Indian equity benchmarks crashed as blue chip stocks came under heavy selling pressure. The barometer index, the S&P BSE Sensex, fell 806.47 points or 2.24% to 35,169.16, as per the provisional closing data. The Nifty 50 index fell 309.85 points or 2.85% to 10,548.40, as per the provisional closing data. Gains in ICICI Bank and Larsen & Toubro supported bourses at lower levels.
The Nifty 50 index fell 259 points or 2.39% to settle at 10,599.25. The index fell 103.55 points, or 0.95% at the day's high of 10,754.70. The index fell 311 points, or 2.86% at the day's low of 10,547.25.
Falling rupee and surging crude prices put pressure on shares. India imports majority of its crude requirements and a surge in crude raises concerns on fiscal deficit, inflation and gives lesser room for the government to boost growth through spending on infrastructure. A weak rupee raises the cost of importing crude oil.
Negative global cues also spoiled sentiment. Investors were cautious ahead of the outcome of Reserve Bank of India (RBI)'s three-day Monetary Policy Committee (MPC) meeting tomorrow, 5 October 2018. The resolution of the MPC will be unveiled at 14:30 IST on 5 October 2018.
Among secondary equity barometers, the BSE Mid-Cap index fell 1.93%. The BSE Small-Cap index fell 2.07%.
The market breadth, indicating the overall health of the market, was weak. On BSE, 779 shares rose and 1885 shares fell. A total of 138 shares were unchanged.
Among the sectoral indices on BSE, the S&P BSE Capital Goods index (down 0.07%), the S&P BSE Bankex (down 0.26%), the S&P BSE Metal index (down 0.56%), the S&P BSE Power index (down 0.67%), the S&P BSE Basic Materials index (down 0.85%), the S&P BSE Industrials index (down 0.99%), the S&P BSE Utilities index (down 1.08%), the S&P BSE Finance index (down 1.11%), the S&P BSE Realty index (down 1.11%), the S&P BSE Consumer Durables index (down 1.51%), the S&P BSE Consumer Discretionary Goods & Services index (down 1.79%), the S&P BSE Auto index (down 1.84%) and the S&P BSE Telecom index (down 1.86%), outperformed the Sensex. The S&P BSE FMCG index (down 2.56%), the S&P BSE Teck index (down 2.97%), the S&P BSE Healthcare index (down 3.02%), the S&P BSE IT index (down 3.28%), the S&P BSE Oil & Gas index (down 6.58%) and the S&P BSE Energy index (down 6.66%), underperformed the Sensex.
Shares of oil marketing companies slumped after Finance Minister Arun Jaitley announced to cut fuel price by Rs 2.5 per litre. Government has cut excise on petrol and diesel by Rs 1.5 per litre. Oil marketing companies have been asked to bear remaining burden of Re 1 per litre.
Indian Oil Corporation (down 10.57%), BPCL (down 10.89%) and HPCL (down 12.23%), crashed.
Reliance Industries (down 7.03%), Hero MotoCorp (down 5.45%), Adani Ports & Special Economic Zone (down 4.17%), ONGC (down 3.74%) and Sun Pharmaceutical Industries (down 3.7%), were the major Sensex losers.
ICICI Bank rose 4.07%. The bank announced today that its board accepted the request of Chanda Kochhar to seek early retirement from the bank at the earliest. The board accepted this request with immediate effect. The enquiry instituted by the board will remain unaffected by this and certain benefits will be subject to the outcome of the enquiry. Ms Kochhar will also relinquish office from the board of directors of the bank's subsidiaries.
The board decided to appoint Sandeep Bakhshi as managing director & chief executive officer. His appointment will be for a period of five years until October 3, 2023, subject to regulatory and other approvals. The other terms and conditions of his appointment, such as remuneration, would remain unchanged. Separately, due to health reasons MD Mallya, independent director, resigned from the board and the same was accepted.
Engineering and construction major Larsen & Toubro rose 1.18%. The company announced today that its wholly owned subsidiary, L&T Hydrocarbon Engineering (LTHE), in consortium with Baker Hughes, a GE company and McDermott International, Inc. has been awarded the subsea contract for India's Oil & Natural Gas Corporation's (ONGC) largest deepwater oil & gas project, the development of block DWN-98/2 in the Krishna Godavari basin.
IT major Tata Consultancy Services (TCS) fell 4.54%. TCS and Institute of Industrial Science, (IIS, UTokyo), one of Japan's leading research institutes for engineering disciplines, have signed a memorandum of understanding (MoU) to collaborate on technology research and facilitate interpersonnel exchange. The partnership is the latest addition to TCS' Co-innovation Network (COIN) which brings together the best of academia, research, tech start-ups, and alliance partners from across the world to collaborate and conceptualize innovation that helps customers in their digital transformation journeys. The MoU opens the prospect of TCS and IIS, UTokyo working together on fundamental research, technology validation and the real-world applications and commercialization of technologies, commencing in the area of robotics. It also paves the way for an exchange of scholars and researchers between the two organizations.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 73.70, compared with its close of 73.34 during the previous trading session. Rupee hit a record low of 73.815 today.
