Bears back in action after a day of break, Sensex lost over 400 points

In a harrowing day of trade Indian markets suffered brutal sell-off, it was only the last hour recovery that helped the markets cap their losses otherwise Wednesday could have proved one of the worst trading day for the markets, after Sensex slumped nearly 650 points to slip below the psychological 24,000 mark for the first time since May 16, 2014. Bulls that were in action in last session were not even in picture today, with bears taking the command from the very beginning and the last session gains proved just a dead cat bounce, with markets resuming their declining streak after a day of break. The sell-off came after IMF painted a gloomy picture of the global economy and sharp slowdown in China. Though, IMF retained India's growth forecast at 7.5 per cent for 2016 and 2017 but lowered China's forecast to 6.3 per cent in 2016 and further down to 6 per cent in 2017 and revised down the global growth projection by 0.2 percentage point to 3.4 per cent for 2016.On the domestic front too, sustained capital outflows amid sluggish corporate earnings and domestic demand with weak trend on Asian bourses on renewed worries over global slowing economic growth and falling oil prices kept weighing the sentiments through the day. The delay in economic reforms and high volatility in global markets have led foreign investors to turn net sellers of domestic equities. The rupee weakness too contributed to the fall, rupee breached 68 per dollar mark for the first time since September 4, 2013 on continued foreign fund outflow.

On the global front, while the US markets consolidated and ended mixed, the Asian markets resumed the slump, initiating global sell-off once again after crude oil dipped below $28 a barrel and the International Monetary Fund reinvigorated concerns about global growth. While the mainland China remained more restrained on imminent policy stimulus, the Hong Kong markets suffered severe sell-off. Japanese share declining for the 11th time in 13 days, slipped to their lowest level since September. The European markets joining the sell-off too made a weak start, with major indices losing  around 3 percent in early deals.

Back home, there was panic selling in the markets on concerns over the anemic global economic growth. Sensex that fell below 24,000-mark by noon after the feeble start of the European markets, made good recovery in last half hour of trade, recovering more than 200 points from its day’s low to protect the 24000 bastion. Some good earnings along with value based buying at lower levels supported the markets in last, however sustained selling pressure in heavyweights after a feeble start of the European markets, weighed on the sentiments and restricted any major recovery. The sell-off was brutal and broad based, with across the sectors selling pressure, with realty, metal, energy and banks suffering severe beating. The early decline in the market was led by energy and oil & gas shares, with Reliance Industries falling by over 4 per cent, despite reporting a strong Q3. RIL reported a record profit of Rs 7,218 crore on the back of a seven-year high refining margins of $11.5 per barrel. While all the sectoral gauges on the BSE ended in red, aviation stocks mostly defied the market wide sell-off and pruned most of the losses finally on report that domestic passenger traffic rose 20.34 per cent in December last year over the same period in 2014. The high passenger carriage by the domestic airlines was mainly due to the ongoing tourist season in December. Power stocks too showed some action but remained in negative terrain after the Cabinet approved a new power tariff policy that aims at promoting clean energy, better regulation of discoms, and faster roll-out of investments. Besides encouraging faster roll-out of investment, the new policy will reflect a concern for the environment and encourage renewable energy. Sensex and Nifty, just managed to protect the turf of 24000 and 7300 respectively after slipping below them in intraday trade, while the broader markets suffered severely.

Finally, the BSE Sensex slumped by 417.80 points or 1.71% to 24,062.04, while the CNX Nifty lost 125.80 points or 1.69% to 7,309.30.

The BSE Sensex is currently trading at 24062.04, down by 417.80 points or 1.71% after trading in a range of 23839.76 and 24325.77.

There were just 3 stocks on gainers side against 27 stocks on losers side on the Sensex.

The broader indices suffered more than the benchmarks; the BSE Mid cap index was down by 2.01%, while Small cap index lost 2.04%.

The top losing sectoral indices on the BSE were Realty down by 3.49%, Metal down by 3.08%, PSU down by 2.66%, Power down by 2.39% and Bankex down by 2.35%.

The top gainers on the Sensex were Bajaj Auto up by 0.43%, Hero MotoCorp up by 0.21% and Wipro up by 0.05%. On the flip side, Adani Ports &Special down by 5.53%, SBI down by 5.13%, Reliance Industries down by 3.76%, Coal India down by 3.45% and Maruti Suzuki down by 3.40% were the top losers.

Meanwhile, a day after the Reserve Bank of India (RBI) governor Raghuram Rajan and two of his deputies met with banks and other financial institutions to discuss stressed loans in the banking system,  Minister of State for finance Jayant Sinha has stated that the finance ministry and the Reserve Bank of India are working in tandem on a comprehensive solution to the stressed assets held by banks through asset-quality reviews followed by specific solutions.

Sinha further acknowledging that bad loans posed a major economic risk for India, said that the stressed assets fund being set up under National Infrastructure Investment Fund (NIIF) is expected to play a key role in the process, making available equity to troubled companies.

The minister said that we have been spending a lot of time on public sector banks,outlining key pillars of intervention that will address the bigger universe of stressed assets and not just bad loans. Now we have to work out the right way to provision for them,' said Sinha, adding that the solution would avoid targeting banks. 'After extensive discussion with experts, RBI and banks, our conclusion was that a badbank approach was not necessarily the best,' he said, elaborating on the three-pronged solution. 'One is to get NIIF started with a stressed-assets fund, which is what we are going to do.' The second pertains to companies getting extensions on payments and loan haircuts while the third calls for taking over assets and induction of new management to effect a turnaround when this is possible.

Sinha said many of the stressed assets stem from industry wide issues, such as the ones that afflict power distribution, steel and textiles. 'There the intervention has to be at multiple levels. At the account level, it has to be with the banks, and it has to be at the industry level.' The global experience has been that the faster such problems are dealt with the better.

The CNX Nifty traded in a range of 7241.50 and 7470.90. There were 6 stocks in green against 44 stocks in red on the index.

The top gainers on Nifty were Idea Cellular up by 0.73%, Bajaj Auto up by 0.53%, HCL Tech. up by 0.44%, Hero MotoCorp up by 0.23% and Wipro up by 0.10%. On the flip side, Vedanta down by 7.73%, Hindalco down by 5.92%, Adani Ports & SEZ down by 5.78%, PNB down by 5.62% and Yes Bank down by 5.14% were the top losers.

European markets were trading sharply lower in early deals, Germany’s DAX declined by 297.96 points or 3.08% to 9,366.25, UK’s FTSE 100 lost 169.52 points or 2.88% to 5,707.28 and France’s CAC was down by 139.48 points or 3.26% to 4,132.78.

Asian equity markets ended in red on Wednesday, with Japan's Nikkei entering the bear market, as global sentiment remained low on concerns over economic growth, China, and oil wallowed at its lowest since 2003 after IEA's warning that oil supply glut may last through 2016. The International Monetary Fund has lowered its global growth projections for this year and the next, citing a sharp slowdown in China trade and weak commodity prices that are hammering emerging markets and developing economies. Chinese shares ended lower after the China Securities Regulatory Commission approved a new batch of initial public offerings under a new IPO registration system, despite the central bank's pledge to ease short-term liquidity.