Global growth concerns drag benchmarks lower

Friday turned out to be a disappointing session for the Indian equity indices which got pounded by over two percentage point as investors sold stocks across sectors amid global growth worries. After a negative opening, the domestic bourses never looked in recovery mood and ended the trade near 14 month lows, breaching their crucial support levels of 25,250 (Sensex) and 7,700 (Nifty). Selling was both brutal and wide-based as none of sectoral indices on BSE could manage a green close. Counters which featured in the list of worst performers included realty, infrastructure and power.

Sentiments remained downbeat after exporters’ body FIEO has said that the decline in outbound shipments has “pulled down” India's GDP growth in the April-June quarter by over 3 percent. Investors failed to get any sense of relief with Minister of State, UAE stating that United Arab Emirates is keen to invest in India, especially in opportunities arising out of various initiatives announced by the government such as ‘Make in India’ and ‘Digital India.’ Market participants also failed to draw any sense of relief with report that the government receiving over Rs 1 lakh crore investment proposals for manufacturing in the electronics sector.

Sluggish global cues too dampened the sentiments with European counters making an awful start, even though German factory orders, adjusted for seasonal swings and inflation, dropped 1.4 percent after June’s reading was revised down to 1.8 percent. Sharp sell-off in the Asian peers to weigh down the investors’ sentiment as investors remained concerned ahead of the US jobs data due to be released later today that may dictate the timing of a rate hike by the US Fed.

Back home, depreciation in Indian rupee too dampened the sentiments. Rupee was trading at 66.49 per dollar at the time of equity markets closing compared with its previous close of 66.24 per dollar. Further, reports that foreign portfolio investors (FPIs) sold shares worth a net Rs 394.31 crore on September 3, 2015 as per provisional data released by the stock exchanges, added to the negative milieu.

Selling in banking counter too dampened the sentiments after a credit rating agency said in a research note that the Reserve Bank of India's (RBI) draft guidelines on computation of base rate, if implemented in its current form, will adversely impact profitability of Indian banks. Power sector too witnessed selling, despite Prime Minister Narendra Modi stating that every household should have round-the-clock power supply by 2022.

The NSE’s 50-share broadly followed index Nifty tumbled by around one hundred and seventy points to end below the psychological 7,700 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over five hundred and sixty points to finish below its psychological 25,600 mark. Broader markets too witnessed selling pressure and ended the session with a cut of around two percentage points. The market breadth remained in favor of decliners, as there were 574 shares on the gaining side against 2,116 shares on the losing side while 89 shares remain unchanged.

Finally, the BSE Sensex plunged by 562.88 points or 2.18% to 25201.90, while the CNX Nifty declined by 167.95 points or 2.15% to 7655.05.

The BSE Sensex touched a high and a low 25775.38 and 25119.06, respectively. The BSE Mid cap index was down by 1.90%, while Small cap index was down by 2.47%.

The top losing sectoral indices on the BSE were Realty down by 3.32%, Infrastructure down by 3.24%, Power down by 3.03%, Bankex down by 2.65% and IT down by 2.34%, while there were no gainers on the sectoral index.

The top gainers on the Sensex were Bharti Airtel up by 0.75% and Coal India up by 0.32%. On the flip side, Vedanta down by 4.84%, GAIL India down by 4.73%, Tata Steel down by 4.66%, Hindalco down by 4.34% and Axis Bank down by 3.61% were the top losers.

Meanwhile, corrosion which has a huge economic and environmental impact on virtually all facets of the world’s infrastructure, from highways, bridges, and buildings to oil and gas, chemical processing, water and waste water systems and particularly industrial structures is making a cascading financial impact on the economy and India is losing a staggering Rs 2 lakh crore annually because of corrosion.

The Union Ministry of Chemicals and Fertilizers which has also been designated as nodal agency to deal with corrosion is going to set up Bureau of Corrosion control in the country as part of National Chemical policy to be announced soon. The Bureau of Corrosion control will help setting up standards for various chemicals, products and machinery to fight corrosion, which is eating up major part of our economy.

Chemicals and Fertilizers Secretary, Surjit K Chaudhary has said that Corrosion has a huge economic and environmental impact on virtually all facets of the world’s infrastructure and highlighted that in addition to causing severe damage and threat to public safety, corrosion especially in coastal states where salt content is high in atmosphere, water, rain and air disrupts operations and requires extensive repair and replacement of failed assets. Corrosion is a serious issue along the long coast line. Almost 3- 4% of our GDP is lost to corrosion.

Chaudhary further stated that India is a resource crunched nation and it needs sustainable and maintenance free Infrastructure that has long span of life, adding that nation cannot afford to allow new infrastructure to corrode and go for frequent repairs. He also said that here government-Industry partnership could be a good solution for sustaining benefits of anti-corrosion technologies being propagated through training and certification programmes.

The CNX Nifty touched a high and low 7804.90 and 7626.85 respectively.

The top gainers on Nifty were BPCL up by 1.47%, Coal India up by 1.07%, Bharti Airtel up by 1.01% and Lupin up by 0.30%. On the flip side, Vedanta down by 4.99%, Gail India down by 4.94%, Tata power down by 4.84%, Tata Steel down by 4.72% and Hindalco down by 4.47% were the top losers.

European Markets were trading in the red; France’s CAC was down by 2.04%, Germany’s DAX was down by 2.00% and UK's FTSE was down by 1.68%.

The Asian markets closed in red on Friday while Shanghai Stock Exchange was shut on account of ‘Victory Day’ holiday. Japan’s government offices have requested 102.4099 trillion yen ($852.14 billion) for an annual budget for the next fiscal year from April 2016, the biggest amount ever. The spending requests got a boost from areas such as social security in a fast ageing society and pro-growth policy steps. The requests, to be announced, highlight a challenge for Prime Minister Shinzo Abe’s aim of achieving both economic growth and fiscal consolidation. Indonesian central bank survey indicates that the country’s consumers are more optimistic about the economy, despite fears of higher inflation. Bank Indonesia’s August Consumer Confidence Index, based on a sample of some 4,600 households in 18 cities nationwide, rose by 2.7 points to 112.6 in August from a month earlier. Japan’s Average Cash Earnings rose to a seasonally adjusted 0.6%, from -2.5% in the preceding quarter whose figure was revised down from -2.4%. Malaysian Trade Balance fell to 2.38B, from 7.98B in the preceding month.