In the global commodities markets, Brent for December 2018 settlement was down 25 cents at $86.04 a barrel. The contract had risen $1.49 a barrel or 1.76% to settle at $86.29 a barrel during the previous trading session.
Meanwhile, India's service sector continued to expand during September, but at a marginal rate amid reports of underwhelming market demand. The seasonally adjusted Nikkei India Services Business Activity Index recorded 50.9 during September. That was down from 51.5 in August and the lowest reading in the current four-month sequence of rising activity.
The seasonally adjusted Nikkei India Composite PMI Output Index also recorded a fall during September. Posting a level of 51.6, the index was down from 51.9 in August and at its lowest level in four months. That was despite a slight improvement in the manufacturing sector, where output growth strengthened to a solid pace.
On the macro front, giving a boost to farmers' income, the Cabinet Committee on Economic Affairs chaired by the Prime Minister Narendra Modi has approved the increase in the Minimum Support Prices (MSPs) for all Rabi crops for 2018-19 to be marketed in 2019-20 season. The farmer friendly initiative will give additional return to the farmers of Rs 62,635 crore by way of increasing MSP of notified crops to at least 50% return over cost of production and will aid in doubling farmers' income. The increase in the MSPs of wheat has been raised by Rs105 per quintal, safflower by Rs 845 per quintal, barley by Rs 30 per quintal, masur (lentil) by Rs 225 per quintal, gram by Rs 220 per quintal and rapeseed & mustard by Rs 200 per quintal is another major step in this regard, the Ministry of Agriculture & Farmers Welfare said in a statement yesterday, 3 October 2018.
On the economic front, the provisional figures of Direct Tax collections up to September, 2018 (Half-yearly figures) show that gross collections are at Rs. 5.47 lakh crore which is 16.7% higher than the gross collections for the corresponding period of last year. It is pertinent to mention that gross collections of the corresponding period of F.Y. 2017-18 also included extraordinary collections under the Income Declaration Scheme(IDS), 2016 amounting to Rs. 10,254 crore (Third and last installment of IDS), which does not form part of the current year's collection.
Refunds amounting to Rs 1.03 lakh crore have been issued during April, 2018 to September, 2018, which is 30.4% higher than refunds issued during the same period in the preceding year. Net collections (after adjusting for refunds) have increased by 14% to Rs. 4.44 lakh crore during April, 2018 to September, 2018. The net Direct Tax collections represent 38.6% of the total Budget Estimates of Direct Taxes for F.Y. 2018-19 (Rs 11.50 lakh crore).
So far as the growth rate for Corporate Income Tax (CIT) and Personal Income Tax (PIT) is concerned, the growth rate of gross collections for CIT is 19.5% while that for PIT (including STT) is 19.1%. After adjustment of refunds, the net growth in CIT collections is 18.7% and that in PIT collections is 14.9%.
An amount of Rs 2.10 lakh crore has been collected as Advance Tax, which is 18.7% higher than the Advance Tax collections during the corresponding period of last year. The growth rate of Corporate Advance Tax is 16.4% and that of PIT Advance Tax is 30.3%.
Overseas, shares in Europe and Asia declined on Thursday as investors digest comments from the US Federal Reserve chief and monitor events in Italy. China's markets are closed for the Golden Week holidays.
Sentiment was muted after Jerome Powell, the US Fed chairman, said that the bank was a "long way" from neutral on interest rates. The comments pushed the dollar to an 11-month high against the Japanese yen.
In Europe, the focus is on Italian politics. Prime Minister Giuseppe Conte said on Wednesday that the government deficit will be decreased in the next three years, despite the surge planned for 2019.
In US, the Dow Jones Industrial Average on Wednesday finished at a record for the 15th time this year as investors were cheered by healthy economic data. But the market pared earlier gains, with major indexes closing off intraday highs as bond yields jumped, which could dampen appetite for stocks.
Private-sector employment soared in September, as employers added 230,000 jobs, according to Automatic Data Processing Inc. Separately, the final reading on the services sector from IHS Markit fell to 53.5 in September from 54.8, while the Institute for Supply Management's reading on the came in at 61.6.
Wall Street got an early lift after a report in Italian daily newspaper Corriere della Sera that the government may yield ground in a budget standoff with the EU, which could lessen the odds of a clash between the country and the bloc.
According to the report, Italy's budget deficit target will be set at 2.4% of GDP in 2019, but decline to 2.2% in 2020 and 2.0% in 2021. Italian officials had previously clashed with Brussels over the budget deficit target, which exceeded EU rules and stoked fears of another crisis in the region. A resolution in Italy would mean one less potential risk to watch out for.
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