Global tremors drag the benchmarks near 52 week low

The carnage in Indian stock markets got prolonged as the benchmarks continued to sway to the tune of depressing global developments and deposed another over a percentage point on Tuesday. Sentiments turned down-beat after Japanese equities posted its biggest daily drop in nearly three years amid strengthening yen. On the domestic front, sentiments got undermined after India reported GDP figures that suggested India's economic growth slowed in the third quarter, adding to pressure on Prime Minister Narendra Modi's government to expedite stalled reforms in the next session of parliament when it presents its annual budget. According to the Central Statistics Office (CSO), India’s economy grew 7.3% year-over-year in the quarter and is expected to grow 7.6% for the entire fiscal year. Besides, deprecating rupee against the dollar also influenced the sentiment. Extending its fall for the third consecutive session, the rupee fell by 19 paise to 68.13 against the US dollar due to increased demand for the American unit from importers and banks. Investors also remained cautious with the expectation of rising inflation after the report that India’s agriculture growth, measured in terms of gross value added at constant prices, slipped into negative territory in the October-December quarter (first time in FY16) because of a low kharif harvest.

On the global front, European stock markets dropped for a seventh straight session on Tuesday, as concerns persisted over the health of the region's top banks giving signs of a global economic slowdown. The downbeat trading mood in Europe worsened by data showing an unexpected drop in German industrial production in December, another sign that Europe’s largest economy ended 2015 on a weak note. On Asian trade, Japan’s Nikkei tumbled to a 2 -1/2 week low, with banks taking the brunt of the sell-off, while a stronger yen dragged down stocks across the board.

Back home, the benchmark got off to a gap down opening, in tandem with the somber sentiments prevailing in global markets. Thereafter, the key indices failed to show any kind of fervor due to lack of encouraging leads. The key gauges traded on a lackluster note for most part of the morning trades and drifted to the lowest point in the session in mid afternoon trades. Though the bourses recovered from the lows of the day but could not succeed in minimizing the huge losses by the end of trading session. Losses were also capped with the report that consumer sentiments in India rose for the first time in the last four months by 1.2 per cent to 109.8 in January as households have been relatively upbeat about the purchasing environment. Eventually the NSE’s 50-share broadly followed index Nifty, took a cut of over a percent to settle below the crucial 7,300 support level while Bombay Stock Exchange’s Sensitive Index Sensex slipped by over two fifty points and closed above the psychological 24,000 mark. Moreover, the broader markets too failed to show any kind of fervor and settled with large cuts of around one and half percent. On the sectoral front, the high beta sectors like IT, Metal and Automobile witnessed brutal assaults as they got clobbered by 3.40%, 2.98% and 2.47% respectively. While counters like Teck and Realty too suffered severe pounding. On the flip side, Oil & Gas pocket managed to go home with modest gains. The market breadth remained in favor of decliners, as there were 824 shares on the gaining side against 1777 shares on the losing side while 117 shares remain unchanged.

Finally, the BSE Sensex declined by 266.44 points or 1.10% to 24020.98, while the CNX Nifty dropped 89.05 points or 1.21% to 7,298.20. 

The BSE Sensex touched a high and a low 24111.19 and 23919.47, respectively. The broader indices made a negative closing; the BSE Mid cap index ended down by 1.91%, while Small cap index ended down by 1.34%

The only gaining sectoral index on the BSE was Oil & Gas up by 0.20%, while IT down by 3.40%, TECK down by 2.98%, Metal down by 2.47%, Auto down by 1.78% and Realty down by 1.50% were the top losing indices on BSE.

The top gainers on the Sensex were Lupin up by 4.68%, Sun Pharma Inds. up by 2.17%, NTPC up by 1.95%, ONGC up by 1.77% and GAIL India up by 1.48%. On the flip side, Coal India down by 4.38%, Tata Motors down by 4.12%, TCS down by 3.68%, Dr. Reddys Lab down by 3.61% and Infosys down by 3.46% were the top losers.

