down by 2.50% were the top losing indices on BSE.

The top gainers on the Sensex were Indusind Bank up by 2.94%, Larsen & Toubro up by 1.92%, Ultratech Cement up by 1.11%, Asian Paints up by 1.04% and Maruti Suzuki up by 0.28%. On the flip side, ITC down by 5.54%, ICICI Bank down by 4.39%, Kotak Mahindra Bank down by 4.05%, Axis Bank down by 3.75% and Titan Co down by 3.68% were the top losers.

Meanwhile, Reserve Bank of India (RBI) Deputy Governor M Rajeshwar Rao has said that while the central bank will foster growth in the microfinance (MFI) sector, the lenders in the space should not throw caution to the wind to chase higher asset growth and returns. He said MFIs should not try to mimic the strategies of mainstream finance, as those serving the microfinance borrowers have a greater need to balance the social objectives with their lending operations.

The Deputy Governor said any slip-up through adverse action of MFIs may undo the tremendous progress achieved over the decades and the sector can ill-afford to do that. He stated that the roots and origins of microfinance should not be forgotten and sacrificed at the altar of bottom-line growth. He added that there is no denying the fact that self-sufficiency and financial sustainability are the objectives that the lenders need to pursue. However, he said prioritization of profitability at the expense of social and welfare goals of micro finance may not be an optimal outcome.

Rao further said lenders need to remain cognizant of the fact that the balance sheet growth should not be built by compromising on prudent conduct. From the regulatory side, RBI would ‘look to foster growth of the sector, guided by the ultimate objective of financial inclusion and customer protection, while providing a level playing field’. He emphasized that MFIs should focus on understanding the needs of customers first and offer them an adequate level of support through appropriate financial products.

The CNX Nifty traded in a range of 18,190.70 and 17,799.45 and there were 6 stocks advancing against 44 stocks declining on the index.

The top gainers on Nifty were Indusind Bank up by 2.58%, Larsen & Toubro up by 1.82%, Ultratech Cement up by 1.19%, Asian Paints up by 1.10% and Shree Cement up by 0.51%. On the flip side, Adani Ports down by 7.35%, ITC down by 5.58%, ONGC down by 4.43%, Kotak Mahindra Bank down by 4.04% and ICICI Bank down by 3.98% were the top losers.

European markets were trading mostly lower; UK’s FTSE 100 decreased 17.02 points or 0.23% to 7,236.25, Germany’s DAX decreased 21.50 points or 0.14% to 15,684.31 and France’s CAC increased 24.51 points or 0.36% to 6,778.03.

Asian markets settled lower on Thursday due to growing worries around inflation that might be forced global central banks to tighten monetary policy earlier than thought. The upcoming US Federal Open Market Committee monetary policy meeting next week is expected to formalize plans to start tapering stimulus this year with an eye to hike interest rates in 2022. Chinese shares ended lower led by coal miners after reports showing the Chinese government is pushing to curb its spiking coal prices, while financial and healthcare shares weighed on Hong Kong’s index. Japanese shares declined as the Japanese central bank kept monetary policy unchanged, while its board members cut their real GDP growth and consumer inflation forecasts for fiscal 2021.

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