Indian equities snap 4-day winning streak, Sensex recedes by 378 Points

Tuesday’s session turned out to be a disappointing session for the Indian benchmarks which crumbled like a ‘house of cards’ and went on to breach various key technical levels in the over one and half  percent freefall. The frontline indices which appeared to be on a southbound journey, desperately kept searching for a bottom through the session, but to no avail as the downward journey only halted with the session’s close. Sentiments turned pessimistic on report that exports of over half of the sectors, out of the 30 closely monitored by the Commerce Ministry, were in the negative zone in January due to a fall in global prices and demand. Investors were also jittery ahead of the government's 2016/17 budget, which is due on February 29, though hopes are high that policymakers will deliver a fiscally responsible budget that nonetheless steers spending to key areas such as infrastructure. Sentiments weakened further after Moody’s Investors Service stated that India’s fiscal metrics will remain weaker than its peers in the near term even if the Finance Minister Arun Jaitley was to stick to the fiscal consolidation roadmap. The global credit rating agency added that the importance of the upcoming Budget 2016 lies in its message on the government’s fiscal consolidation plans. Meanwhile, foreign institutional investors (FIIs/FPIs) continued their selling spree on Monday as well, and were net sellers of Indian equities worth Rs 656.93 crore, indicting diminishing trust over market fundamentals.

On the global front, Asian markets ended mostly lower as the oil price rally that boosted global equity markets reversed, while the euro and sterling were hit by uncertainty over Britain's membership in the European Union.  Japanese and Australian shares saw their early lead eroded as the yen appreciated, a move exacerbated by a weaker renminbi as the People’s Bank of China set the reference rate for its currency lower by the most since the first week of January. Meanwhile, European shares retreated on Tuesday, with falling commodities prices and disappointing updates from Standard Chartered and BHP Billiton putting pressure on the market.

Back home, after making a flat but positive start, Indian benchmark indices dropped into the red terrain sooner than later, lacking any significant upside cues. Thereafter, the frontline indices lost the plot and kept tumbling down the hill without any stoppage. The steep fall turned even acute after the opening of European markets in the noon trades, as one negative report after another from the continent kept creating havoc for the local bourses. 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 twenty five point laceration to settle just above the crucial 7,100 support level, while Bombay Stock Exchange’s Sensitive Index Sensex got obliterated by over three hundred and fifty points and closed near the psychological 23,400 mark. Moreover, the broader markets too failed to show any kind of fervor and settled with cuts of over a percent. On the sectoral front, the rate sensitive sectors like Banking, Realty and PSU witnessed brutal assaults as they got clobbered by 2.82%, 2.49% and 3.32% respectively. While counters like Oil & Gas and Metal too suffered severe pounding. There appeared absolutely no gainer either on the BSE sectoral front. The market breadth remained pessimistic as there were 717 shares on the gaining side against 1890 shares on the losing side while 144 shares remained unchanged.

Finally, the BSE Sensex plunged by 378.61 points or 1.59% to 23410.18, while the CNX Nifty dropped 125.00 points or 1.72% to 7,109.55. 

The BSE Sensex touched a high and a low 23851.51 and 23361.94, respectively. The broader indices made a negative closing; the BSE Mid cap index ended down by 1.47%, while Small cap index ended down by 1.25%

The top losing sectoral indices on the BSE were Bankex down by 2.82%, Realty down by 2.49%, PSU down by 2.32%, Oil & Gas down by 1.87% and Metal down by 1.75%, while there were no gainers on BSE sectoral front.

The top gainers on the Sensex were Asian Paints up by 0.64% and ONGC up by 0.02%. On the flip side, Coal India down by 4.06%, SBI down by 3.94%, Bajaj Auto down by 3.56%, ICICI Bank down by 3.20% and Axis Bank down by 3.02% were the top losers.

Meanwhile, amid fall in global prices and demand, exports of over half of the sectors out of the 30 closely monitored by the Commerce Ministry were in the negative zone in the month of January 2016. Outbound shipments of as many as 17 sectors, dipped last month. According to the data of the Commerce Ministry, top two sectors - engineering and petroleum products contracted 27.6 percent and 35.18 percent, respectively during the month.

Further, agri-products, which constitute over 10 percent of the country's total shipments, too recorded a negative growth during the month under review. Overall, eight out of 13 main agriculture products slipped into negative territory.  Exports of rice, cashew and oil meals fell 33.46 percent, 24.6 per cent and 77.5 percent, respectively.

On the other hand, exports of pharmaceuticals, plastic, carpet, tea and coffee have recorded positive growth in January 2016.  Exporters' body Federation of Indian Export Organisations (FIEO) has said that in order to boost the shipments, the government should announce incentives in the Budget. It said that the inverted duty structure in respect of various items may be given due consideration in the Budget as it not only effects exports but also the manufacturing sector.

India’s merchandise exports extending its decline for the fourteen months in row, plunged by 13.6 per cent in January 2016 at $21.07 billion as against $24.39 billion in January last year. Decline in these exports has been instrumental in dragging down India's overall merchandise exports. Due to continuous dip, the total merchandise shipments are expected to reach a figure of $270 billion in 2015-16.  India has aimed at taking exports of goods and services to $900 billion by 2020 and raising the country's share in world exports to 3.5 percent from 2 percent.

The CNX Nifty touched a high and low 7,241.70 and 7,090.70 respectively. 

The only gainers on Nifty was Asian Paints up by 0.40%, while Bank of Baroda down by 4.81%, Cairn India down by 4.32%, PNB down by 4.10%, Coal India down by 3.95% and SBI down by 3.85% were the top losers.

European markets were trading in red; Germany’s DAX decreased 56.06 points or 0.59% to 9,517.53, UK’s FTSE 100 shed 24.12 points or 0.4% to 6,013.61 and France’s CAC was down by 3.08 points or 0.07% to 4,295.62.

Asian markets ended mostly lower on Tuesday as the oil price rally that had boosted global equity markets reversed, while the euro and sterling were hit by uncertainty over Britain's membership of the European Union. Chinese stocks fell on profit taking after rallying more than 2 percent the previous day. Focus returned to the yuan after China's central bank weakened the currency by the largest margin in six weeks amid heightened ‘Brexit’ concerns. Japanese shares ended lower as the dollar gave up its earlier gains versus the yen. Hong Kong stocks tracked mainland China shares lower, with falls in property and utility sectors offsetting gains in energy and resources plays.