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Indian equity benchmarks closed lower for the third day in a row on weekly F&O expiry day, as index heavyweights such as Asian Paints, Reliance Industries and Infosys reeled under selling pressure. Key Indian indices slumped after opening in the green, as traders turned cautious with report stated that amid concerns about the rising oil prices, India, the world's third-largest energy consumer, has warned that high oil prices will undermine global economic recovery, and nudged Saudi Arabia and other OPEC nations to work towards affordable and reliable supplies. Petrol and diesel prices have shot up to record highs across the country after relentless price increases since early May. Some cautiousness also came as data showed that Foreign Institutional Investors (FIIs) were net sellers in the capital market as they offloaded shares worth Rs 1,843.09 crore, while Domestic Institutional Investors (DIIs) were net sellers to the tune of Rs 1,680.73 crore in the Indian equity market on Wednesday.

However, markets managed to recover some lost ground in the last hour of trade, as some optimism remained among traders with Moody's Analytics in a report said that a rebound in industrial production and demand owing to easing mobility restrictions fuelled India's current recovery with production appearing to have regained lost ground during the second Covid-19 wave. However, it has flagged concerns around volatility in inflation caused by rising food and fuel prices. Some support also came with Ratings and Research’s (Ind-Ra) report stated that it witnessed a continuous recovery in the average current collection efficiency to 80 percent in August 2021 from 79 percent in July 2021 across its 143 rated securitisation transactions. It noted that there has been a 10 percentage point increase in the collection efficiency since May 2021 for all the outstanding transactions, after reducing by 13.4 percentage points from March-May 2021.

On the global front, Asian markets ended mostly lower on Thursday, while European markets were trading lower as news about the collapse of a $2.6 billion asset sale at heavily indebted developer China Evergrande Group offset investor optimism around the earnings season. Traders also remain concerned about the coronavirus infections in the region, which is hindering economic activity. Back home, on the sectoral front, PSU banking stocks were in focus as the Centre asked public sector banks (PSBs) to aggressively target financial inclusion, expand pension and insurance coverage and, at the same time, use financial technology (fintech) to extend credit to borrowers during the festive season through co-lending arrangements. Metal sector stocks too were in focus as rating agency ICRA revised its non-ferrous metals sector outlook to positive from stable on the back of robust prices and improving demand despite a near-term concern of coal availability and increased cost of production for the non-ferrous metal companies.

Finally, the BSE Sensex fell 336.46 points or 0.55% to 60,923.50 and the CNX Nifty was down by 88.50 points or 0.48% to 18,178.10.       

The BSE Sensex touched high and low of 61,621.20 and 60,485.65, respectively and there were 9 stocks advancing against 21 stocks declining on the index.         

The broader indices ended in red; the BSE Mid cap index fell 0.38%, while Small cap index was down by 0.69%.

The top gaining sectoral indices on the BSE were Bankex up by 1.71%, PSU up by 0.56%, Auto up by 0.50%, Industrials up by 0.44% and Power up by 0.38%, while IT down by 2.30%, TECK down by 2.14%, Metal down by 2.03%, Energy down by 1.81% and Telecom down by 1.81% were the top losing indices on BSE.

The top gainers on the Sensex were Kotak Mahindra Bank up by 6.51%, HDFC up by 1.70%, ICICI Bank up by 1.52%, NTPC up by 1.03% and SBI up by 0.62%. On the flip side, Asian Paints down by 5.21%, Reliance Industries down by 2.85%, Infosys down by 2.59%, Dr. Reddy's Lab down by 2.29% and Tata Steel down by 2.11% were the top losers.

Meanwhile, India Ratings and Research (Ind-Ra) in its latest report has said that it witnessed a continuous recovery in the average current collection efficiency to 80 percent in August 2021 from 79 percent in July 2021 across its 143 rated securitisation transactions. It noted that there has been a 10 percentage point increase in the collection efficiency since May 2021 for all the outstanding transactions, after reducing by 13.4 percentage points from March-May 2021. 

The agency said there is likely to have been a further improvement in September 2021 collections. Securitisation involves transactions where credit risks in assets are redistributed by repackaging them into tradable securities with different risk profiles. It may give investors of various classes an access to exposures which they otherwise might be unable to access directly. It said there is an improvement in the current collections across asset classes, except in unsecured business loans and tractor loans.

With the festive season, the agency expects demand to pick-up, not only for the non-discretionary sector, but also for discretionary products. It noted that this will allow small businesses to perform better. It also said that the rural area impacted substantially from the second Covid-19 wave, there is still a downward pressure on collections for its rated tractor loan transactions. It added that prospects for the agricultural sector and rural demand looks promising, which could help borrowers in the near term.

The CNX Nifty traded in a range of 18,384.20 and 18,048.00 and there were 22 stocks advancing against 28 stocks declining on the index.   

The top gainers on Nifty were Kotak Mahindra Bank up by 6.92%, Tata Motors up by 4.53%, Grasim Industries up by 3.52%, HDFC up by 1.96% and BPCL up by 1.71%. On the flip side, Asian Paints down by 4.88%, Hindalco down by 3.81%, Infosys down by 2.52%, Reliance Industries down by 2.42% and TCS down by 2.11% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 25.19 points or 0.35% to 7,197.91, France’s CAC decreased 15.15 points or 0.23% to 6,690.46 and Germany’s DAX decreased 5.95 points or 0.04% to 15,516.97.

Asian markets ended mostly lower on Thursday amid rising inflation worries, while concerns over economic health for Asia also dented market sentiments. Japanese shares declined sharply on the back of Nasdaq's overnight weakness, but expectations for strong earnings results from Japanese firms limited losses. However, Chinese shares ended higher after reports that Chinese developer Evergrande Group has secured more than 3-month extension period on a defaulted $260 million bond, a day after a deal to sell a $2.6 billion stake in its property services unit failed.

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