Sell-off in late trade drag markets lower; Nifty breaches 7,800 mark

Monday turned out to be a disappointing session for the Indian equity indices which got pounded by around a percent. After a cautious start, the domestic bourses traded listless for most part of the session but, sharp decline in late trade dragged key gauges below their crucial 25,700 (Sensex) and 7,800 (Nifty) levels. Investors remained on sidelines ahead of the Reserve Bank of India’s (RBI) monetary policy review on Tuesday. Though, the expectations are high from RBI’s governor Raghuram Rajan to cut its key repo rate to a four-year low to support the domestic economy at a time when consumer inflation is at a record low.

The sentiments also remained under pressure with a survey by the Boston Consulting Group and apex industry chamber Confederation of Indian Industry stating that at present rate of government’s ambitious ‘Make in India’ initiative, its target of creating 100 million jobs and achieving 25 percent of GDP from manufacturing sector by 2022 may be difficult to meet. Investors failed to draw any sense of relief with Niti Aayog vice-chair man Arvind Panagariya’s statement that the economy is now in a much better shape than before and backs the idea of aggressive rate cuts. He said that growth rate has turned around and shows signs of acceleration. Inflation is well within the target zone, indirect tax revenues have been buoyant and investor confidence is much improved.

On the global front, European markets made an awful start and were trading with a cut of over a percent, though Greece’s new finance minister, Euclid Tsakalotos said that growth will return to the beleaguered European nation. Asian markets ended mostly in red as investors awaited the release of key economic indicators in the U.S. and China. Concerns over an economic slowdown in China and its potential impact on the U.S. Federal Reserve’s plans to normalize monetary policy after years of record low rates has too dampened sentiments.

Back home, sentiments remained down-beat on reports that foreign portfolio investors (FPIs) sold shares worth a net Rs 115.10 crore on Thursday as per provisional data released by the stock exchanges. The rate-sensitive counter banking traded higher for most part of the day, but gave up all the gains to end in red terrain with a cut of over half a percent. On the flip side, stocks related to Fertilizer sector traded with traction on a report that the government is planning $83 million debt waiver for fertilizers and chemicals companies. Sugar stocks too remained on buyers’ radar on expectations that the country’s total sugar production in the current year may be lower by 5 per cent due to poor monsoon rains in key cane growing states such as Maharashtra was the principal reason.

The NSE’s 50-share broadly followed index Nifty declined by over seventy points to end below the psychological 7,800 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex dropped by around two hundred and fifty points to finish below its psychological 25,650 mark. Broader markets too struggled to get any traction and ended the session with a cut of around quarter percent. The market breadth remained in favor of decliners, as there were 1,136 shares on the gaining side against 1,590 shares on the losing side while 131 shares remain unchanged.

Finally, the BSE Sensex plunged by 246.66 points or 0.85% to 25616.84, while the CNX Nifty declined by 72.80 points or 0.93% to 7795.70.

The BSE Sensex touched a high and a low 25936.89 and 25593.56, respectively. The BSE Mid cap index was down by 0.23%, while Small cap index was down by 0.24%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 2.87%, Realty up by 1.03% and Healthcare up by 0.12%, while Metal down by 2.60%, Auto down by 1.74%, Capital Goods down by 1.72%, TECK down by 1.37% and IT down by 1.26% were the losing indices on BSE.

The top gainers on the Sensex were Dr. Reddys Lab up by 5.37%, Lupin up by 2.21%, Hindustan Unilever up by 1.43%, TCS up by 0.57% and SBI up by 0.17%. On the flip side, Tata Motors down by 6.06%, Vedanta down by 4.40%, Sun Pharma down by 3.42%, Infosys down by 2.91% and Coal India down by 2.81% were the top losers.

Meanwhile, with an aim to scale up inland waterways infrastructure in the country, the government is planning to offer 850 small and medium sized ports along key rivers for development by the private sector including foreign investors which could see investment of nearly Rs 4,000 crore. The government proposes to offer ports along the riverside systems of the Ganga, Brahmani, Brahmaputra, West Coast Canal, Godavari, Krishna and Barak for development. Most of these ports will fall along coal bearing routes making them commercially exploitable. The projects will be offered on the design, built, operate and transfer model.

The government is eyeing huge opportunity in transportation of coal to power plants along these rivers, having set an internal target of over 200 million tonnes. The shift of transportation of coal from railways to river ways will not only be environment friendly but also will bring down overall transportation cost. For 12 power projects along Ganga, coal could be transported through the river and goods can directly be exported to Bangladesh through waterways. Under the upcoming model concession agreement (MCA), the government is likely to offer a contract period of 30 years, making it a worthwhile proposal for private investment.

In order to develop inland transportation network, the government has already firmed up a plan to develop 101 inland waterways in different states that will require an estimated Rs 35,000 crore. Further, work has begun on three multi modal logistics hubs along the Ganga. Moreover, there is also a plan to set up satellite and dry ports to facilitate cargo movement through trains from states that don't have waterways.

Earlier, Shipping minister Nitin Gadkari had said that the inland waterways sector along with international ports will contribute over 1 per cent to the country's GDP in the next few years. Inland waterways in India make up a paltry 3 per cent of the total transport, compared with 47 per cent in China and 35 per cent in Bangladesh.

The CNX Nifty touched a high and low 7893.95 and 7787.95 respectively.

The top gainers on Nifty were Dr. Reddys Lab up by 5.23%, Idea Cellular up by 2.48%, Lupin up by 2.24%, Adani Ports &Special up by 1.90% and Yes Bank up by 1.25%. On the flip side, Tata Motors down by 6.18%, Vedanta down by 4.76%, Coal India down by 3.39%, Ultratech Cement down by 3.32% and Sun Pharma down by 3.18% were the top losers.

European Markets were trading in the red; France’s CAC was down by 1.69%, UK's FTSE was down by 1.39% and Germany’s DAX was down by 1.27%. 

The Asian markets closed mostly in red on Monday, tracking the lackluster cues from Wall Street. Hong Kong, South Korea and Taiwan markets were closed today on account of national holiday. Indonesia’s central bank will announce new policies aimed at increasing onshore supply of dollars, as part of the second installment of a stimulus package to support the shaky rupiah. Indonesia’s Finance Minister Bambang Brodjonegoro stated that the government is set to slash taxes for exporters in its second policy package to bolster the nation’s foreign exchange reserves and reduce volatility in the local exchange rate. The government is planning to lower income tax rates on interest exporters earn when they deposit their proceeds in local banks, as part of a strategy to keep dollar-denominated funds from leaving the country. China’s top economic planner with National Development and Reform Commission, Wang Changlin, stated that despite the weakened environment in the traditional industry sector, the service and high-tech sectors are emerging as strong growth drivers and helping the economy maintain growth at a medium-high pace. Tokyo’s core CPI, which excludes fresh food costs fell to at an annualized rate of -0.2%, from -0.1% in the preceding month.