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EQUITY
Post Session: Quick Review
Oct-22-2018

Indian equity benchmarks failed to sustain early gains and ended in red terrain on Monday, with Sensex and Nifty 50 index surrendering their crucial 34,150 and 10,250 levels respectively. Selling activity which took place during final hours of trade forced the markets to end lower for third straight day. The day began on a positive note, tracking positive leads from Asian markets. Traders got some support with a private report stating that India is likely to emerge as the third-largest economy in the world in just over a decade from now, surpassing Japan and Germany. Buying further crept in with a report that in an effort to ease current liquidity crunch, the RBI allowed banks to use government securities equivalent to their incremental credit to non-banking lenders for a three-month period starting October 20 to meet their liquidity coverage ratio (LCR) needs.

However, selling in last leg of trade mainly played spoil sport for the frontline gauges and key bourses took U-turn to end lower with a cut of over half percentage point. Traders turned pessimistic with the Reserve Bank of India’s (RBI) report showing that India’s forex reserves declined by $5.14 billion during the week ended October 12, when the rupee slipped to 74 and beyond against the US dollar. The RBI’s weekly statistical supplement showed that overall forex reserves decreased to $394.46 billion from $399.60 billion reported for the week ended October 5. Sentiments also got spooked with traders' body CAIT warning that allowing central as well as state tax administrations to initiate action against any taxpayer irrespective of jurisdiction would lead to harassment of traders and complicate the tax system. Adding pessimism among investors, job creation slowed down by 8.39 percent to stand at 8,94,769 in August month as against the revised figure of 9,76,675 in July month.

On the global front, Asian markets ended mostly higher on Monday, as China surges on hopes for more stimulus. European markets were trading in green, led by Italian stocks after a downgrade from Moody’s Investors Service spared that country from a junk rating on its debt. Back home, stocks related to oil and gas space were in focus on report that petrol and diesel prices were cut in the range of 27-30 paise across metro cities on Monday (October 22, 2018), for the fifth consecutive day in a row. In the national capital, petrol is priced at Rs 81.44 per litre, 30 paise down from Sunday's price of Rs 81.74. Besides, stocks related to airlines too were in focus with a private report stating that domestic airlines will operate 22 percent more flights during the winter schedule 2018 with 23,117 departures a week as compared with the winter schedule of 2017.

The BSE Sensex ended at 34140.64, down by 174.99 points or 0.51% after trading in a range of 34082.76 and 34748.69. There were 10 stocks advancing against 21 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell by 0.59%, while Small cap index was down by 1.94%. (Provisional)

The only gaining sectoral indices on the BSE were Power up by 0.17% and Auto up by 0.06%, while Energy down by 3.04%, Oil & Gas down by 2.54%, Basic Materials down by 1.39%, Industrials down by 1.08% and Consumer Durables down by 1.03% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were ICICI Bank up by 4.02%, Bajaj Auto up by 2.03%, NTPC up by 1.85%, HDFC Bank up by 1.41% and Adani Ports &SEZ up by 0.97%. (Provisional)

On the flip side, Indusind Bank down by 7.05%, Reliance Industries down by 3.61%, Asian Paints down by 3.41%, ONGC down by 3.14% and Tata Motors - DVR down by 3.07% were the top losers. (Provisional)

Meanwhile, welcoming the Reserve Bank of India’s decision to incentivise banks to enhance their lending to non-banking finance companies (NBFCs), the industry chamber, Associated Chambers of Commerce and Industry of India (ASSOCHAM) has stated that this step will help NBFCs in tackling liquidity crunch. The RBI allowed the banks to use government securities equivalent to their incremental credit to NBFCs for a three-month period to meet their liquidity coverage ratio requirements. The provision will allow banks to free up Rs 50,000-60,000 crore of liquidity which banks can lend to NBFCs till December 31.

ASSOCHAM also said this shall also send a message that the recent developments do not indicate any systemic problem but it is merely a case of sentiments having gone wrong after one of the big NBFCs defaulted. It added that the whole issue of asset liability mismatch is more relevant in case of long-term lending companies like the housing finance companies and infra financing NBFCs.

The industry chamber further said a typical NBFC model is a retail lending model with short tenures of 2-5 years and small ticket sizes where asset liability mismatch is not a concern. NBFCs have shown impressive growth for the last few years maintaining a high capital adequacy ratio which is higher than the minimum prescribed levels. It noted that this growth has also been healthy as reflected in better asset quality. However, provision of a dedicated refinance window, especially, for the large number of small and medium sized NBFCs is very important to ensure future growth.

The CNX Nifty ended at 10242.45, down by 61.10 points or 0.59% after trading in a range of 10224.00 and 10408.55. There were 15 stocks advancing against 35 stocks declining on the index. (Provisional)

The top gainers on Nifty were Indiabulls Housing Finance up by 9.28%, ICICI Bank up by 4.11%, Eicher Motors up by 4.04%, Bajaj Auto up by 2.06% and NTPC up by 2.01%. (Provisional)

On the flip side, Indusind Bank down by 7.05%, BPCL down by 4.48%, Ultratech Cement down by 3.93%, Reliance Industries down by 3.60% and Asian Paints down by 3.46% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 increased 31.96 points or 0.45% to 7,081.76, France’s CAC was up by 10.48 points or 0.21% to 5,095.14 and Germany’s DAX added 48.24 points or 0.42% to 11,602.07.

Asian markets ended mostly higher on Monday as China surges on hopes for more stimulus, while caution prevailed elsewhere across Asia on geopolitical concerns over Saudi Arabia, Italy and Brexit. Japanese shares ended with modest gains on expectations that China will step up economic stimulus in the months ahead. Chinese stocks extended Friday’s rally as authorities took steps to support the market after the release of weaker-than-expected GDP data.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

2,654.88

104.41

3.93

Hang Seng

26,153.15

591.75

2.26

Jakarta Composite

5,840.44

3.15

0.05

KLSE Composite

1,722.47

-9.67

-0.56

Nikkei 225

22,614.82

82.74

0.37

Straits Times

3,078.06

15.55

0.51

KOSPI Composite

2,161.71

5.45

0.25

Taiwan Weighted

9,974.28

55.02

0.55
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