Feeble global cues drag benchmarks lower; Sensex settles below 30,500

Snapping the record-setting spree, Indian equity benchmarks ended the daunting day of trade with a cut of around a percent, with frontline gauges settling below their crucial 30,500 (Sensex) and 9,450 (Nifty) levels amid selloff as political turmoil in White House spooked investors and dragged the global markets. Major bourses traded in red terrain throughout the session, as traders remained on sidelines eyeing two-day Goods and Services Tax (GST) Council meet beginning in Srinagar, which will see participation from 29 states and union territories, along with Jaitley, and senior officials from the revenue department. In the meeting Finance Ministry Arun Jaitley is likely to finalise the rates that various goods and services will attract from July 1. Meanwhile, the GST Council approved all nine rules for the rollout of the new indirect tax regime. The nine rules finalized by the council pertain to composition, valuation, transition, input tax credit, invoice, payment, refund, registration and return.

Market participants failed to get any sense of relief with Commerce and Industry Minister Nirmala Sitharaman’s statement that India’s exports have been increasing despite global headwinds and efforts are being made to neutralise any impact on them due to implementation of GST. Traders also overlooked a senior UN economic official’s statement that the demonetisation policy is not expected to have a long term impact on domestic demand in India, which is projected to clock a 7.9 percent growth in fiscal 2018.

Selling intensified in last leg of trade with European markets making a somber start as mounting political uncertainty in the U.S. exacerbated concerns among investors as to whether President Donald Trump would be able to deliver on key pro-growth policies. Asian markets too traded weak and ended mostly in red on Thursday.

Back home, depreciation in Indian rupee too dampened sentiments. The Indian rupee weakened for the third consecutive session against the US dollar as concern over US President Donald Trump spurred a selloff in emerging market currencies. On the sectoral front, banking stocks remained under pressure after domestic rating agency India Ratings and Research report highlighted that the banking system has Rs 7.7 trillion of unrecognized stressed loans in corporate and SME sector and around 35 per cent of that could slip into the NPA category in the next 12-18 months. Select pharma companies too ended in red, as the drug price regulator NPPA has initiated action against various firms, including Abbott Healthcare, Zydus Cadila and Dr Reddy’s, for non-compliance with provisions for new drugs under the price control regime. In a notification issued, the National Pharmaceutical Pricing Authority (NPPA) said that various companies have launched formulations by altering a scheduled formulation with strength dosage other than as specified in the Drugs Price Control Order (DPCO) 2013.

The NSE’s 50-share broadly followed index Nifty lost around hundred points to end below the psychological 9,450 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over two hundred and twenty points to finish below its psychological 30,500 mark. Broader markets too witnessed selling pressure and ended the session with a cut of over two percentage points. The market breadth remained in favor of decliners, as there were 688 shares on the gaining side against 2,058 shares on the losing side while 164 shares remain unchanged.

Finally, the BSE Sensex lost 223.98 points or 0.73% to 30,434.79, while the CNX Nifty was down by 96.30 points or 1.01% to 9,429.45. 

The BSE Sensex touched a high and a low of 30575.83 and 30393.72, respectively and there were 6 stocks on gaining side as against 23 stocks on the losing side, while one stock remained unchanged on the index.

The broader indices ended in red; the BSE Mid cap index declined 2.16%, while Small cap index was down by 2.04%.

The only gaining sectoral indices on the BSE were IT up by 1.21% and TECK was up by 0.65%, while Realty down by 3.12%, Metal down by 2.76%, Basic Materials down by 2.62%, Power down by 2.14% and Capital Goods down by 2.09% were the top losing indices on BSE.

The top gainers on the Sensex were Wipro up by 3.47%, TCS up by 3.38%, Infosys up by 1.00%, Lupin up by 0.61% and Sun Pharma up by 0.51%. On the flip side, Tata Motors down by 2.55%, Axis Bank down by 2.15%, Dr. Reddys Lab down by 1.96%, Bajaj Auto down by 1.94% and Mahindra & Mahindra down by 1.92% were the top losers.

Meanwhile, in a bid to attract higher foreign investments in the country, the government is mulling easing foreign direct investment (FDI) policy on construction, print media and retail sectors, which will provide investor friendly climate to foreign players and in turn boost economic growth & create jobs. In this regard the commerce and industry ministry may approach the Cabinet soon to get the final approval on these proposals.

In print media the government is considering to relax FDI norms in certain areas, currently government allows foreign investment in areas such as printing of newspapers and publishing of scientific magazines with certain conditions and FDI caps. In construction and development sector, proposal is to ease the policy, under which an Indian company could be allowed to bring FDI even for undeveloped plots in any project. Currently, 100 percent FDI is allowed in the construction sector subject to various conditions. The government is also mulling easing policy in single brand and multi-brand retail trading and there are consideration to allow 100 percent FDI in single brand retail sector through automatic route with certain conditions.

Foreign investments are considered crucial for economic development of the country and to attract maximum FDI into the country, the government has been relaxing the foreign investment norms in various sectors. Foreign investments will help improve the country's balance of payments situation and strengthen the rupee value against other global currencies, especially the dollar and India needs around $1 trillion to overhaul its infrastructure sector such as ports, airports and highways to boost growth.

The CNX Nifty traded in a range of 9,489.10 and 9,418.10. There were 6 stocks in green as against 45 stocks in red on the index.

The top gainers on Nifty were TCS up by 3.29%, Wipro up by 2.91%, Infosys up by 0.94%, Lupin up by 0.51% and Sun Pharma up by 0.47%. On the flip side, Bosch down by 3.83%, Yes Bank down by 3.68%, Grasim Industries down by 3.46%, Ultratech Cement down by 2.91% and Bharti Infratel down by 2.82% were the top losers.

European markets were trading in red; Germany’s DAX decreased 105.44 points or 0.83% to 12,526.17, UK’s FTSE 100 declined 95.43 points or 1.27% to 7,408.04 and France’s CAC was down by 56.87 points or 1.07% to 5,261.02.

Asian equity markets ended mostly in red on Thursday as US political turmoil continued to keep investors nervous. Besieged from all sides, the Trump administration appointed former FBI Director Robert Mueller as a special counsel to oversee the federal investigation into Russia's involvement in the US presidential election last year. That followed a report from The New York Times that former FBI Director James Comey had composed a memorandum recording the President's request to drop an investigation of Michael Flynn, the former national security adviser. Chinese shares ended lower as data showed home price growth in China's biggest cities softened in April due to stricter restrictions on property purchases. Further, Japanese shares hit 2-1/2-week lows as the yen's recent strength on fading expectations for continuous Fed rate-hike actions through 2017 and the allegations surrounding Trump's Russian ties overshadowed strong GDP data.