Weak macro data takes its toll, markets slumps over a percent

Indian markets suffered severe drubbing on Friday, weighed down by weak set of macro data and sluggish global surroundings. The benchmarks which had shown a terrific performance just a day ago remained under pressure from the very beginning amid weak global cues. Though, the start was in red but the initial trends showed that markets may resist any sharp fall despite getting twin disappointment of India's industrial production growth slowing to 0.1 percent in March as compared to 2.5 percent during same month last year, and retail inflation inching up in April to 5.39 percent, compared to 4.83 per cent in March. But as the trade progressed the markets started losing momentum and by the mid of the session completely lost their way with both the major indices losing over a percent each. The rupee weakness added pressure to the market slump, Indian rupee sliding for the third straight day lost substantial ground against the US dollar on fears of foreign outflows.

On the global front, the Asian markets followed the US trend and made a weak closing led by the Japanese market, which lost around one and half a percent for the day as the yen strengthened after Crude oil retreated from a six-month high. The European markets too made a soft start tracking US and Asian counterparts. There was some concern in the markets with the Bank of England on Thursday cutting its growth forecast for the second quarter to 0.3%, compared to the prior estimate of a 0.5% expansion.

Back home, markets ended the dismal day of trade on a weak note with Sensex losing its crucial psychological level of 25500, while Nifty just managing to hold the 7800 mark. Markets, apart from the macro data remained jittery with some other developments like the Reserve Bank of India (RBI) proposing to raise provisioning and risk weights for fresh loans given to highly leveraged companies. In order to discourage banks from lending to such companies, which are said to have caused a high concentration of credit risk in the banking sector. In other development, acting upon recommendations of the Special Investigation Team on black money, market watchdog Sebi plans to tighten due diligence requirements for issuance and transfer of controversy-ridden P-Notes and put the onus on investors to ensure compliance with anti-money laundering law. All these coupled with some downbeat earnings weighed on the sentiments of the market for the day and dragged the indices lower. The broader markets that showed some resistance in early trade, too lost their momentum and ended in red. On the sectoral front too there were all red on the street and sectoral indices led by metal, capital goods, consumer durables, realty, banking, PSU and FMCG.

There was some buzz in the private sector banks after Reserve Bank India (RBI) issued guidelines on ownership in private sector banks. RBI allowed foreign banks to invest up to 10% in local private lenders and supranational institutions such as Life Insurance Corporation of India to take this to as much as 40% as part of a sweeping set of measures expected to help them shore up  capital and possibly encourage consolidation in the sector. Yes Bank, HDFC Bank and IndusInd Bank were down by around half a percent, while Kotak Mahindra Bank and ICICI Bank lost over two percent. There were scrip specific movements with the MSCI rejiging its India index.

Finally, the BSE Sensex plunged by 300.65 points or 1.17% to 25489.57, while the CNX Nifty lost 85.50 points or 1.08% to 7,814.90.

The BSE Sensex traded in a range of 25400.27 and 25743.69. There were just 3 stocks in green against 27 stocks in red on the index.

The broader indices too ended in red; the BSE Mid cap index was down by 0.58%, while Small cap index lost 0.25%.

The top losing sectoral indices on the BSE were Realty down by 2.07%, Metal down by 2.04%, Capital Goods down by 1.57%, Consumer Durables down by 1.43%, Bankex down by 1.25%, there were no sectoral idex in green.

The top gainers on the Sensex were Asian Paints up by 1.70%, Tata Motors up by 0.72% and ITC up by 0.09%. On the flip side, Adani Ports & SEZ down by 3.48%, Hindustan Unilever down by 2.58%, BHEL down by 2.50%, HDFC down by 2.45% and Tata Steel down by 2.36% were the top losers.

Meanwhile, abandoning the age old concept of five-year plans, the government has decided to come up with a 15-year vision document in tandem with global trends and economic growth. This will also include internal security and defence that has been not a part of the five year plan. The long-term vision document will formulate various ways through which India can achieve its broader social objectives to meet the UNDP’s 2030 sustainable goals and will be a roadmap on transformation required in the planning system to sync it with the 14th Finance Commission recommendations. The move comes just three months after finance minister Arun Jaitley hinted in his budget speech that the government will abandon the plan and non-plan distinction from 2017-18, indicating that the five-year plan process will end with the 12th five-year plan (2012-17).

The first 15-year vision document will start from 2017-18, along with a seven-year National Development Agenda which will lay down the schemes, programmes and strategies to achieve the long-term vision. National Development Agenda will be reviewed after a gap of every three years to ensure that it was aligned with financial needs and requirements. For the first Development Agenda, the review would be done in 2019-20, in line with the termination year of the 14th Finance Commission. The NITI Aayog will create a dashboard for constant monitoring, evaluation and reviewing and also fix up outcome targets for all major schemes of infrastructure and social sectors. A plan for the current financial year would be submitted to the Prime Minister's Office by later this month.

The Five-Year Plans were started by Jawahar Lal Nehru in 1951. Since then India had 12 such programs ensured an integrated approach to national economic programs. However, the Modi government felt that the Planning Commission and the five-year-plans have outlived their utility.

The CNX Nifty traded in a range of 7784.20 and 7881.00. There were 9 stocks in green against 42 stocks in red on the index.

The top gainers on Nifty were Asian Paints up by 1.60%, Idea Cellular up by 1.43%, HCL Tech. up by 1.18%, Tata Motors up by 0.75% and Bharti Infratel up by 0.75%. On the flip side, Hindalco down by 4.39%, Eicher Motors down by 3.85%, Adani Ports &Special down by 3.38%, Kotak Mahindra Bank down by 2.55% and HDFC down by 2.50% were the top losers.

European markets were trading in red, UK’s FTSE 100 declined by 28.17 points or 0.46% to 6,076.02, France’s CAC was lower by14.59 points or 0.34% to 4,278.68 and Germany’s DAX decreased by 5.13 points or 0.05% to 9,856.99.

Asian equity markets ended lower on Friday as the yen ticked up and oil prices fell after rising about 1 percent in choppy trade overnight. Caution ahead of a deluge of European, US and Chinese data also kept investors on the sidelines, heading into the weekend. Japanese stocks fell in choppy trade, dragged down by profit-taking and persistent concerns over a stronger yen's impact on corporate profits. An uptick in yen hit exporter's shares and Apple suppliers underperformed on concerns they will see a significant drop in orders in H2 due to weak demand from smart phones. The yen edged up a little bit, but hovered near two-week lows amid speculation the Bank of Japan could expand its monetary stimulus as soon as next month. China stocks closed at their lowest level in two months, as metal prices dropped and the Yuan weakened amid concern the government will hold off from new stimulus even as growth falters. Hong Kong shares dropped as investors awaited a slew of Chinese data due this weekend. While data on new loans and money supply are slated for release later in the day, reports on industrial output, fixed asset investment and retail sales will be published on Saturday.