October started off on a muted note with a sharp sell-off followed by some recovery in the last hour of the trading session. The Nifty failed to hold on to 11,500 levels.
The sell-off was triggered due to worries over a crisis in the banking and non-banking financial companies (NBFC) space.
However, the Reserve Bank on Wednesday (October 1) clarified that the Indian banking sector is safe and there is no cause for concern.
Unfortunately, the widespread disruption came at a time when customers were already in a panic due to the recent RBI suspension of the Punjab and Maharashtra Cooperative (PMC) Bank operations.
Thousands of customers of private sector banks such as Yes Bank, HDFC Bank, Kotak Mahindra Bank and IDFC First Bank complained on Tuesday (October 1) that their online transactions failed despite multiple attempts.
Some banks, however, said the disruption was because several customers tried to make online payments for festive sales, said a report.
September auto sales numbers reaffirmed the slowdown in consumer demand. A set of government data on September 30 showed that eight core industries in August recorded a 0.5 percent decline in output of coal, crude oil, natural gas, cement, and electricity.
The overall market capitalisation of BSE-listed firms dropped to Rs 1,45,32,392.02 crore from Rs 1,47,17,456.10 crore on October 1, making investors poorer by Rs 1.85 lakh crore in a single day.
The rupee dropped 20 paise to close at 71.07 against the US dollar on October 1 as heavy selling in domestic equities, unabated foreign fund outflows kept investors edgy.
On the institutional front, foreign portfolio investors (FPIs) were net sellers in the Indian markets for Rs 1,298 crore, while domestic institutional investors (DIIs) were net buyers to the tune of Rs 1,503 crore, provisional data showed.
Big News:
The Goods and Services Tax (GST) collection in September stood at Rs 91,916 crore as against Rs 98,202 crore in August, as per government data released on October 1. This is the lowest revenue since February 2018.
Central GST (CGST) collected in September 2019 stood at Rs 16,630 crore, State GST (SGST) at Rs 22,598 crore. The Integrated GST (IGST) stood at Rs 45,069 crore.
GST collections of September 2019 which are said to be lowest in the last 19 months is a cause of concern, suggest experts. It indicates a major economic downturn.
"Hopefully the recent amendments in the Income Tax Act and the GST Council's decision to reduce rates and other measures to turnaround the economy show results in the next two months. Further, the festive season should revive the economy," Parag Mehta, Partner, NA Shah Associates LLP said.
Technical View:
Nifty formed large bearish candle on daily charts. The index closed below 11,400 levels for the first time since September 20.
As long as the index trades below 11,400 levels and if it breaks Tuesday's (October 1) intraday low of 11,246, the bears could tighten their grip on Dalal Street, experts feel.
A breach of 11,247 on a closing basis can drag down the index towards critical support level placed in the zone of 11,180–11,080 levels
Three levels: 11,247, 11,554, 11,600
Max Call OI: 11,500, 12000
Max Put OI: 11,000, 11500
Stocks in news:
Yes Bank will be in focus after the private lender clarified on October 2 that the crash in its stock price the previous day was primarily on account of "forced sale" of 10 crore equity shares, which comprised 3.92 per cent of the bank's equity share capital.
In a filing to BSE, the bank said Milestone Trusteeship Services invoked shares pledged with it, following which the entire pledge stood extinguished.
Two-wheeler market leader Hero MotoCorp on October 1 reported a 20.4 percent decline in total sales at 612,204 units in September.
Indian IT major Infosys on October 1 announced a new strategic program, Innov8, to accelerate enterprise digital transformation journeys using digital solutions of IT firm SAP.
Technical Recommendations:
We spoke to SMC Global Securities and here’s what they have to recommend:
Coromandel International: Buy| Target: Rs 452| Stop Loss: Rs 385| Upside 10%
Kansai Nerolac Paints: Buy| Target: Rs 551| Stop Loss: Rs 470|Upside 10%
Fine Organic Industries: Buy| Target: Rs 1,910| Stop Loss: Rs 1,580| Upside 12%
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