Indian equity benchmarks ended the volatile day of trade with a cut of one third of a percent following a sell-off overnight in the US markets on fears of that interest rates will stay higher for longer. Markets made a cautious start as escalating diplomatic tensions between India and Canada impacted sentiments. India temporarily suspended visa operations with Canada for an indefinite period due to alleged ‘security threats’ against diplomatic staff, amidst a diplomatic crisis that arose following the latter’s allegation that India is responsible for the killing of a Sikh activist. Persistent selling by FIIs dampened sentiments in domestic markets. Provisional data from the National Stock Exchange (NSE) showed that foreign institutional investors (FII) sold shares worth Rs 3,007.36 crore on September 21.
However, markets traded in green for brief period in noon deals as some support came with reports that India’s inclusion in the JPMorgan Government Bond Index is positive, though short-term equity challenges may persist due to Foreign Portfolio Investors’ selling as the US dollar strengthens. Sentiments also got boost as Reserve Bank Deputy Governor Michael D Patra said that India will be a $5 trillion economy and the third largest in the world by market exchange rates by 2027, aided by the demographic advantage and pace of financial sector development. Meanwhile, RBI said that it has proposed tighter norms for treatment of wilful defaulters under which banks and other lenders will be required to examine all accounts with outstanding amount of Rs 25 lakh and more to see if the borrower is deliberately not repaying the loan. The central bank has issued a 'Draft Master Direction on Treatment of Wilful Defaulters and Large Defaulters' on which comments have been invited till October 31. However, key gauges failed to hold gains and selling in last leg of trade dragged benchmarks lower for the day.
On the global front, Asian markets ended mostly higher despite fears persisted about the Fed staying hawkish and the Bank of Japan maintained its ultra-loose monetary policy. European markets were trading mostly in red amid concerns that higher interest rates could weigh on global growth. Survey data released earlier showed that business activity across Germany fell for the third month in a row in September amid a sustained decline in demand for goods and services.
Back home, Secretary in the Department for Promotion of Industry and Internal Trade (DPIIT) Rajesh Kumar Singh has said the figure that India's logistics cost is 13 per cent of Gross Domestic Product (GDP) is probably not correct and as per initial indications, it would not exceed 10 per cent. In a positive development to India's debt market, JPMorgan will add Indian government bonds to its benchmark emerging-market index, a keenly awaited event that could drive billions of foreign inflows.
Finally, the BSE Sensex fell 221.09 points or 0.33% to 66,009.15 and the CNX Nifty down by 68.10 points or 0.34% to 19,674.25.
The BSE Sensex touched high and low of 66,445.47 and 65,952.83, respectively. There were 13 stocks advancing against 17 stocks declining on the index.
The broader indices ended mixed; the BSE Mid cap index fell 0.14%, while Small cap index was up by 0.04%.
The top gaining sectoral indices on the BSE were PSU up by 0.85%, Telecom up by 0.49%, Auto up by 0.29%, Capital Goods up by 0.14% and Bankex was up by 0.06%, while Healthcare down by 1.30%, Consumer Durables down by 0.84%, Realty down by 0.73%, Basic Materials down by 0.62% and Oil & Gas down by 0.45% were the top losing indices on BSE.
The top gainers on the Sensex were Indusind Bank up by 2.92%, Maruti Suzuki up by 2.34%, SBI up by 1.67%, Mahindra & Mahindra up by 1.52% and Bajaj Finserv up by 1.11%. On the flip side, Wipro down by 2.32%, HDFC Bank down by 1.57%, Ultratech Cement down by 1.50%, Power Grid Corp down by 1.34% and Sun Pharma down by 1.26% were the top losers.
Meanwhile, with the support of pace of financial sector development and demographic advantage, the Reserve Bank of India (RBI) Deputy Governor Michael D Patra has said India will be a $5 trillion economy and the third largest in the world by market exchange rates by 2027. He said it is widely believed that during the next two decades -- if not for longer -- the centre of gravity of the global economy will shift eastward to Asia. He said the IMF’s Regional Economic Outlook for Asia and the Pacific indicates that this region will contribute about two-thirds of global growth in 2023 itself and India will account for a sixth of world output growth in 2023 and 2024.
In terms of market exchange rates, he said India is the fifth-largest economy in the world and the third-largest economy on the basis of purchasing power parity. He added a key driver in this transformation is likely to be the window of a demographic dividend that opened up in 2018 and will probably last till the 2040s, going by fertility and mortality rates. He also said ‘we are the most populous country in the world at 1.4 billion and the youngest at an average age of 28 years. The other major catalyst of India's progress will be the pace and quality of financial sector development’.
For a high saving rate economy, like the rest of Asia, he said a modern, efficient, and soundly functioning financial sector is essential for mobilising the resource requirements of India’s developmental aspirations. While the jury is still out on whether economic progress is finance or demand-led, Patra said a wealth of empirical evidence points to Asia’s growth trajectory being that of the real economy leading financial development, and India is no exception. He said there is also stylised evidence that the composition of the financial sector across Asia is changing, with hitherto bank-dominated systems giving space to alternative financial intermediaries like non-banks and capital markets, and added these developments, in turn, generate impulses of growth for the rest of the economy.
In India, he said ‘additional dimensions have opened up exciting possibilities for leveraging our growth potential - the digital revolution; transformation of the payment and settlement ecosystem; and innovations in financial inclusion’. He said ‘more recently, India’s exponential expansion of the usage of space technology is reshaping every aspect of our lives, including the financial sector’. He noted the approach to the financial sector in India is reflecting a new paradigm in which macroeconomic and financial stability are seen as strongly complementary and providing the foundation for medium-term growth prospects. He also pointed out prudence is taking precedence over-exuberance, and this is reflected in the steady build-up of all types of buffers.
The CNX Nifty traded in a range of 19,657.50 and 19,798.65. There were 19 stocks advancing against 31 stocks declining on the index.
The top gainers on Nifty were Indusind Bank up by 2.95%, Maruti Suzuki up by 2.44%, SBI up by 1.70%, Mahindra & Mahindra up by 1.51% and Bajaj Finserv up by 1.15%. On the flip side, Dr. Reddy's Lab down by 2.67%, Wipro down by 2.44%, Cipla down by 1.70%, Bajaj Auto down by 1.65% and UPL down by 1.64% were the top losers.
European markets were trading mostly lower; France’s CAC fell 29.43 points or 0.41% to 7,184.47 and Germany’s DAX lost 10.29 points or 0.07% to 15,561.57, while UK’s FTSE 100 was up by 53.46 points or 0.70% to 7,732.08.
Asian markets ended mostly higher on Friday, despite Wall Street’s overnight fall followed by growing prospects of higher for longer US interest rates. Chinese and Hong Kong markets gained on reports that China's market regular has issued a slew of measures to promote the development of the private economy as part of the nation's broader efforts to stimulate the private sector for greater economic growth. However, Japanese markets declined after the Bank of Japan maintained its ultra-loose monetary policy, while a private survey showed that Japan's manufacturing activity fell back into contraction in June and service sector growth slowed for the first time in seven months.
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Asian Indices
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Last Trade
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Change in Points
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Change in %
|
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Shanghai Composite
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3,132.43
|
47.73
|
1.52
|
|
Hang Seng
|
18,057.45
|
402.04
|
2.23
|
|
Jakarta Composite
|
7,016.84
|
25.37
|
0.36
|
|
KLSE Composite
|
1,450.23
|
2.02
|
0.14
|
|
Nikkei 225
|
32,402.41
|
-168.62
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-0.52
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Straits Times
|
3,204.82
|
2.01
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0.06
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KOSPI Composite
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2,508.13
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-6.84
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-0.27
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Taiwan Weighted
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16,344.48
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27.81
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0.17
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