Shares continued to trade on a weak note in afternoon trade. At 13:16 IST, the barometer index, the S&P BSE Sensex, was down 760.91 points or 2.12% at 35,214.72. The Nifty 50 index was down 236.85 points or 2.18% at 10,621.40. Falling rupee and surging crude prices put pressure on shares. Negative global cues also spoiled sentiment.
Cautiousness prevailed 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 was down 2.40%. The BSE Small-Cap index was down 2.31%.
The market breadth, indicating the overall health of the market, was weak. On BSE, 601 shares rose and 1869 shares fell. A total of 127 shares were unchanged.
Reliance Industries (down 6.04%), Hero MotoCorp (down 5.97%), Adani Ports & Special Economic Zone (down 4.09%), IndusInd Bank (down 3.04%), Infosys (down 2.8%) and Hindustan Unilever (down 2.49%), were the major Sensex losers.
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IT major Tata Consultancy Services (TCS) was down 3.90%. TCS and Institute of Industrial Science, The University of Tokyo (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.
Engineering and construction major Larsen & Toubro was up 1.49%. 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.
Axis Bank (up 0.80%), Vedanta (up 0.62%), Tata Steel (up 0.28%) and Yes Bank (up 0.21%), were the major Sensex gainers.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 73.635, 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 9 cents at $86.20 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. Price pressures intensified, with higher fuel costs and a stronger US dollar raising the price of imported goods.
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.
Overseas, shares in Europe and Asia traded lower 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 non-manufacturing sector 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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