Dalal Street witnesses bloodbath; Sensex slips below 28,400 mark

Indian benchmarks started a new week on a devastating note as they went on to extend the declining streak for the second successive session, investor sentiment was rattled by concerns that the US Federal Reserve could be considering an imminent interest rate hike. The frontline indices shaved off over one and half percent and breached 28,400 (Sensex) and 8,750 (Nifty) levels on the downside. Adding anxiety among market patients a private report indicated that the Bank of Japan was considering ways to steepen the Japanese yield curve, along with worries that central banks more generally were running short of fresh stimulus options. On the domestic front, sentiments were undermined by the report that the monsoon weakened in most parts of the country this month, taking the season's total rainfall to 5 per cent below normal. September rainfall has been 19% lower than normal, except in east and northeast India, where it was 66% in excess. All other regions reported a deficit of 40%-50% this month. Besides, factors like depreciation in rupee values against the dollar and FIIs outflow in the previous session, also weighed on the sentiment. Extending losses for the third straight session, Indian rupee weakened by twenty five paise to trade at 66.93 against the US dollar at the time of equity markets closing due to fresh buying of the American currency by banks and importers. Investors also turned cautious ahead of macroeconomic data-IIP for July and inflation data for August-scheduled to be released later in the day. Meanwhile, some telecom operators like Bharti Airtel and Idea Cellular came under pressure after Trai decided to reject the demand of incumbent mobile operators such as Bharti Airtel, Vodafone and Idea Cellular for an increase in the fee that they charge from Reliance Jio to terminate its calls on their networks.  The regulator has also asked the incumbent operators to provide requisite number of interconnect points to Jio at the earliest and ensure that consumers are not put at an inconvenience due to lack of connectivity. Further, Fertiliser stocks slipped after government scraped rule that required actual user as a condition for import of industrial or technical grade urea.

On the global front, Asian markets ended mostly in red on Monday as hawkish comments from several Federal Reserve officials, a sell-off in bond & oil markets and renewed concerns about North Korea's nuclear test spooked investors.  Chinese shares declined on worries that central banks may be running out of ammunition to support economic growth, while Japanese shares fell as increased risk aversion revived demand for the yen and media reports suggested that the Bank of Japan is studying several options to steepen the bond yield curve to encourage short and medium-term corporate lending.  Meanwhile, major European stock indexes fell as much as 2 percent in early deals, putting them on course for their biggest losses since June, and Wall Street futures pointed to a fall of 0.7% at the open.

Back home, the local benchmarks got off to a gap down opening, in tandem with the somber sentiments prevailing in Asian markets. Thereafter, the frontline indices tried to pare the early losses, but continued to trade with the losses of over a percent throughout the session. Finally the NSE’s 50-share broadly followed index Nifty, suffered a nasty hundred and fifty point laceration to settle below the crucial 8,750 support level, while Bombay Stock Exchange’s Sensitive Index Sensex got obliterated by over four hundred points and closed below the psychological 28,400 mark. Moreover, the broader markets too succumbed to the selling pressure evident in their larger peers and plunged by over two percent.

The market breadth remained pessimistic, as there were 689 shares on the gaining side against 2031 shares on the losing side, while 174 shares remained unchanged.

Finally, the BSE Sensex declined by 443.71 points or 1.54% to 28353.54, while the CNX Nifty dropped 151.10 points or 1.70% to 8,715.60. 

The BSE Sensex touched a high and a low 28481.11 and 28251.31, respectively. The broader indices made a negative closing; the BSE Mid cap index ended down by 2.95%, while Small cap index was lower by 2.35%.

The few gaining sectoral indices on the BSE were IT up by 0.87% and TECK up by 0.26%, while Realty down by 5.23%, Metal down by 4.34%, Capital Goods down by 3.25%, Power down by 3.14% and PSU down by 2.95% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 1.74%, TCS up by 0.28%, Reliance Industries up by 0.28% and Wipro up by 0.14%. On the flip side, Tata Steel down by 5.30%, Adani Ports & SEZ down by 4.37%, SBI down by 4.28%, Larsen & Toubro down by 3.68% and NTPC down by 3.56% were the top losers.

Meanwhile, giving more freedom to states to spend funds under Centrally Sponsored Schemes (CSS) to meet local developmental requirements, the government has announced new guidelines called flexi-fund for states with aim to meet local needs and requirements and pilot innovation to improve efficiency. As per the new guidelines, flexi-funds in each CSS have been increased from the current 10 per cent to 25 per cent for states and 30 per cent for Union Territories.

Now, states can use the fund to undertake mitigation or restoration activities in case of natural calamities or to satisfy local requirements in areas affected by internal security disturbances. It also stated that states if they want can set aside 25 per cent of any CSS as flexi-fund to be spent on any sub-scheme or component or innovation that is in line with the overall aim and objective of the approved Scheme.

The guidelines however said that the state governments will have to constitute a state-level sanctioning committee to avail of the flexi-fund facility. The flexi-fund facility is not for CSS which emanate from legislation, like MNREGA.

Based on the recommendations of the sub-group of chief ministers and consultations with stakeholders, Niti Aayog had issued instructions for rationalisation of CSS. The rationalisation is expected to ensure optimum utilisation of resources with better outcome through area-specific interventions. This would also ensure wider reach of benefits to target groups. Centrally Sponsored Schemes (CSS) are schemes that are implemented by State governments of India but are largely funded by the Central Government with a defined State Government share.

The CNX Nifty traded in a range of 8,746.95 and 8,699.40. There were 5 stocks advancing against 46 decliners on the index.

The top gainers on Nifty were Infosys up by 1.88%, Tech Mahindra up by 1.27%, Wipro up by 0.28%, TCS up by 0.24% and Reliance Industries up by 0.23%. On the flip side, Hindalco down by 8.81%, Yes Bank down by 6.01%, Tata Steel down by 5.74%, Bank of Baroda down by 5.73% and Ambuja Cement down by 4.64% were the top losers.

The European markets were trading in red; UK’s FTSE 100 decreased 104.68 points or 1.54% to 6,672.27, Germany’s DAX decreased 205.37 points or 1.94% to 10,368.07 and France’s CAC decreased 87.6 points or 1.95% to 4,403.80.

Asian equity markets ended in deep red on Monday as hawkish comments from several Federal Reserve officials, a sell-off in bond and oil markets, and renewed concerns about North Korea's nuclear test spooked investor sentiments. The probability for a September rate hike increased somewhat after Fed officials Eric Rosengren, Daniel Tarullo and Robert Kaplan signaled openness to a rate hike in 2016 to prevent the economy from overheating. North Korea is ready to carry out another nuclear test at any time, South Korea's defense ministry was quoted as saying today, a day after North Korea said it would take multi-step measures to strengthen its nuclear strike forces in response to the hostile US policy. Chinese shares dropped on worries that central banks may be running out of ammunition to support economic growth. Further, Japanese shares fell as increased risk aversion revived demand for the yen and media reports suggested that the Bank of Japan is studying several options to steepen the bond yield curve to encourage short and medium-term corporate lending. Markets in Malaysia, Singapore and Indonesia were closed in observance of Eid-ul-Adha.