Benchmarks witness bloodbath; Sensex slips below 23100 mark

The bloodbath in Indian equity market prolonged for one more session as the benchmarks continued to sway to the tune of depressing global developments and deposed another over a percentage point on Wednesday. The session was characterized by extreme volatility and marketmen looked at every rise as opportunity to take profits off the table, as there emerged no supporting factor that could halt the unrelenting selling pressure. Investors' confidence was eroded by the continuing conflict between the ruling NDA (National Democratic Alliance) and the opposition, which is seen as having a bearing on some key economic legislations that await parliamentary approval. Further, sentiments remained down-beat with Moody's Investors Service’s statement that India's fiscal metrics will remain weaker than its peers in the near term even if Finance Minister Arun Jaitley was to stick to fiscal consolidation roadmap. It said that without fiscal consolidation going forward, India's government finances will continue to compare poorly to peers. Market participants were also jittery ahead of the Budget amid hopes that policymakers will deliver a fiscally responsible budget that nonetheless steers spending to key areas such as infrastructure. Meanwhile, investors failed to draw any sense of relief with President Pranab Mukherjee describing the country as a haven of ‘stability’ in a turbulent global economy, saying the government has simplified procedures for approvals, repealed obsolete laws and put in place a non-adversarial tax regime to attract investments.

On the global front, Asian markets ended mostly in red on Wednesday as hopes for a coordinated production cut by OPEC faded and investors fretted over additional pressure on bank earnings in 2016. Saudi Arabia's oil minister, Ali Al-Naimi, told a meeting of energy leaders in Houston on Monday that output cuts aimed at boosting slumping crude prices won't work. He said that the market should instead let some operators go out of business. Japanese shares hit a one-week low, with sentiment dampened by a stronger yen and weaker US and European data. Meanwhile, European counters also made awful start with all major counters declining over a percent.

Back home, the benchmark got off to a somber opening, extending the downtrend for the second straight session as pessimistic sentiments prevailed across Asian markets. The key indices failed to show any kind of fervor due to lack of encouraging leads and suffered a setback in afternoon trades as sudden bouts of profit booking emerged in the local markets immediately after a somber European market opening.  Eventually the NSE’s 50-share broadly followed index Nifty, took a cut of over a percent to settle below the crucial 7,050 support level, while Bombay Stock Exchange’s Sensitive Index, Sensex slipped by over three hundred points and closed below the psychological 23,100 mark. Moreover, the broader markets too failed to show any kind of fervor and closed with losses of around a percent. On the BSE sectoral space, high beta sectors like - Metal and Capital Goods pockets remained among top laggards in the space as they got lacerated by 2.62% and 1.67% respectively. While sectors like Banking, PSU and FMCG too got pounded heavily in the session. On the flipside, Oil & Gas pocket managed to go home with moderate gains of around quarter a percent. The market breadth remained pessimistic as there were 810 shares on the gaining side against 1742 shares on the losing side while 155 shares remained unchanged.

Finally, the BSE Sensex plunged by 321.25 points or 1.37% to 23088.93, while the CNX Nifty dropped 90.85 points or 1.28% to 7,018.70. 

The BSE Sensex touched a high and a low 23338.89 and 23057.45, respectively. The broader indices made a negative closing; the BSE Mid cap index ended down by 0.79%, while Small cap index lost 1.15%

The only gaining sectoral index on the BSE was Oil & Gas up by 0.21%, while Metal down by 2.62%, Capital Goods down by 1.67%, Bankex down by 1.36%, PSU down by 1.29% and FMCG down by 1.27% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 0.93%, Mahindra & Mahindra up by 0.54%, Asian Paints up by 0.51%, Hindustan Unilever up by 0.42% and Axis Bank up by 0.38%. On the flip side, BHEL down by 4.97%, NTPC down by 4.20%, Tata Motors down by 3.63%, HDFC down by 2.68% and ICICI Bank down by 2.63% were the top losers.

Meanwhile, Government has come out with a uniform definition of startups under which a company with an annual turnover of less than Rs 25 crore in the first five years from the date of its incorporation/registration will be eligible for tax breaks and other incentives under the government’s start-up policy if it fulfils certain conditions. Notifying the definition, the Department of Industrial Policy and Promotion (DIPP) said it would bring about 'uniformity' and ensure that only genuine startups get the benefits.

Further, in its notification DIPP has said that in order to obtain tax benefits a startup so identified under the definition shall be required to obtain a certificate of an eligible business from the Inter-Ministerial Board of Certification, comprising a joint secretary with the DIPP and representatives of the departments of science and technology as well as biotechnology.

The DIPP also said that a startup must be working towards innovation, development, deployment or commercialization of new products, processes or services driven by technology or intellectual property. Besides, a company working on “significantly improved existing product or service or process that will create or add value for customers or workflow” will also be eligible for incentives if it fulfills other conditions. However, any such entity formed by “splitting up or reconstruction of a business already in existence” won’t be considered a start-up.

Startups will also be required to submit a simple application with various documents including a letter of funding of not less than 20 per cent in equity by any incubation fund/ angel fund/ private equity fund/ duly registered with SEBI that endorses innovative nature of the business. The process of recognition as a start-up would be through mobile app or the DIPP portal.

The CNX Nifty touched a high and low 7,090.80 and 7,009.75 respectively. 

The top gainers on Nifty were BPCL up by 4.97%, Power Grid up by 2.12%, Bank of Baroda up by 1.24%, Yes Bank up by 0.82% and M&M up by 0.77%. On the flip side, BHEL down by 5.13%, NTPC down by 4.24%, Tata Motors down by 3.77%, Hindalco down by 3.50% and Cairn down by 3.29% were the top losers.

European markets were trading in red; Germany’s DAX tumbled 182.22 points or 1.94% to 9,234.55, UK’s FTSE 100 decreased 84.72 points or 1.42% to 5,877.59 and France’s CAC was down by 66.49 points or 1.57% to 4,171.93.

Asian markets ended mostly lower on Wednesday as hopes for a coordinated production cut by OPEC faded and investors fretted over additional pressure on bank earnings in 2016. Trading sentiment remained sluggish after the major US averages fell over 1 percent overnight amid a spate of worries ranging from lower oil prices to bad loans in the energy sector. Japanese shares hit a one-week low, with sentiment dampened by a stronger yen, weaker U.S. and European data and the oil price decline after both Iran and Saudi Arabia ruled out a deal by major producers to cut oil output. Chinese shares ended higher on hopes that the upcoming meeting by China's legislature starting March 5 will result in more stimulus.