Selling intensifies, benchmarks decline over 1.5%

Disappointment has once again gripped the Indian equity markets; the gap-up start following the recovery in the other regional markets has once again taken the turn of panic selling in the early noon trade, with major averages plunging deep in red after the Chinese market extended its fall. Traders even overlooked the global rating agency Moody’s latest report in which it has said that a fall in commodity prices, particularly crude oil prices, and tighter fiscal and monetary policies have helped restore India's macro-economic balance over the last two years and this improved balance offers the Indian economy and financial system some resilience to potential volatility in global capital flows in coming months. Traders that took some encouragement from Finance Minster Arun Jaitley’s statement that the economy is in a revival phase and hint that it will clock a growth rate in excess of 8 per cent in 2015-16, have once again resorted to selling on fear of further drop in the markets on global growth concern. Back on street, broader markets are once again witnessing sharper selling pressure, while all the sectoral indices too have slipped into red, with some even suffering cuts of close to 4 percent.

The BSE Sensex is currently trading at 25363.49, down by 378.07 points or 1.47% after trading in a range of 25298.42 and 26124.83. There were just 6 stocks advancing against 24 stocks declining on the index.

The broader indices were suffering more than the benchmarks; the BSE Mid cap index was down by 2.35%, while Small cap index plunged by 3.84%.

The top losing sectoral indices on the BSE were Capital Goods down by 3.95%, Power down by 3.80%, Consumer Durables down by 3.60%, INFRA down by 2.99%, Auto down by 2.32%.

The gainers on the Sensex were Coal India up by 2.42%, Axis Bank up by 1.41%, NTPC up by 0.91%, Hindustan Unilever up by 0.74% and Reliance Industries up by 0.10%. On the flip side, BHEL down by 5.73%, Lupin down by 4.50%, Sun Pharma Inds. down by 4.40%, Maruti Suzuki down by 3.91% and Bharti Airtel down by 3.71% were the top losers.

Meanwhile, after Finance Minister and RBI governor’s assurance of Indian economy being strong enough to withstand the global turmoil, the international rating agency Moody’s Investor's Service too has said that India's macro-economic indicators have improved over the last few years, which will help the country withstand volatility in global capital flows in coming months.

Moody's in its latest report has said that recent policy measures by the government will stabilize inflation and help India grow 7% in FY16. It further said if policies to improve India's operating environment are effectively implemented, and are accompanied by a strengthening of institutions, their impact will improve the sovereign credit profile over the medium term. However, it also said that policy progress is likely to be slow and unlikely to be reflected in near term economic indicators.

The report though is an annual update to the market, and does not constitute a rating action, but stated that as a commodity importer, India benefits from a low commodity price environment, and its reliance on domestic demand for GDP growth shields the economy somewhat from the subdued outlook for global growth and that India's rating could be upgraded if Moody's expectations of gradual but credit positive reforms are realized in actual policy implementation and if the recent improvement in inflation, fiscal and current account ratios is sustained.

Moody's noted that in addition to lower oil prices tighter fiscal and monetary policies have also helped restore India's macro-economic balance over the last two years and highlighted that this improved balance offers the Indian economy and financial system some resilience to potential volatility in global capital flows in coming months.

The CNX Nifty is currently trading at 7679.05, down by 129.95 points or 1.66% after trading in a range of 7667.25 and 7925.40. There were 9 stocks advancing against 41 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 2.13%, Axis Bank up by 1.64%, Coal India up by 1.63%, Hindustan Unilever up by 0.85% and Indusind Bank up by 0.76%. On the flip side, Tata Power down by 10.20%, BHEL down by 5.84%, Vedanta down by 4.81%, Ambuja Cement down by 4.60% and Lupin down by 4.42% were the top losers.

Asian markets were showing mixed trend, FTSE Bursa Malaysia KLCI increased by13.17 points or 0.86% to 1,545.31, KOSPI Index gained 16.82 points or 0.92% to 1,846.63, Straits Times was up by 28.29 points or 0.99% to 2,871.68, Jakarta Composite gained 81.24 points or 1.95% to 4,244.97 and Taiwan Weighted increased 265.3 points or 3.58% to 7,675.64.

On the other hand, Nikkei 225 slumped by 733.98 points or 3.96% to 17,806.70, Hang Seng was down by 230.91 points or 1.09% to 21,020.66 and Shanghai Composite plunged by 213.36 points or 6.65% to 2,996.54.