Indian markets slip further into red; Realty, Banks and Metal exerts pressure

Indian markets are not getting any respite and the cut is getting deeper as the trade proceeds. Sentiments remained down-beat with the Centre and States on Sunday failing to reach a consensus on who will control which set of assessees under GST. The said meeting which came ahead of the formal meeting of the all powerful GST Council on November 25, was held after the Centre and states were deadlocked over the issue at two previous meetings. The GST Council will meet again on November 25 to work out the modalities. Further, investors turned jittery after rupee extended losses to hit its lowest level since June 1 against dollar as sentiment turned bearish on combination of growing US rate hike expectations and stunning dollar run. The demonetisation effect also continues to weigh on the bourses with several brokerage firms cutting GDP growth estimates for FY17, FY18. A private report has stated that India’s economic growth is expected to fall by up to 1 percent point over the next 12 months in the wake of demonetisation, while longer-term gains will depend on follow-up reforms. Adding anxiety among market participants, the private report indicated that foreign investors have pulled out close to $ 3 billion from the Indian capital market this month so far on lingering concerns over the government’s demonetisation decision and fears of a rate hike by the US Federal Reserve. According to data, net withdrawal by FPIs from equities stood at Rs. 9,841 crore during November 1-18, while the same from the debt market was Rs 9,720 crore during the period under review, translating into a total outflow of Rs 19,561 crore ($ 2.89 billion).

On the global front, Asian markets were trading mixed on Monday, undermined by fears that the strength in the US dollar and rising US bond yields since Donald Trump's election to president could accelerate fund outflows from emerging markets. Trump's unexpected election victory has led to a major reprising of assets, with investors rushing to buy US stocks and the dollar, while dumping bonds and emerging market assets. Japan's Nikkei was hovering at 10-1/2-month highs after the yen weakened further, but gains could be limited on caution after the market's recent sharp rally. On Friday, US markets ended lower with healthcare stocks leading the declines, as investors cashed in on a post-election rally and waited for clarity on the next administration's policies. 

Back home, stocks from IT and Teck counters were supporting the markets, while those from Realty, Banking and Metal counters were adding to the underlying cautious undertone. In scrip specific development, Techno Electrical surged after the company reported over 31% year-on-year jump in standalone net profit at Rs 45 crore for the quarter ended September 30, 2016. Also Panacea Biotec gained after the company announced that it has received an Establishment Inspection Report indicating the formal closure of the cGMP and the pre-approval inspection conducted by the USFDA.

The market breadth remained pessimistic as there were 356 shares on the gaining side against 1982 shares on the losing side, while 131 shares remained unchanged.

The BSE Sensex is currently trading at 25843.41, down by 306.83 points or 1.17% after trading in a range of 25777.21 and 26270.28. There were 6 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 2.29%, while Small cap index down by 2.70%.

The only gaining sectoral indices on the BSE were IT up by 0.39% and TECK up by 0.12%, while Realty down by 4.11%, Bankex down by 2.60%, Metal down by 2.34%, Auto down by 2.13% and Capital Goods down by 1.99% were the losing indices on BSE.

The top gainers on the Sensex were Wipro up by 1.43%, TCS up by 0.35%, Infosys up by 0.34%, GAIL India up by 0.28% and ONGC up by 0.16%. On the flip side, Tata Steel down by 4.18%, SBI down by 4.08%, Adani Ports &Special down by 3.20%, Mahindra & Mahindra down by 2.55% and Tata Motors down by 2.49% were the top losers.

Meanwhile, a report by industry body, Confederation of Indian Industry (CII), which works to create and sustain an environment conducive to the growth of industry in India, has said that a vibrant mining sector has the capacity to spur growth and add up to $70 billion to the country’s economy as well as generate 60-70 lakh jobs.
The report stated that a vibrant mining sector has the potential to propel economic growth not just through its contribution to GDP but also through its forward and backward linkages. Adding that in high growth scenario, mining sector can add close to $ 70 billion to GDP from now to 2030. It also said that mining could play a crucial role in employment generation for India moving many from poverty to empowerment. In an accelerated growth scenario, mining can generate an additional 6-8 million jobs.

The report titled Mining Opportunities - Realising Potential, also stressed on dealing with clearances which it says “still remain an impediment for a smooth transition from auction stage to implementation stage”. The report said that Environment and Forest clearances take long time in clearing adding that industry realises that these are non-negotiable and sustainable development needs have to be addressed at all stages. It added that however, the problem is the inordinately long time that is required for obtaining this clearance and the cumbersome process involved therein.

It further said that there is significant room for improvement in the clearance system in terms of efficiency, speed of decision making, predictability and transaction and said finalise specific timelines for each approval process step, without modifying the overall stipulated time in the notification. Finalise responsibilities and accountability at each process step, wherever not defined at present.

The CNX Nifty is currently trading at 7960.15, down by 113.95 points or 1.41% after trading in a range of 7945.25 and 8102.45. There were 9 stocks advancing against 42 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 2.42%, Wipro up by 1.34%, HCL Tech up by 1.28%, Tech Mahindra up by 0.99% and GAIL India up by 0.44%. On the flip side, Bank of Baroda down by 9.07%, Eicher Motors down by 4.69%, SBI down by 4.44%, BHEL down by 4.32% and Grasim Industries down by 4.16% were the top losers.

Asian markets were showing mixed trend, FTSE Bursa Malaysia KLCI was up by 0.15%, Shanghai Composite gained 0.67%, Taiwan Weighted increased by 0.36% and Nikkei 225 surged by 0.81%. On the other hand, Jakarta Composite decreased 0.38%, Hang Seng lower by 0.16% and KOSPI Index was down by 0.37%.