Indian equities slide for third straight session, end near two-year low

Following decline in the global stock exchanges, Indian benchmark indices extended cuts for the third straight session and ended at their lowest level since May 2014 on the back of broad-based selling pressure. Sentiments remained down-beat with the report Indian economy is expected to grow at 7.9% in the fiscal starting April, lower than earlier forecast of 8.1%, due to intensifying global headwinds.  Also, the weak earnings of PSU banking stocks kept weighing on the sentiments, state-run lenders - Central Bank of India, Dena Bank, Allahabad Bank and IOB - reported massive losses and the spillover effects were seen on the other banking stocks too. Furthermore, foreign Institutional Investors (FIIs) continued their selling spree as they sold net Rs. 681 crore on February 09, 2015. Deprecating rupee against the dollar also influenced the sentiment. Indian rupee depreciated 6 paise to 67.96 against the US dollar due to increased demand for the American unit from importers and banks. Investors failed to draw any solace with Economic Affairs Secretary Shaktikanta Das underscoring the importance of reforms, stating that the 7.6 per cent GDP growth is ‘significant’ amid the global turmoil and there is no need to be ‘skeptical’.

On the global front, Asian markets ended in red as volatile trading in global equities continued, with Japanese shares extending losses after the biggest one-day plunge since August. US stocks finished Tuesday's volatile session little changed as a rally in materials was offset by losses in the energy sector fuelled by a fresh drop in oil prices amid a global stock sell-off. However, European shares rebounded on Wednesday from two-year lows reached in the previous session, helped by some solid corporate earnings and a recovery in Deutsche Bank.

Back home, the benchmark got off to a somber opening, extending the downtrend for the third straight session as pessimistic sentiments prevailed across Asian markets. Thereafter, the key indices failed to show any kind of fervor due to lack of encouraging leads. The selling pressure accentuated in the mid afternoon trades as investors took to across the board risk aversion. However, late short covering in blue-chip stocks and supportive leads from European markets ensured that local bourses go home with relatively less losses. Eventually the NSE’s 50-share broadly followed index Nifty, suffered a nasty over a percent laceration to settle above the crucial 7,200 support level, while Bombay Stock Exchange’s Sensitive Index Sensex got obliterated by over two hundred points and closed above the psychological 23,750 mark. Moreover, the broader markets too succumbed to the selling pressure and closed with losses of about a percent. On the BSE sectoral front, the Realty pocket bore the maximum brunt of selling as it got thrashed by about three and half a percent, followed by the rate sensitive Banking index, which too went home with hefty losses of over two percent, while counters like PSU, FMCG and Auto too suffered severe pounding.  The market breadth remained pessimistic as there were 653 shares on the gaining side against 1995 shares on the losing side, while 105 shares remained unchanged.

Finally, the BSE Sensex declined by 262.08 points or 1.09% to 23758.90, while the CNX Nifty dropped 82.50 points or 1.13% to 7,215.70. 

The BSE Sensex touched a high and a low 23938.32 and 23636.72, respectively. The broader indices made a negative closing; the BSE Mid cap index ended down by 0.95%, while Small cap index ended down by 1.42%

The top losing sectoral indices on the BSE were Realty down by 3.46%, Bankex down by 2.04%, PSU down by 1.66%, FMCG down by 1.37% and Auto down by 1.18%, while there were no gainers on BSE sectoral space.

The top gainers on the Sensex were Coal India up by 1.57%, Larsen & Toubro up by 0.73%, Maruti Suzuki up by 0.72%, Reliance Industries up by 0.61% and Mahindra & Mahindra up by 0.15%. On the flip side, Tata Motors down by 6.04%, SBI down by 4.82%, Adani Ports &Special down by 3.57%, HDFC down by 3.24% and Cipla down by 3.17% were the top losers.

Meanwhile, amid increasing global headwinds, Crisil Research in its report has said that Indian economy is expected to grow at 7.9 per cent in the fiscal year 2016-17, lower than earlier forecast of 8.1 per cent and higher from 7.6 per cent expected in the current fiscal, if supported by a normal monsoon. According to the report, growth in the next fiscal will find mild support from improved transmission of the RBI's policy rate cuts and the implementation of the salary and pension revisions recommended by the One Rank One Pension Scheme and the Seventh Pay Commission.

The report further highlighted that the economy's modest recovery so far has been shaped by good luck on crude oil and commodities, and a supportive policy environment. While this is expected to continue, India cannot afford to be third-time unlucky with rains and added that a normal monsoon in fiscal 2017 will give agriculture a one-time growth kicker because of the low-base effect of the last two years.

Crisil further notified that while a slowing world implies prices of crude oil and the commodity complex will remain battered, which will bolster the fiscal math, sluggishness in global demand will prolong the agony for exporters. That means the trigger for growth in fiscal 2017 will come from within  or the domestic economy  and, as in the current fiscal, another dose of good luck through low crude oil prices will be useful.

The report further stated that it also expects the government to improve ease of doing business even more and pass the important reforms such as the Goods and Services Tax (GST), which can improve investor appetite.

The CNX Nifty touched a high and low 7,271.85 and 7,177.75 respectively. 

The top gainers on Nifty were HCL Tech up by 2.65%, Ultratech Cement up by 1.87%, BPCL up by 1.59%, Power Grid up by 1.44% and Grasim Industries up by 1.44%. On the flip side, PNB down by 9.12%, Tata Motors down by 7.07%, Bank of Baroda down by 5.95%, Cairn down by 5.92% and SBI down by 4.82% were the top losers.

European markets were trading in green; UK’s FTSE 100 surged 63.79 points or 1.13% to 5,695.98, France’s CAC increased 81.6 points or 2.04% to 4,079.14 and Germany’s DAX was up by 181.82 points or 2.05% to 9,061.22.

Asian markets ended in red on Wednesday, as the collapse of oil prices and fresh worries that a new banking crisis could erupt in a fragile global economy added to the risk-off mood. Shares fell across the region despite oil prices seeking some rebound from overnight losses on news that Iran is ready to talk with Saudi Arabia over the current conditions in international oil markets. Japanese shares hit a 15-month low as the dollar slid from the lower 115 yen range to the mid-114 yen zone on concerns over global market volatility and worries over financial institutions in Europe and the US. The markets in South Korea, Taiwan, China and Hong Kong remain closed for the Lunar New Year holiday.