Weak trade persists on Dalal Street; Sensex falls over 300 points

Key Indian benchmarks continued their weak trade in late morning session, on the back of selling in Basic Materials, Capital Goods and Metal stocks amid lingering North Korea tensions. In line with larger peers, the broader markets too continued their lackluster trade, while only one sectoral index - Utilities traded higher on the BSE. Traders remained pessimistic with Chief Economic Adviser Arvind Subramanian’s statment that Indian economy continues to face multiple challenges, he stressed on the need to tackle them on various fronts, such as exchange rate, public investments while maintaining macroeconomic stability. Sentiments were also cautious with the derivatives expiry due on Thursday. Beside, banking shares too failed to get relief with Finance Minister Arun Jaitley’s statement that the government will expeditiously work with the banking system to strengthen them.

On the global front, Asian markets were trading mostly in red, unsettled by the sovereign debt downgrade for China last week by credit rating Moody's. Back home, in scrip specific development, GlaxoSmithKline Pharmaceuticals was trading higher after the company received an approval for sale of its land admeasuring approximately 60 acres located at Thane, Maharashtra to Oberoi Realty for a consideration of Rs 555 crore.

The BSE Sensex is currently trading at 31614.21, down by 308.23 points or 0.97% after trading in a range of 31573.32 and 32016.52. There were 6 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 1.66%, while Small cap index was down by 2.35%.

The only gaining sectoral indices on the BSE was Utilities up by 0.16%, while Basic Materials down by 2.42%, Capital Goods down by 2.36%, