Sensex falls 555 points on weak global cues, Nifty settles below 17,650

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After hovering near the flat line for the most part of the session, the domestic equity barometers tumbled in afternoon trade and ended with significant cuts on Wednesday. The Nifty closed below the 17,650 mark. Selling was widespread with metals, PSU banks, auto stocks declining the most. The barometer index, the S&P BSE Sensex, plunged 555.15 points or 0.93% to 59,189.73. The Nifty 50 index tumbled 176.30 points or 0.99% to 17,646. The Nifty hit the day’s high of 17,884.60 in early trade.

The NSE’s India VIX, a gauge of the market’s expectation of volatility over the near term, jumped 5.70% to 17.33.

In the broader market, the S&P BSE Mid-Cap index fell 1.22% while the S&P BSE Small-Cap index declined 0.55%.

The market breadth was negative. On the BSE, 1441 shares rose and 1841 shares fell. A total of 164 shares were unchanged.

COVID-19 Update:

Total COVID-19 confirmed cases worldwide stood at 235,805,910 with 4,816,244 deaths. India reported 246,687 active cases of COVID-19 infection and 449,538 deaths according to the data from the Ministry of Health and Family Welfare, Government of India.

A total of 92,12,85,696 COVID-19 vaccine doses have been administered in the country so far, with over 59.28 lakh doses being given yesterday, according to the Co-WIN dashboard.

Economy:

Rating agency Moody’s Investors Service has upgraded India’s sovereign rating outlook to ‘stable’ from ‘negative’ citing an ebbing of the risks from COVID-19 and the negative feedback between the real economy and financial system.

While it retained India’s rating at Baa3, reflecting the lowest investment grade rating, Moody’s said it expects real GDP to surpass pre-pandemic levels of 2019-20 this year itself, as the ongoing economic recovery is picking up steam with activity upticks broadening across sectors. It expects 2021-22 to record 9.3% growth in GDP, followed by 7.9% next year.

Buzzing Index:

The Nifty Metal index fell 3.26% to 5,611.15. The index has declined by 3.38% in two sessions.

National Aluminum Co. (down 5.91%), Vedanta (down 4.36%), Hindalco Industries (down 4.10%), Adani Enterprises (down 3.28%), Tata Steel (down 3.25%), JSW Steel (down 3.22%), SAIL (down 3.05%), Jindal Steel & Power (down 3.03%), NMDC (down 2.49%) and Welspun Corp (down 2.46%) declined.

Stocks in Spotlight:

RBL Bank slumped 4.53% to Rs 184.55. The private sector bank’s total deposits rose 17% to Rs 75,588 crore in the quarter ended 30 September 2021 as against Rs 64,506 crore reported in the quarter ended 30 September 2020. Gross advances grew by 1% year on year to Rs 58,046 crore as on 30 September 2021 as against Rs 57,298 crore reported on 30 September 2020.

Hindustan Copper jumped 4.25% to Rs 125.05 on reports that Vedanta Group is open to buying government’s stake in the company. Vedanta Group’s founder Anil Agarwal told the media that the company will look to bid for buying government’s stake in Hindustan Copper as and when the state-owned firm is put up for privatisation. As on 30 June 2021, the Government of India held 72.76% stake in Hindustan Copper.

Coal India fell 2.63% to Rs 192.70. The company’s board has accorded in-principle approval to pre-feasibility report for setting up integrated greenfield aluminium project in Odisha which shall include bauxite mining, alumina refinery, aluminium smelter and associated captive power plant by its subsidiary Mahanadi Coalfields.

Marico advanced 0.90% to Rs 562.95. In the India business, the company witnessed healthy consumer sentiment across our categories. Revenue growth in the quarter was in the low twenties, with volume growth close to double-digits on a 2-year CAGR basis. The International business delivered double digit constant currency growth as the company witnessed positive trends in all markets, except Vietnam.

