Benchmarks witness bloodbath on Monday on weak IIP data

Monday’s session turned out to be a daunting day of trade for Indian equity benchmarks where frontline gauges tumbled below their crucial 26,600 (Sensex) and 8,200 (Nifty) levels. After a gap down opening, market never looked confident throughout the session and ended near the intraday low levels, as sentiments remained dampened with Industrial production shrinking an annual 1.9% in October, worsening from a 0.7% rise in the previous month and 9.8 per cent growth in the year-ago month. Industrial production has contracted in four out of seven months so far this fiscal. In the April-October period, production declined 0.3 per cent compared with 4.8 per cent growth last year. Weak economic data coupled with the fear of rise in inflation with the surge in crude prices after OPEC and non-OPEC producers reached a deal on Saturday, too weighed down the sentiments. Traders also remained on sidelines ahead of domestic trade deficit data, November CPI inflation and WPI inflation to be announced later in the week, while globally Fed rate decision is awaited.

Sentiments also remained dampened with the Centre and States failing to approve the GST laws on Sunday and agreeing to meet on December 22 and 23 to hammer out a consensus, dashing hopes that the crucial bills would be introduced in the ongoing winter session of Parliament and making it tough to meet the April 1 rollout date across the country. Markets participants shrugged off robust growth in November indirect tax collection. Net indirect tax collections grew 23.1 per cent in November from a year ago. Overall, net indirect tax mop-up was up 26.2 per cent in April-November from a year ago, while net direct tax increased 15.1 per cent over this period. Total direct and indirect tax collections at the end of November stood at Rs 9.64 lakh crore, nearly 60 per cent of the budget target of Rs 16.26 lakh crore for FY17.

Markets extended the southward journey with European counters making a weak opening, as investors started to focus on the US Federal Reserve's policy meeting later this week. Asian markets ended mostly in red in response to the first global oil deal since 2011 and Saudi’s readiness to do “whatever it takes” to rebalance the oil markets.

Back home, sentiment was also weakened by continued uncertainty about the impact on the economy and corporate profits from the cash shortage sparked by the country's demonetisation drive. On the sectoral front, information technology stocks remained under pressure by tough talk on visas by US president Donald Trump. Trump pledged to stop companies from abusing the visa process for foreign workers. Oil marketing companies declined after crude prices surged to their highest since mid-2015.

The NSE’s 50-share broadly followed index Nifty lost over ninety points to end below the psychological 8,200 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex tumbled by over two hundred and thirty points to finish below its psychological 26,600 mark. Broader markets too witnessed selling pressure and ended the session with a cut of around a percent. The market breadth remained in favour of advances, as there were 1,097 shares on the gaining side against 1,533 shares on the losing side, while 148 shares remained unchanged.

Finally, the BSE Sensex declined 231.94 points or 0.87% to 26,515.24, while the CNX Nifty was down by 90.95 points or 1.10% to 8,170.80. 

The BSE Sensex touched a high and a low of 26,725.31 and 26,468.59, respectively and there were 7 stocks on gaining side against 23 stocks on the losing side on the index.

The broader indices made a negative closing; the BSE Mid cap index dropped 1.11%, while Small cap index was down by 0.73%.

The top losing sectoral indices on the BSE were Auto down by 1.73%, Bankex down by 1.67%, Finance down by 1.45%, FMCG down by 1.20% and Oil & Gas down by 1.14%, while there were no gainers on the BSE sectoral front.

The top gainers on the Sensex were ONGC up by 1.43%, NTPC up by 0.82%, TCS up by 0.58%, Sun Pharma up by 0.49% and Larsen & Toubro up by 0.26%. On the flip side, Asian Paints down by 3.33%, Axis Bank down by 2.56%, Bajaj Auto down by 2.52%, Tata Motors down by 2.05% and Hero MotoCorp down by 1.97% were the top losers.

Meanwhile, the sixth meeting of the all-powerful Goods and Services Tax Council called by Finance Minister Arun Jaitley to sort out contentious issue of dual control of assesses, remained inconclusive and has been re-scheduled on December 22 and 23, raising apprehension of missing the April 1 target of the final GST rollout.  

Finance Minister Arun Jaitley said that the discussion on the Integrated GST (IGST) law is expected to happen in the next meeting of the Council along with that of deciding on the jurisdiction over assessees. He expressed hopes that in the next 2-Day GST Council meeting they would be able to clear draft legislation for Central Goods and Services Tax (CGST), Integrated Goods and Services Tax (IGST) and compensation law after which these will be introduced in Parliament. Jaitley also noted that there are about 195 sections in the draft legislation, so it is the core bill of the legislation. He also said that they have discussed 99 sections and a few clauses need to be redrafted and would change that during the course of time. Kerala FM Thomas Isaac said demonetisation has eroded states trust. 'April 1 deadline is out of picture, GST can be rolled out only by September'.

The council’s two-day meeting commenced in the shadow of the November 8 demonetisation, whose fallout has put a serious question mark on implementing GST by the central government’s targeted deadline of April 1, next year. Last month, the GST Council agreed on a four-slab structure - 5, 12, 18 and 28 per cent along with a cess on luxury and ‘sin’ goods such as tobacco. GST is a singular tax reform that will remove barriers across states and integrate the country into a common market.

The CNX Nifty traded in a range of 8,230.65 and 8,154.45. There were 7 stocks in green against 44 stocks in red on the index.

The top gainers on Nifty were ONGC up by 1.52%, NTPC up by 0.85%, TCS up by 0.59%, Sun Pharma up by 0.51% and Larsen & Toubro up by 0.20%. On the flip side, BPCL down by 3.59%, Ambuja Cement down by 3.56%, Asian Paints down by 3.34%, Ultratech Cement down by 2.99% and Eicher Motors down by 2.91% were the top losers.

The European markets were trading in red; Germany’s DAX decreased 40.96 points or 0.37% to 11,162.67, UK’s FTSE 100 shed 15.94 points or 0.23% to 6,938.27 and France’s CAC was down by 6.91 points or 0.15% to 4,757.16.

Asian equity markets ended mostly in red on Monday, with a crackdown on stock purchases by insurance firms sending Chinese and Hong Kong shares tumbling. China's insurance regulator suspended Evergrande Life from further investing in stocks, saying its asset allocation plan is not clear and capital operation is not standardized. Meanwhile, Japanese shares closed at a fresh high for the year as the yen continued to weaken against the dollar ahead of an expected rate hike by the Federal Reserve this week. Higher oil prices and upbeat core machinery orders data also boosted investor sentiment. Japan's October core machinery orders rose for the first time in three months to beat expectations. Markets in Malaysia and Indonesia were closed in observance of the birth of the Prophet Muhammad.