Sensex Ends 298 Points Lower as Banking Stocks Slide; Yes Bank, IndusInd Bank Slip 5%

Thu, 10 Oct Closing

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Indian share markets witnessed negative trading activity throughout the day and ended lower. At the closing bell, the BSE Sensex stood lower by 298 points (down 0.8%) and the NSE Nifty closed down by 79 points (down 0.7%).

The BSE Mid Cap index ended the day down by 0.9%, while the BSE Small Cap index ended the day down by 0.6%.

Sectoral indices ended on a mixed note with stocks in the banking sector, finance sector and realty sector leading the losses, while telecom stocks and energy stocks witnessed buying interest.

The rupee was trading at 71.01 against the US$.

Speaking of the volatility witnessed in Indian share markets lately, if you look at the stock market returns over the years, you will see that the markets have never moved in a linear fashion.

What do I mean by that?

It has never been a one-way street - only up or down.

Stock markets have always moved in cycles.

The Time to Buy Stocks is Now

Here's what Radhika Pandit wrote about this in a recent edition of The 5 Minute WrapUp...

• If you would have bought stocks when either the Sensex or the Smallcap index was in a downturn, you would have made big returns once the cycle turned and the bulls took over.
  
  Sarvajeet and I believe we are seeing a similar situation currently.
  
  The economic slowdown does not herald the end of the world or for that matter the end of India. It's a phase and like all phases - This too shall pass.

So, the real question is - Are you taking advantage of these price declines to buy quality stocks?

Also, amid such volatile times in stock markets, Richa Agarwal reveals her investing strategy in the video below.

She also talks about the type of small cap stocks she is looking at during such times. Tune in...

In the news from the macroeconomic space, Moody's Investors Service cut India's gross domestic product (GDP) growth forecast for 2019-20 to 5.8% from the earlier estimate of 6.2%.

It attributed the deceleration to an investment-led slowdown that has broadened into consumption, driven by financial stress among rural households and weak job creation.

The ratings agency said that the drivers of the deceleration are multiple, mainly domestic and in part long-lasting.

Highlighting the diminished probability of sustained real GDP growth at or above 8%, it said that what was an investment-led slowdown has broadened into consumption, driven by financial stress among rural households and weak job creation.

A credit crunch among non-bank financial institutions (NBFIs), major providers of retail loans in recent years, has compounded the problem.

The ratings agency expects growth to pick up to 6.6% in FY21 and around 7% over the medium term.

Note that India's economic growth slumped to a six-year low of 5% in the April-June quarter. Further, according to the Reserve Bank of India (RBI), it is likely to be nearing this trough at 5.3% in the July-September quarter.

Last week, the RBI cut its benchmark interest rates last week for the fifth time this year to boost economic growth. The RBI cut repo rate by 25 basis points to 5.15%, which takes its cumulative cuts so far this year to 135 bps.

The six-member MPC decided to continue with an accommodative stance as long as it is necessary to revive growth, while ensuring that inflation remains within the target.

The MPC also sharply reduced its growth forecast for the fiscal year 2019-2020 to 6.1% from 6.9% earlier. The committee noted that risks to growth have emerged due to weak domestic demand and sagging export prospects on account of continuing trade tensions.

On the other hand, it retained its consumer price inflation forecast for the second half of the fiscal year 2019-202 as expected at 3.5%-3.7%.

Moody's noted that prolonged softer growth would dampen prospects for the government's fiscal consolidation plans and hamper its ability to prevent a rise in the debt burden.

With the recently announced corporate tax cuts and lower nominal GDP growth, it expects a central government deficit of 3.7% of GDP in 2019-20, marking a 0.4 percentage point slippage from its target.

How these estimates pan out remains to be seen in the coming months. We will keep you updated on developments from this space.

In the news from the telecom sector, Bharti Airtel share price was in focus today as the telecom operator raised US$ 750 million (about Rs 53.3 billion) from investors based in Asia, Europe and the US through a hybrid financial instrument.

The company on Wednesday said it has raised US$ 750 million from investors based in Asia, Europe and the US through a hybrid financial instrument.

The company will use the proceeds for refinancing, investments in subsidiaries and general corporate purpose.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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