Markets losses around 1.9%; Sensex tanks 1159 points & Nifty closes below 17,900

The domestic equity markets on Thursday, October 28, 2021, witnessed losses of around 1.90 per cent amid negative global cues. It fell sharply on the derivative expiry day with Sensex declining below the 60,000 mark while the Nifty closing below the 17,900 level.

The S&P BSE Sensex declined 1158.63 points, or 1.89 per cent, to 59,984.70. The Nifty 50 index fell 353.70 points, or 1.94 per cent, to 17,857.25. The Nifty Bank declined 1,365.40 points, or 3.34 per cent, and settled below the 40,000 mark at 39,508.95.

In the broader markets, the S&P BSE MidCap declined 1.38 per cent and the S&P BSE SmallCap fell 1.56 per cent. All sectoral indices on the NSE closed in the red with realty, metal, PSU banks stocks losing the most.

The market breadth was weak. On the BSE, 985 shares rose and 2295 shares fell. On the Nifty 50 index at the NSE, 6 shares advanced and 44 shares declined. The top five gainers were IndusInd Bank (up 2.58 per cent), Larsen & Turbo (up 1.82 per cent), UltraTech Cement (up 1.19 per cent), Asian Paints (up 1.10 per cent) and Shree Cement (up 0.51 per cent). The top five losers were Adani Ports (down 7.35 per cent), ITC (down 5.58 per cent), ONGC (down 4.43 per cent), Kotak Mahindra Bank (down 4.04 per cent) and ICICI Bank (down 3.98 per cent).

In global equity markets, shares in Asia-Pacific today logged losses. China's Shanghai Composite index fell 1.2 per cent and Japan's NIKKEI-225 declined one per cent. South Korea's KOSPI and Singapore's Straits Times, both slipped half a per cent and Hong Kong's Hang Seng ended 0.3 per cent down. European markets were also down in intra-day trade.

Morgan Stanley downgraded Indian equities

Morgan Stanley downgraded Indian equities to equal-weight from overweight on Thursday due to expensive valuations and said it expects the market to consolidate ahead of potential "short-term headwinds", reported by Reuters.

The brokerage said while the country's key fundamentals are positive, at 24 times forward price-to-earnings, Indian equities could see some consolidation ahead of the Fed tapering, a likely rate hike by India's central bank in February, and higher energy costs.

Morgan Stanley's downgrade follows similar moves by Nomura and UBS over expensive valuations. Indian stocks have strongly outperformed other emerging markets this year, with the MSCI India index up 27.53 per cent, compared to a 0.65 per cent slip in the MSCI Emerging Market index.

Economy

The RBI has said it proposes to make micro-lending collateral-free, not just for microfinance institutions (MFIs) but for all lenders. Delivering the inaugural address at the Sa-Dhan National Conference on 'Revitalising financial inclusion' on Wednesday, RBI deputy governor Rajeshwar Rao said that current regulations have created a non-level playing field.

Global supply chain disruptions and upward pressure on wages could linger longer than anticipated, according to Singapore's central bank, increasing inflationary pressures on the city-state as it continues growing at a faster-than-usual rate next year. The Monetary Authority of Singapore (MAS) said in its twice-yearly macroeconomic outlook Thursday that rising imported and labour costs, as well as a pickup in domestic activity, will support a broad acceleration in inflation. Singapore's central bank, which earlier this month tightened monetary policy settings to front-run the rise in consumer prices, is among global policymakers growing increasingly concerned that current inflationary pressures, mainly from supply disruptions and commodities, risk becoming more persistent. While it sees global supply bottlenecks being resolved next year as the pandemic eases "there is a risk that supply problems could become entrenched," the MAS said in the report.

It added that the decline in labour force participation in many economies "may not reverse as completely or rapidly as anticipated, leading to more persistent upward pressure on wages that could eventually feed through to consumer prices. The MAS on Thursday reiterated that its measure of core inflation should be near the upper end of its 0-1 per cent range this year and accelerate to 1-2 per cent next year.