Indian equity markets rest in red with grave losses

Indian equity indices continued to trade in red in noon session as investors reacted to early results and predictions for the US presidential elections, showing gains for Trump in crucial states. Latest update on US vote count showed Republican presidential candidate Donald Trump was leading in 167 seats against Democrat Hillary Clinton’s 133. On the domestic front, sentiments got undermined on Prime Minister Narendra Modi’s announcement that 500 and 1,000 rupee banknotes would be withdrawn from circulation at midnight to crack down on rampant corruption and counterfeit currency. The surprise move was designed to bring billions of dollars worth of cash in unaccounted wealth into the mainstream economy, but this move will adversely impact the country’s economy in near term, given that about 40% of the economy is driven by small- and medium-sized enterprises that largely depend on cash transactions. Sectors like real estate, construction material, and jewellery that use more of black money will take a big knock, while e-commerce sector having cash on delivery may feel impact on sales. Every unorganised sector in every trade also will feel the impact of this bold move. Investors failed to draw any sense of relief with the report that a new and simpler portal for the incoming Goods and Services Tax regime went live on Tuesday that will enable easy filing of returns and tax payments through credit/debit cards and other modes.

On the global front, Asian markets were trading lower on Wednesday, as investors shifted into safe-haven assets amid news that the outcome of the US presidential election looked much tighter than expected. The race between Democratic nominee Hillary Clinton and Republican rival Donald Trump has been among the most the divisive in history and the outcome could have a significant impact on US economic policy. A win for Clinton is likely to spur markets, while a Trump win may weigh on investors. Japan's Nikkei 225 closed down by 5.4%, while European and US markets are expected to drop when trading resumes on Wednesday.

Back on street, all sectoral indices on the BSE were trading in the red with Realty index emerging as the top loser down by over 14 percent followed by Consumer Durables, Metal and Auto indices among others. In scrip specific development, VA Tech Wabag has surged after the company reported 69.65% rise in its consolidated net profit at Rs 24.04 crore for the quarter ended September 30, 2016 as compared to Rs 14.17 crore for the same quarter in the previous year. On the other hand, Bharat Forge has declined after the company reported 26.34% fall in its net profit at Rs 126.89 crore for the quarter ended September 30, 2016 as compared to Rs 172.27 crore for the same quarter in the previous year.

The market breadth remained pessimistic as there were 176 shares on the gaining side against 2271 shares on the losing side, while 69 shares remained unchanged.

The BSE Sensex is currently trading at 26651.91, down by 939.23 points or 3.40% after trading in a range of 25902.45 and 27026.28. There were 30 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 5.16%, while Small cap index was down by 6.19%.

The top losing sectoral indices on the BSE were Realty down by 14.26%, Consumer Durables down by 6.92%, Metal down by 4.43%, Auto down by 4.34% and FMCG down by 3.98%, while there were no gainers on BSE sectoral front.

The top losers on the Sensex were Hero MotoCorp down by 6.36%, Adani Ports &Special down by 6.29%, ICICI Bank down by 5.99%, HDFC down by 4.94% and TCS down by 4.78%, while there were no gainers on the frontline index.

Meanwhile, in order to boost export finance, Commerce and Industry Minister Nirmala Sitharaman has said that Export Credit Guarantee Corporation of India (ECGC) will require an adequate headroom as it provides a range of credit risk insurance covers to exporters against loss in export of goods and services. She said that exports from India suffer due to unmet trade finance needs of as much as $300 billion.

Sitharaman also said that the Ministry will take the issues of ECGC with the Finance Ministry to further strengthen it and will also negotiate with Reserve bank of India so that greater room is given to ECGC because it cannot be too much regulated. She added that at this crucial time the government needs to support exporters to explore newer markets and also need to support the ECGC and strengthen the organization so that it gets the flexibility to operate. She said that exporters need to look at newer markets like Latin America and Africa as demand growth is slow in the traditional markets.

ECGC, wholly-owned by the central government, was set up with the objective of promoting exports by providing credit risk insurance and related services. It also provides overseas Investment Insurance to Indian companies investing in joint ventures abroad in the form of equity or loan.

The CNX Nifty is currently trading at 8240.50, down by 303.05 points or 3.55% after trading in a range of 8002.25 and 8351.15. There were 51 stocks declining on the index.

The top losers on Nifty were Ultratech Cement down by 6.69%, Hero MotoCorp down by 6.51%, BHEL down by 6.46%, Ambuja Cement down by 6.42% and Adani Ports &Special down by 6.02%, while there were no gainers on the frontline index.

All the Asian markets were trading in red; Nikkei 225 crumbled 5.29%, Hang Seng decreased 2.93%, Taiwan Weighted tumbled 2.98%, Jakarta Composite shed 2.06%, KOSPI Index fell 2.69%, FTSE Bursa Malaysia KLCI dropped 0.93% and Shanghai Composite was down by 0.44%.