Among key inputs, copra prices corrected further, crude remained firm, while edible oil prices oscillated at higher levels. As a result, the company expects modest bottom line growth in the quarter. Operating margin is expected to contract on a year on year basis.

Bajaj Finance shed 0.08% to Rs 7,718.10. The NBFC major’s customer franchise grew 19.7% to 52.8 million as of 30 September 2021 from 44.1 million on 30 September 2020. Consolidated liquidity surplus stood at approximately Rs 16,500 crore as of 30 September 2021.

Assets under management (AUM) grew 21.74% and stood at approximately Rs 166,900 crore as of 30 September 2021 as compared to Rs 137,090 crore as of 30 September 2020. Deposit book stood at approximately Rs 28,700 crore as of 30 September 2021 as compared to Rs 21,669 crore as of 30 September 2020.

Godrej Consumer Products fell 2.50% to Rs 1,018. The FMCG company expects to deliver high single-digit sales growth with another quarter of double-digit two-year CAGR during July-September quarter. During the quarter, demand trends in categories across the key countries remained steady.

India sales growth is expected to be in double-digit during the second quarter, driven largely by volume growth and calibrated price increases. In Indonesia, the company expects a marginal decline in constant currency sales. In Godrej Africa, USA and Middle East, growth momentum continued across key countries of operations. The firm expects sales growth in its Latin America and SAARC businesses to be soft.

Godrej Consumer Products said it expects operating margins to contract during the quarter driven by a lag between the rise in input costs and increase in end consumer pricing.

AU Small Finance Bank lost 0.61% to Rs 1,204.40. Gross advances increased by 5% quarter on quarter and 32% year on year to Rs 36,405 crore as on 30 September 2021. The bank’s collection efficiency was 109% in September 2021, 107% in August 2021 and 110% in July 2021.

ICICI Lombard rose 0.46% to Rs 1,555.25. As per the bulk deal data on the BSE, Societe Beaujon sold its entire holding of 1.75 crore shares (3.85%) in ICICI Lombard General Insurance at Rs 1,540.13 per share on Tuesday (5 October 2021). Societe Beaujon is the investment holding company of AXA Group, a French multinational insurance firm.

Force Motors gained 0.63% to Rs 1,491.50. The company’s total auto sales surged nearly 37% to 2,240 units while total production increased by 43.74% to 2,159 units in September 2021 over September 2020.

IT major TCS declined 0.56% to Rs 3,812.30. The company said it has extended its partnership with State Bank of India (SBI), India’s largest bank, for another five years.

As part of the new contract, TCS will continue to maintain and enhance SBI’s application estate around core banking, trade finance, financial reporting,and financial inclusion with new features and functionality. This will support the bank’s ability to launch newer offerings and respond to business and regulatory changes.

Global markets:

US Dow Jones index futures were down 368 points, indicating a weak opening in the US stocks today.

European shares declined across the board while Asian stocks ended mostly lower on Wednesday. Mainland Chinese markets remain closed on Wednesday for the holidays.

In US, the major averages rebounded on Tuesday following a technology-centered market rout in the previous session.

In Washington, lawmakers are still trying to agree to raise or suspend the U.S. borrowing limit and avert a dangerous first-ever default on the national debt. The Treasury Department warned last week that lawmakers must address the debt ceiling before October 18 when officials estimate the U.S. will exhaust emergency efforts to honor its bond payments.

Treasury Secretary Janet Yellen said Tuesday she believes the economy would fall into a recession if Congress fails to raise the debt ceiling before a default on the U.S. debt.

Investors are readying for the closely watched jobs report, which will be released on Friday.

The US trade deficit increased to a record $73.3 billion in August as a small gain in exports was swamped by a much larger increase in imports. The Commerce Department reported Tuesday that the monthly trade deficit increased 4.2% in August, rising to an all-time high, surpassing the previous record of $73.2 billion set in June.

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