Global tremors continue to assault local benchmarks

It turned to be yet another tumultuous day of trade for the Indian stock markets which got thrashed for the fourth straight session to end with a cut of over two percent. Markets saw relentless selling pressure across the counters after further depreciation of the Chinese yuan rekindled fears of a growth slowdown in the world's second largest economy while slump in crude oil prices also dampened sentiment. The global benchmark Brent fell over 3 per cent to $33 per barrel, a level not seen since April 2004 and below the previous 11-year low. Sentiments also remained down-beat with the World Bank lowered its global economic growth forecast for 2016 to 2.9% against its June forecast of 3.3% growth because of sluggish performance from major emerging market economies. On the domestic front, sentiments got undermined with the report that Indian companies raised the lowest amount via both onshore and offshore debt markets in six years last year owing to subdued domestic investment climate and volatile global markets. Besides, depreciation in Indian rupee too dampened the sentiments. The rupee was at 66.86 per dollar at the time of equity markets closing as compared to 66.82 per dollar level on Wednesday. Persistent foreign capital outflows also affected the market sentiment. Foreign investors sold shares worth Rs. 242.48 crore on January 06, 2015. Investors failed to draw any solace with Finance Minister Arun Jaitley’s statement that in the first half of FY16, the Indian Economy has achieved robust growth rate despite volatility and uncertainty in global economy. 

On the global front, a plunge in Chinese stocks and a falling yuan sent markets across Asia sharply lower Thursday, as worries intensified about China’s economy and whether authorities had lost their grip on the market. Panic selling was witnessed across the global peers. Japan’s Nikkei, Hong Kong’s Hang Seng, China’s Shanghai Composite lost between 2%-8%. European markets also fell sharply with major stock market indices in the region down nearly 3 per cent.

Earlier on Dalal Street, the benchmark got off to a somber opening, extending the downtrend for the fourth straight session as pessimistic sentiments prevailed across Asian markets. Thereafter, the frontline indices lost the plot and kept tumbling down the hill without any stoppage. The steep fall turned even acute after the weak opening of European markets in the noon trades. The indices barely managed to show signs of stabilizing in the session as the downward drift halted only with the session’s close after suffering gargantuan losses.  Finally the NSE’s 50-share broadly followed index Nifty, suffered a nasty one hundred and seven point laceration to settle below the crucial 7,600 support level while Bombay Stock Exchange’s Sensitive Index Sensex got obliterated by over five hundred points and closed just above the psychological 24,850 mark. Moreover, the broader markets too failed to show any kind of fervor and settled with large cuts of about three percent.

On the sectoral front, the high beta sectors like Realty, Automobile and Metal witnessed brutal assaults as they got clobbered by 4.50%, 3.72% and 3.72% respectively. While counters like Power and Capital Goods too suffered severe pounding. There appeared absolutely no gainer either on the BSE sectoral front or among the heavyweight shares.  Meanwhile, Metal and mining stocks edged lower after the devaluation of yuan would lead to exports becoming costlier. Stocks related to Auto space also witnessed selling pressure, as the government ignoring protests from car makers -who will have to invest heavily and raise prices steeply, has decided to adopt Bharat Stage VI norms all over India by April 1, 2020. Another pack which got hit was the tyre pack with Apollo Tyres, MRF, Ceat and JK Tyres slumping between 3 percent-7 percent on fears that cheap imports from China may hurt sales. The market breadth remained awful as there were 680 shares on the gaining side against 2198 shares on the losing side while 101 shares remained unchanged.

Finally, the BSE Sensex declined by 554.50 points or 2.18% to 24851.83, while the CNX Nifty lost 172.70 points or 2.23% to 7,568.30.

The BSE Sensex traded in a range of 25230.35 and 24825.70. All the 30 stocks on the Sensex were on declined sideThe broader indices made a negative closing; the BSE Mid cap index ended down by 2.61%, while Small cap index ended down by 2.87%.

The top losing sectoral indices on the BSE were Realty down by 4.50%, Auto down by 3.72%, Metal down by 3.72%, Power down by 3.45% and Capital Goods down by 3.23%, while there were no gainers on the sectoral front.

The top losers on the Sensex were BHEL down by 6.98%, Tata Steel down by 6.85%, Tata Motors down by 6.15%, Axis Bank down by 4.98% and Maruti Suzuki down by 4.75%, while there were no gainers on the Sensex.

Meanwhile, in order to come up with ideas to drive economic growth ahead of the budget and beyond it, Prime Minister Narendra Modi has set up eight groups of secretaries. The eight groups are: accelerated growth; good governance; employment generation; farmer-centric initiatives; education and health; innovative budgeting and effective implementation; Swachh Bharat and Ganga rejuvenation with people's participation; and energy efficiency and conservation. Many of the ideas from these eight groups are likely to find their way into the Budget, which is being seen as a make-or-break one by a government under pressure to lift growth to a higher trajectory.

Modi on December 31 had briefed secretaries to focus on quick delivery of Centre’s programmes. Further he will hold intensive half-day meetings with the eight secretaries' groups on January 12, 15 and 16. The meetings are aimed at finalising the Practical Action Plan (PAP) for these eight priority areas.

Besides, each group is being assisted by two separate teams of joint secretaries, making for 16 such squads in all. The groups are working on plans for all eight areas for one year, three years and the long term and the task is put on high priority. Top bureaucrats Hasmukh Adhia, Ashok Lavasa, Jugal Kishore Mahapatra, Anil Swarup, Amitabh Kant and Rajiv Kumar are among those who have been asked to 'pilot' the group presentations that will be put together on January 16 as the final plan. The good governance group is working on a mandate of process reengineering, which includes discussion of measures to reduce tribunals, laws and needlessly time-consuming processes. The group on education is looking at using technology to track attendance of teachers in schools and measures that will help Indian colleges feature in the global top 100.

Modi has also given suggestions to every subgroup including a new crop insurance scheme, leveraging traditional health systems, energy audits of companies and a list of 100 towns that can be made model clean towns by October 2016. Further, he has also asked for greater embedding of technology in government functions, which include digitisation, Aadhaar, space applications and skill development. The PM has asked for a comprehensive road map for power, coal, road and road infrastructure for the next three years besides plans for agricultural reform in the eastern states.

The CNX Nifty traded in a range of 7,674.95 and 7,556.60. All the 50 stocks on the Nifty were on declined sideThe top losers on Nifty were Vedanta down by 8.72%, Cairn India down by 8.29%, BHEL down by 7.18%, Tata Steel down by 7.01% and Bank of Baroda down by 6.19%, while there were no gainers on index.

European markets were trading with deep cut; Germany’s DAX tumbled 355.69 points or 3.48% to 9,858.33, UK’s FTSE 100 declined 167.86 points or 2.76% to 5,905.52 and France’s CAC was down by 138.71 points or 3.1% to 4,341.76.