Nightmarish session on D-street ends with over two percent of bloodbath

Friday’s session turned out to be a dreadful session for the Indian benchmark indices, which disintegrated like a ‘house of cards’ and went on to breach various key technical levels in the over two and half percent freefall as investors feared higher interest rates under President Donald Trump will spark capital outflows from emerging markets like India. Also, impacting sentiment was the demonetisation of Rs 500 and Rs 1000 notes that dampened sentiment across sectors, especially, real estate, fast moving consumer goods and consumer discretionary. 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 journey only halted with the session’s close. Fall in rupee also dented the market mood on Friday as the currency crashed by 52 paise on account of strong demand of dollar. Emerging market currencies like rupee were hammered by concerns that investors could pull back their funds out of higher-yielding emerging assets and move them back to the US. On the domestic front, around 3 percent drop in index heavyweight State Bank of India (SBI) too dampened the sentiments. The country’s largest public sector lender came under pressure on reporting nearly 35% drop in bottomline for the quarter ended September 30, 2016, thanks to an 80% year-on-year rise in provisions and contingencies. The Bank has reported a standalone net profit of Rs 2538.32 crore for the quarter under review as compared to Rs 3879.07 crore for the same quarter in the previous year. Investors failed to get any sense of relief with the report that Reserve Bank of India (RBI) in a step to address corporate stress, making sweeping changes to existing loan recast schemes, it has given lenders additional time up to 180 days for hammering out a restructuring package under the scheme for sustainable structuring of stressed asset (S4A). Previously, the time limit was 90 days. Further, the International Monetary Fund (IMF) said it supports India's efforts to fight corruption through demonetisation, but noted that the transition needs to be managed 'prudently' to minimise any disruption.  Meanwhile, Airlines stocks came under pressure on the report that the government would impose a new levy on some domestic flights. The ministry of civil aviation has proposed the levy to help raise money to fund air travel between India's smaller towns and cities at a subsidised cost. Jewellery stocks declined after the report that the Income Tax (I-T) department is conducting surveys on jewellers and suspected hawala operators across Mumbai, Delhi and parts of other metropolitan cities.  Furthermore, Cement stocks also hogged the limelight on the report that Cement manufacturers have moved the Competition Appellate Tribunal (COMPAT) against Rs 6700 crore penalty slapped by the Competition Commission of India (CCI) for indulging in cartelisation. In August, CCI had slapped penalty on 11 cement firms including ACC, Ambuja , Ramco and JK Cement as well as the industry body CMA for indulging in cartelisation.

On the global front, Asian markets ended mostly lower on Friday as oil prices eased on skepticism regarding OPEC's ability to rebalance crude supply and US bond yields soared on expectations that Trump will increase fiscal spending.  However, Japan’s Nikkei ended with small gains, on expectation they will benefit from Trump’s infrastructure spending, while  Chinese shares rose to a fresh 10-month high after news that the long-awaited Shenzhen-Hong Kong Stock Connect will be officially launched on November 21. China's yuan weakened for a second straight day to hit a fresh six-year low against the dollar, tracking a broad rally in the greenback as investors braced for further uncertainty over coming weeks.

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 lost the plot and kept tumbling down the hill without any stoppage. 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 two hundred point laceration to settle below the crucial 8,300 support level, while Bombay Stock Exchange’s Sensitive Index Sensex got obliterated by around seven hundred points and closed just above the psychological 26,800 mark. Moreover, the broader markets too failed to show any kind of fervor and settled with large cuts of over three percent. On the sectoral front, Automobile, Consumer Durables and Realty witnessed brutal assaults as they got clobbered by 4.53%, 4.19% and 4% respectively. While counters like FMCG and Banking too suffered severe pounding. There appeared absolutely no gainer on the BSE sectoral front, while sole gainer among the heavyweight shares. The market breadth remained awful as there were 460 shares on the gaining side against 2223 shares on the losing side while 147 shares remained unchanged.

Finally, the BSE Sensex declined 698.86 points or 2.54% to 26818.82, while the CNX Nifty dropped 229.45 points or 2.69% to 8,296.30. 

The BSE Sensex touched a high and a low of 27344.85 and 26777.18, respectively and there were 1 stock on gainers side against 29 stocks on the losers side on the index.

The broader indices made a negative closing; the BSE Mid cap index ended lower by 3.62%, while Small cap index was down by 3.42%.

The top losing sectoral indices on the BSE were Auto down by 4.53%, Consumer Durables down by 4.19%, Realty down by 4.00%, FMCG down by 3.24% and Bankex down by 2.51%, while there were no gainers on BSE sectoral front.

The sole gainer on the Sensex was Sun Pharma up by 3.30%. On the flip side, Mahindra & Mahindra down by 6.02%, Adani Ports &Special down by 5.86%, ICICI Bank down by 5.32%, Hero MotoCorp down by 5.18% and Asian Paints down by 5.02% were the top losers.

Meanwhile, International Monetary Fund (IMF) has supported Prime Minister Narendra Modi's efforts to fight corruption through the currency control measures and illegal financial flows in India. However, it said that the move has to be managed prudently to minimize possible disruptions keeping in mind the large role of cash in everyday transactions in Indian economy.

The Prime Minister has expressed happiness at the patient and orderly manner in which citizens were getting notes exchanged in banks following cancellation of the legal tender character of high-denomination bank notes of Rs 500 and Rs 1,000. He also said that it is heartening to see such warmth, enthusiasm and patience of the citizens to bear this limited inconvenience for a greater good.

Further, Government’s recent decision would help to make more and more transactions become digital and people will now disclose income and pay taxes. The Indian banks reopened on November 10 and have started issuing new currency notes of Rs 500 and Rs 2,000 in the market. Meanwhile, the government is also planning to re-introduce Rs 1,000 notes in few months.

The CNX Nifty traded in a range of 8,460.60 and 8,284.95. There was only 1 stock in green against 50 stocks in red on the index.

The sole gainer on Nifty was Sun Pharma up by 3.69%. On the flip side, Bharti Infratel down by 6.45%, Mahindra & Mahindra down by 5.92%, Eicher Motors down by 5.56%, UltraTech Cement down by 5.53% and Yes Bank down by 5.52% were the top losers.

European markets were trading mostly in red; UK’s FTSE 100 decreased 65.78 points or 0.96% to 6,762.20 and France’s CAC was down by 16.71 points or 0.37% to 4,514.24, while Germany’s DAX was up by 24.13 points or 0.23% to 10,654.25.

Asian equity markets ended mostly in red on Friday as soaring US bond yields on expectations of higher inflation and interest rates in the US stoked worries about capital outflows from the region. Meanwhile, Japanese shares ended a tad firmer as the dollar continued to rise against the yen after President-elect Donald Trump promised tax reform and large fiscal spending to stimulate the world's largest economy. Chinese shares rose to a fresh 10-month high after news that the long-awaited Shenzhen-Hong Kong Stock Connect will be officially launched on November 21. China's yuan weakened for a second straight day to hit a fresh six-year low against the dollar, tracking a broad rally in the greenback as investors braced for further uncertainty over coming weeks.