Benchmarks crash like house of card in late trade; Nifty breaches 8,400 mark

Thursday turned out to be a daunting session for the Indian equity indices which got pounded by over a percentage point as investors sold stocks across sectors amid weak global cues. After a weak opening, markets traded in tight band tad below their neutral lines but suffered sudden profit taking in last leg of trade and crashed like house of card to end below their crucial 8,400 (Nifty) and 27,750 (Sensex) levels. Selling was both brutal and wide-based as none of sectoral indices on BSE, barring FMCG and Healthcare, were spared. Counters, which featured in the list of worst performers, include realty, metal, banking and software.

Sentiments remained down-beat with a private report stating that four states which produce over one-third of India’s foodgrain, and five crops that add up to more than a quarter of the production of grains and oilseeds, are vulnerable to this year’s deficit monsoons. The India Meteorological Department too has predicted that the second half (August-September) of the four-month monsoon season will see a deficit of 16% of the long-term average, while the overall deficit is likely to be 12%. Moreover, investors failed to get any sense of relief from Reserve Bank of India governor Raghuram Rajan’s statement that Indian economy is showing signs of improvement and the devaluation of the Chinese yuan was not something to be concerned about at current levels. He also added that the rural demand coming back more strongly and that would be a very tremendous bonus to Indian economy.

Selling got intensified after European markets made an awful start tracking global weakness after US Federal Reserve minutes dented expectations for a rate hike in mid-September and commodities took a hit from slowdown fears. Concerns about slowing growth in China sent Asian shares to two-year lows and pressured oil prices on Thursday.

Back home, depreciation in Indian rupee too dampened the sentiments. Rupee was trading at 65.46 per dollar at the time of equity markets closing compared with its previous close of 65.53 per dollar. Sentiments also weighed down on report that foreign portfolio investors (FPIs) selling shares worth a net Rs 423.72 crore on August 19, 2015, as per provisional data released by the stock exchanges. Selling in metal counter too dampened the sentiments due to softening global commodity prices and concerns over slowing demand from China. IT shares which had rallied in the previous sessions on the back of a weakening rupee witnessed profit taking. On the flip side, Pharma stocks remained on buyers’ radar after government once again expressed concern over EU's ban on medicines clinically tested by GVK Biosciences, saying it could lead to ‘adverse campaign’ about clinical trials done in the country. Commerce and Industry Minister Nirmala Sitharaman said the ban has come despite India engaging with the European Union and their regulatory bodies at various levels.

The NSE’s 50-share broadly followed index Nifty declined by over one hundred and twenty points to end below the psychological 8,400 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over three hundred and twenty points to end below its crucial 27,750 mark. Broader markets too witnessed bloodbath and ended with a cut of two percentage points. The market breadth remained in favor of decliners, as there were 771 shares on the gaining side against 2,072 shares on the losing side while 100 shares remain unchanged.

Finally, the BSE Sensex plunged by 323.82 points or 1.16% to 27607.82, while the CNX Nifty declined by 122.40 points or 1.44% to 8372.75.

The BSE Sensex touched a high and a low 27964.60 and 27564.16, respectively. The BSE Mid cap index was dwon by 2.00%, while Small cap index was down by 2.01%.

The top gaining sectoral indices on the BSE were FMCG up by 1.34% and Healthcare up by 0.38%, while Realty down by 4.13%, Metal down by 2.39%, Bankex down by 2.33%, IT down by 2.27% and TECK down by 2.12% were the losing indices on BSE.

The top gainers on the Sensex were Lupin up by 5.39%, ITC up by 3.90%, Dr. Reddys Lab up by 1.54%, Sun Pharma up by 0.91% and Hindustan Unilever up by 0.03%. On the flip side, Vedanta down by 4.00%, Axis Bank down by 3.68%, Reliance Industries down by 3.55%, BHEL down by 3.30% and Tata Steel down by 3.30% were the top losers.

Meanwhile, Ministry of New and Renewable Energy has made a request for public Feedback/Views/Comments on the National Biofuels Policy and the Motor spirit and High Speed Diesel Control in respect of the changed overall outlook of the biofuel programme which seeks to allow the producers to directly sell fuel to consumers especially bulk customers like railways in a free market economy. The feedback could be sent by September 20 at biofuels. mnre@ gov. in.

The National Biofuel Policy states that the responsibility of storage, distribution and marketing of biofuels will rest with oil marketing companies. Besides, the policy states that the exports of biofuels will be permitted only when domestic requirements are met. Further, The Motor spirit and High Speed Diesel Control Order also stipulates that no other person should get engaged in the business of selling these products apart from the dealer or the oil company.

Last year, while considering the proposal to facilitate manufacturers of biodiesel to directly sell the fuel to bulk consumers, Power, Coal, New & Renewable Energy Minister Piyush said no biodiesel has been procured by oil marketing companies in the last three years while around 92,000 tonnes biodiesel were exported during the same period. Meanwhile an indicative target of 20% blending for bio-diesel and bio-ethanol, by 2017 has been proposed.

The Policy aims to bring about accelerated development and promotion of the cultivation, production and use of biofuels to increasingly substitute petrol and diesel for transport and used in stationary and other applications, while contributing to energy security, climate change mitigation, apart from creating new employment opportunities and leading to environmentally sustainable development.

The CNX Nifty touched a high and low 8501.35 and 8359.75 respectively.

The top gainers on Nifty were Lupin up by 5.55%, ITC up by 3.94%, BPCL up by 2.02%, Dr. Reddys Lab up by 1.65% and Sun Pharma up by 1.21%. On the flip side, Yes Bank down by 6.29%, Cairn India down by 5.67%, PNB down by 5.51%, Vedanta down by 4.15% and Reliance Industries down by 4.08% were the top losers.

European Markets were trading in the red; France’s CAC was down by 0.91%, Germany’s DAX was down by 0.85% and UK's FTSE was down by 0.35%.

The Asian markets, barring Taiwan Weighted, closed in red on Thursday with Shanghai Composite plunging as worries persisted over the weak economy and currency. Chinese companies that have been active raising cheap funds in global capital markets are facing increasing pressure as the yuan has come off its track of steady appreciation and is expected to fall further in coming months. The mismatch between their foreign currency liabilities and yuan-denominated revenues means interest expenses and principal payments of these loans and bonds will increase in yuan terms when the Chinese currency depreciates. China’s central bank has made $17 billion available to more than a dozen financial institutions to help boost the economy, a day after injecting nearly $100 billion into two government policy banks. Indonesia’s foreign debt grew at a slower pace in the second quarter of 2015, with the private sector reluctant to take on more debt amid rising risks stemming from sluggish economic growth and a weak currency. The country’s total foreign debt rose by 6.3% to $304.3 billion in the April-to-June period, compared to the same period a year ago. The growth was slower than the 7.9% pace the previous quarter. Japan’s All Industries Activity Index rose to a seasonally adjusted 0.3%, from -0.5% in the preceding month.