The market reversed early trend and hit fresh intraday low in morning trade as a sudden selling pressure gripped shares. At 10:30 IST, the barometer index, the S&P BSE Sensex, was down 202.04 points or 0.60% at 33,689.09. The Nifty 50 index was down 68.40 points or 0.67% at 10,130. Trading sentiment was affected amid worsening relationship between the Reserve Bank of India and the government.
The government has reportedly invoked never-before-used powers under the RBI Act allowing it to issue directions to the central bank governor on matters of public interest.
Media reports suggested that Section 7 of the RBI Act empowers the government to consult and give instructions to the governor to act on certain issues that the government considers serious and in public interest. This Section had never been used in independent India till now, reports added.
India's finance minister Arun Jaitley criticised the Reserve Bank of India (RBI) for failing to prevent lending excess in a speech on Tuesday, 30 October 2018. The central bank looked the other way when banks gave loans indiscriminately during 2008 to 2014, Jaitley reportedly said while speaking at an event in New Delhi. According to media reports, tensions between the finance ministry and the RBI have risen since the bank's deputy governor said in a speech on Friday that undermining a central bank's independence could be "potentially catastrophic", in an indication that it is pushing back hard against government pressure to relax its policies and reduce its powers.
Among secondary barometers, the BSE Mid-Cap index was down 0.37%. The BSE Small-Cap index was down 0.30%. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, turned negative from positive. On BSE, 807 shares rose and 1082 shares fell. A total of 96 shares were unchanged.
Tata Steel fell 4.37%. The steel major's joint venture with Thyssenkrupp AG to set up a European steel company with equal shares of ownership reportedly face an in-depth European Union probe over concerns that the deal could reduce competition in the supply of various high-end steels.
Coal India was down 3.44%. The President of India is looking to sell up to 18,62,22,275 (3%) equity shares of Coal India on 31 October 2018 (for non-Retail Investors only) and on 1 November 2018 (for Retail Investors and non-Retail Investors who choose to carry forward their unallotted bids) with an option to additionally sell 37,24,44,550 (6%) equity shares of the company. The floor price for the offer shall be Rs 266 per share. The announcement was made after market hours yesterday, 30 October 2018.
Bharti Airtel (down 3.6%), Power Grid Corporation of India (down 2.54%), NTPC (down 2.5%) and Maruti Suzuki India (down 2.09%), were the major Sensex losers.
Dr. Reddy's Laboratories was down 3.38%. The company said that the audit of formulations manufacturing facility at Duvvada, Visakhapatnam, by the USFDA, has been completed. The company received Form-483 with eight observations which it is addressing, Dr. Reddy's Laboratories said. The announcement was made after market hours yesterday, 30 October 2018.
Infosys (up 1.72%), HDFC (up 1.33%), Hero MotoCorp (up 0.56%) and Sun Pharmaceutical Industries (up 0.42%), were the major Sensex gainers.
Overseas, most stocks in Asia rose on Wednesday. Chinese official manufacturing Purchasing Managers' Index (PMI) was 50.2. The official manufacturing PMI had been 50.8 in September. China's official non-manufacturing purchasing managers index dropped to 53.9 from September's 54.9, the National Bureau of Statistics said on Wednesday. A reading above 50 indicates expansion, while a reading below that signals contraction.
US stocks closed higher Tuesday as President Donald Trump signaled that the US is ready to reach a deal to ease trade tensions with China, giving the market some much-needed relief. Markets were also digesting a raft of quarterly corporate results with several big-name companies set to report earnings this week.
On the US data front, home-price gains are slowing, as the Case-Shiller 10-city composite index showed a 0.6% increase from last month's reading, or a 5.5% annual increase. The 20-city composite index rose a seasonally adjusted 0.1% and was 5.5% higher compared to its level a year ago, the lowest annual increase in nearly two years.
Consumer sentiment hit an 18-year high, according to the Conference Board's consumer confidence index, which rose to 137.9, from 135.3 in September.
The residential vacancy rate fell 0.4% points from a year earlier to 7.1%, according to the Census Bureau report, which also showed that the US homeownership rate was virtually unchanged at 64.4%.
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