Meanwhile, India’s economic growth for the third quarter of this financial year slowed to a four-quarter low at 7.3 percent, from the revised 7.7 percent of the previous quarter. It, however bettered the 6.6 percent in the same period of the last fiscal. Growth in gross fixed capital formation, a proxy for investment, fell significantly in the third quarter, compared to the second, because of lacklustre private investments.

However, the Central Statistics Office (CSO) is still bullish on the Indian growth story and has said that Gross domestic product (GDP) will expand by 7.6 percent in 2015-16 compared with 7.2 percent a year earlier, overtaking a slowing China, on the back of improvement in manufacturing and farm sectors. The CSO's estimate is higher than the Finance Ministry's mid-year economic analysis, which projected a growth rate of 7-7.5 percent for the current fiscal. It is also higher than 7.4 percent estimated by the Reserve Bank of India. To meet the revised figure of 7.6 percent growth in the entire current year, the GDP has to increase by 7.8 percent in the last quarter. The CSO said in its statement that performance of the corporate sector during April-December 2015 has also been taken into account while compiling advance estimates.

Nominal GDP is estimated to grow 8.6 percent in the full year to March. For 2015-16, the Gross Value Added (at basic prices) is estimated to grow 7.3 percent as against 7.1 percent in 2014-15.  The sectors which are likely to register growth rate of over 7 percent are ‘financial, real estate and professional services’, ‘trade, hotels, transport, communication and services related to Broadcasting’ and manufacturing. The growth in ‘agriculture, forestry and fishing’ and ‘mining and quarrying’ is estimated to be 1.1 percent and 6.9 percent, respectively. While electricity generation is expected to slow down to 5.9 percent  in 2015-16 from 8 percent  a year ago due to lower demand from state distribution companies, the job-creating construction sector is also set to decelerate to 3.7 percent  in FY16 from 4.4 percent in the previous year.

The CSO data also showed that India's per capita income during 2015-16 is likely to grow by 6.2 percent to Rs 6,452.58 per month. The per capita income in real terms (at 2011-12 prices) during 2015-16 is likely to attain a level of Rs 77,431 as compared to Rs 72,889 for the year 2014-15. Also, the per capita net national income during 2015-16 is estimated to be growing at 7.3% to Rs 7,769.25 per month as against Rs 7,239.92 per month in the previous fiscal.

The per capita net national income during 2015-16 is estimated to be Rs 93,231, showing a rise of 7.3 percent, as compared to Rs 86,879 during 2014-15 with the growth rate of 9.4 percent. The CSO has estimated national income or the nominal net national income (at current prices) at Rs 119.62 lakh crore during 2015-16, as against Rs 110.08 lakh crore for 2014-15.

The CNX Nifty touched a high and low 7,323.45 and 7,275.15 respectively. 

The top gainers on Nifty were Lupin up by 4.55%, Sun Pharma up by 2.55%, NTPC up by 2.07%, Tata Power up by 1.53% and Bajaj-Auto up by 1.31%. On the flip side, PNB down by 6.68%, Tech Mahindra down by 4.82%, Coal India down by 4.73%, Bank of Baroda down by 4.63% and HCL Tech down by 4.09% were the top losers.

European markets were trading mostly in red; Germany’s DAX decreased 39.95 points or 0.44% to 8,939.41 and France’s CAC was down by 22.08 points or 0.54% to 4,044.23, while UK’s FTSE 100 was up by 24.42 points or 0.43% to 5,713.78.

Asian markets ended in red on Tuesday after US and European markets fell sharply overnight on concerns over slowing global growth and speculation over the Federal Reserve raising rates further in March. Japanese shares fell after a sell-off in the European banking sector triggered safe-haven bids for the yen, sending dollar crashing through the 115-yen level to its lowest since November 2014. Many of the regional markets, including China, Hong Kong, South Korea, Malaysia, Singapore and Taiwan were closed for the Lunar New Year holiday.

Nikkei 225 declined 918.86 points or 5.4% to 16,085.44 and Jakarta Composite was down by 30.32 points or 0.63% to 4,768.63.