Benchmarks extend losing streak for seventh straight session; Nifty slips below 8,000 mark

Extending their recent downtrend, Indian equity benchmark indices witnessed further drubbing on Thursday as the country’s cash crunch issue continued to weigh on corporate earnings expectations for the December quarter. The frontline gauges failed to showcase any kind of resilience through the session and kept drifting to lower levels, breaking one technical level after another to eventually settle below the psychological 8,000 (Nifty) and 26,000 (Sensex) levels. Sentiments remained bearish on sustained foreign fund outflows and a weak trend at Asian and European markets. Foreign portfolio investors (FPIs) have already pulled out of equities worth nearly $4 billion (over Rs 25,000 crore) so far in the December quarter, the worst since September 2015, amid uncertainty over US presidential election and prospects of hawkish US Federal Reserve’s policies.  Also, investments in domestic capital markets through participatory notes (P-Notes) plunged to its lowest level in nearly three years in November 2016. According to the data available with Sebi, the total value of P-Notes investment in Indian markets -- equity, debt and derivatives -- fell to Rs 1.79 lakh crore in November-end, from Rs 1,99,987 crore at the end of October 2016.  Adding the pessimism among investors, Chief Executive Officer of NITI Aayog Amitabh Kant said that just one per cent of India's more than 1.25 billion population pays Income Tax and the country cannot afford as high as 95 percent of its economy making cash transactions. Furthermore, traders remained cautious with Prime Minister Narendra Modi’s top economic adviser Bibek Debroy’s statement that the negative shock from demonetisation will last until the end of March, though he also said that improved growth next year should fully compensate for the loss. Also, the minutes of last rate-setting meeting of the Reserve Bank of India’s monetary policy committee (MPC) showed that it shifted its focus towards inflation, while playing down concern about economic growth. Moreover, the broader markets too ended on a daunting note with over one percent losses, underperforming their larger peers by quite a margin.

On the global front, Asian markets ended lower on Thursday as market volumes began to thin out in the run-up to the Christmas holidays, while trading was range-bound with many investors sitting on the sidelines. Japanese market edged down from one-year highs as market participants took profit from recent gainers such as financials in otherwise thinning trade ahead of the holiday season. Singapore shares hit their lowest in more than three weeks, pulled down by financial and industrial stocks. Looking ahead, investors are awaiting the release of U.S. third-quarter GDP and U.S. initial jobless claims later in the global trading day. Both data sets could sway market expectations around the pace of interest rate increases by the U.S. Federal Reserve in 2017. Meanwhile, European markets edged lower, led by miners, and U.S. stock futures stagnated after the Dow Jones Industrial Average failed to make progress toward 20,000 Wednesday.

Back home, the local benchmark got off to a somber opening, extending the downtrend for the seventh straight session as pessimistic sentiments prevailed across Asian markets. Thereafter, the key indices failed to show any kind of fervor due to lack of encouraging leads. The selling pressure accentuated in the afternoon trades as investors took to across the board risk aversion. Though the bourses recovered from the lows of the day but could not succeed in minimizing the huge losses by the end of trading session. Eventually the NSE’s 50-share broadly followed index Nifty, took a cut of over a percent to settle below the crucial 8,000 support level, while Bombay Stock Exchange’s Sensitive Index, Sensex slipped by over two hundred and sixty points and closed below the psychological 26,000 mark. Moreover, the broader markets too failed to show any kind of fervor and closed with losses of over a percent. On the BSE sectoral space, the high beta - Metal and Consumer Durables pockets remained among top laggards in the space as they got lacerated by around two percent, while sectors like Power, Capital Goods and PSU too got pounded heavily in the session.

The market breadth remained pessimistic as there were 655 shares on the gaining side against 1995 shares on the losing side, while 145 shares remained unchanged. Finally, the BSE Sensex declined by 262.78 points or 1% to 25979.60, while the CNX Nifty dropped 82.20 points or 1.02% to 7,979.10.

The BSE Sensex touched a high and a low of 26248.45 and 25940.14, respectively and there were 4 stocks on gainers side against 26 stocks on the losers side on the index. 

The broader indices made a negative closing; the BSE Mid cap index ended lower by 1.47%, while Small cap index was down by 1.25%.

The top losing sectoral indices on the BSE were Metal down by 2.78%, Consumer Durables down by 1.90%, Power down by 1.67%, Capital Goods down by 1.61% and PSU down by 1.57%, while there were no gainers on BSE sectoral front.

The top gainers on the Sensex were ITC up by 0.51%, Asian Paints up by 0.38%, Wipro up by 0.26% and Tata Motors up by 0.19%. On the flip side, Adani Ports & SEZ down by 3.56%, Tata Steel down by 3.09%, ONGC down by 3.03%, Bharti Airtel down by 2.98% and SBI down by 2.12% were the top losers.

Meanwhile, Reserve Bank of India’s monetary policy committee (MPC) expressed concern over rising risk from global oil prices, and domestic non-oil and non-food inflation, in the December policy all the members of Monetary Policy Committee Meeting (MPC) have voted for keeping the policy repo rate unchanged at 6.25 per cent.

RBI Governor Urjit Patel has said that the central bank needs to stay focused on the medium term and strive to achieve the inflation target of 5 percent for Q4 of 2016-17 and securing 4 percent the central point of the notified target range as the impact of demonetisation of Indian currency notes of Rs 500 and Rs 1000 on the economy is uncertain, though temporary. He also said that more recently, the steady easing of food inflation has brought about a decline in overall inflation expectations in the latest round of the survey and also added that the risk arising out of global financial conditions are also not showing any signs of abating.

Patel further said that inflation in advanced economies is turning up incipiently and is expected to rise significantly in 2017 from 2016 levels. He added that the RBI in its fifth bi-monthly policy kept interest rate unchanged despite calls for lowering it while it slashed the economic growth projection by half a per cent to 7.1 in the first policy review post demonetisation. 

The CNX Nifty traded in a range of 8,046.45 and 7,964.95. There were 8 stocks in green against 43 stocks in red on the index.

The top gainers on Nifty were Asian Paints up by 0.82%, ITC up by 0.62%, Tata Motors up by 0.50%, Bharti Infratel up by 0.48% and Eicher Motors up by 0.24%. On the flip side, Hindalco down by 4.27%, Adani Ports & SEZ down by 3.79%, ONGC down by 3.10%, Tata Steel down by 2.84% and Bharti Airtel down by 2.72% were the top losers.

The European markets were trading mostly in green; Germany’s DAX increased 2.01 points or 0.02% to 11,470.65 and France’s CAC increased 4.72 points or 0.1% to 4,838.54, while UK’s FTSE 100 decreased 6.28 points or 0.09% to 7,035.14.

Asian equity markets ended mostly in red in thin pre-Christmas trade on Thursday, following a slide in US stocks. Dow Jones Industrial Average failed yet again to reach the 20,000 mark overnight and ended in the red. While, oil prices firmed after falling overnight for the first time in a week as the EIA report showed an unexpected build in US oil inventories. Japanese shares ended down from a one-year high as caution set in ahead of a slew of US economic reports due out later in the day and a market holiday in Japan on Friday for the Emperor's birthday. However, Chinese shares bucked the trend and gained marginally as strength in shares of state-owned enterprises (SOE) was offset by persisting tight liquidity in the wake of a bond scandal.