Benchmarks witness bloodbath; Nifty breaches 8,450 mark

Extending their southward journey for fourth straight day, Indian barometer gauges witnessed bloodbath on Monday with both the major indices losing around two percentage points and ending below their crucial 8,450 (Nifty) and 27,900 (Sensex) levels. Sentiments remained dampened on reports that India’s exports contracted by 21.06 percent to $23.95 billion, while imports fell by 13.44 percent to $ 35.74 billion in March that led to trade deficit to its highest level in four months at $11.79 billion, as exports continued to fall, underscoring risks for growth prospects in Asia’s third largest economy. Sentiments also weighed down on reports that foreign institutional investors were net sellers in equities to the tune of Rs 676 crore on Friday. Further, concerns that unseasonal rains that have damaged crops in parts of the country could reduce rural demand thereby hurting volumes also weighed on sentiment.

Moreover, traders failed to get any sense of relief from Finance Minister Arun Jaitley’s statement that Indian economy is now clearly on a recovery path with a 7.4 per cent growth in the first three quarters and the new government is committed to maintain overall macroeconomic conditions on a sustained basis. Investors also shrugged off a survey conducted by global accounting consultancy firm EY and research agency Delphi, where it stated that though India has a better investment climate among BRICS nations, its regulatory and tax system-related challenges are impacting immediate investment plans.

On the global front, Asian markets ended the Monday’s trade mostly in the red terrain as mounting fears about a Greek default, uncertainty over the timing of a Federal Reserve rate hike and apprehensions about whether China will be able to keep its economy from losing too much steam kept investors on edge. However, European counters were trading in fine fettle in early deals, led by the telecoms sector after Telenet’s move to buy KPN's mobile telephony unit in Belgium.

Back home, selling was both brutal and wide-based as none of sectoral indices on BSE were spared. Counters, which featured in the list of worst performers, include realty, FMCG, capital goods, software, technology and power. Depreciation in Indian rupee too dampened the sentiments. Rupee was trading at 62.79 per dollar at the time of equity markets closing compared with its previous close of 62.36. Meanwhile, selling software and technology counters too dampened the sentiments. IT majors extended losses after lower-than-expected revenue growth in the fourth quarter by Tata Consultancy Services (TCS). Stocks related to realty space too edged lower overlooking the global rating agency Fitch’s report that the likely upturn in the country’s investment climate and reduction in interest rates will improve the property market by the end of March 2016.

The NSE’s 50-share broadly followed index Nifty dropped by around one hundred and sixty points to end below the psychological 8,450 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over five hundred and fifty points to finish below its psychological 27,900 mark. Broader markets too butchered during the trade and ended the session with a huge cut of over two percentage points. The market breadth remained in favor of decliners, as there were 878 shares on the gaining side against 1,961 shares on the losing side while 103 shares remain unchanged.

Finally, the BSE Sensex plunged by 555.89 points or 1.95% to 27886.21, while the CNX Nifty dropped by 157.90 points or 1.83% to 8,448.10.

The BSE Sensex touched a high and a low of 28539.46 and 27802.37, respectively. The BSE Mid cap index was down by 2.02%, while Small cap index was down by 2.17%.

The top gainers on the Sensex were Sun Pharma up by 0.66% and ICICI Bank up by 0.31%. On the flip side, Reliance Industries down by 4.46%, Hero MotoCorp down by 3.96%, Cipla down by 3.03%, Mahindra & Mahindra down by 2.96% and Axis Bank down by 2.94% were the top losers.

The losing sectoral indices on the BSE were Realty down by 2.78%, FMCG down by 2.71%, Capital Goods down by 2.17%, IT down by 2.08% and Power down by 2.04%.while, there were no gainers.

Meanwhile, as the Parliament resumes the Budget Session, the government is likely to introduce a Bill in Lok Sabha to amend the existing law on micro, small and medium enterprises. Indications are that the government may change the definition of MSMEs and thereby revise the investment limit for plant and machinery for such units.

The bill amending the Micro Small & Medium Enterprises Development Act, 2006 has suggested doubling the capital ceiling for micro enterprises from Rs 25 lakh at present to Rs 50 lakh. Similarly, for small enterprises, it proposes to hike the limit from Rs 5 crore to Rs 10 crore. The bill suggests tripling the capital ceiling for medium enterprises from Rs 10 crore to Rs 30 crore. For services sector units, the proposal entails doubling the investment limit in plant and machinery from Rs 10 lakh to Rs 20 lakh for micro enterprises. For small enterprises, it is proposed to be raised from Rs two crore to Rs five crore; whereas for medium enterprises the proposed increase is from the present Rs five crore to Rs 15 crore.

The MSMEs, ministry has said that the main purpose of this exercise is to support entrepreneur ventures of MSMEs in positive and constructive manner. The Prime Minister's Task Force on MSMEs recommended that the banks must achieve 20 per cent year-on-year growth in credit to micro and small enterprises and a 10 per cent annual growth in number of micro enterprise accounts.

The CNX Nifty touched a high and low of 8,619.95 and 8,422.75 respectively.

The top gainers on Nifty were Lupin up by 1.24%, Bank of Baroda up by 1.04%, ACC up by 0.55%, BPCL up by 0.55% and ICICI Bank up by 0.48%. On the flip side, NMDC down by 5.35%, Reliance Industries down by 4.65%, Hero MotoCorp down by 3.96%, HDFC down by 3.82% and IndusInd Bank down by 3.53% were the top losers.

European Markets were trading in the green; Germany's DAX was up by 1.26%, France's CAC was up by 0.26% and UK's FTSE 100 was up by 0.62%.

Asian equity indices ended mostly in the red terrain on Monday as investors remained concern about mounting fears about a Greek default and uncertainty over the timing of a Federal Reserve rate hike. Moreover, apprehensions about whether China will be able to keep its economy from losing too much steam too kept investors on edge. Hong Kong’s Hang Seng remained the top loser among Asian peers, down by over two percent as investors turned cautious after the buying frenzy that sent both Chinese and Hong Kong stocks surging in the past few weeks. Chinese Shanghai too edged lower as a crackdown by the China Securities Regulatory Commission on margin lending overshadowed positive sentiment arising from additional policy easing to bolster the slowing economy. China’s securities regulator on Friday said it would allow fund managers to lend shares for short-selling amid the continued surge in stock prices. The China Securities Regulatory Commission also tightened rules on margin lending and warned investors to be rational, sending stock-index futures down more than 5 percent in after-hours trading Friday. However, Seoul shares rose for a seventh consecutive session, with auto, chemical and other large-cap shares pacing the gainers, buoyed by the Chinese stimulus action.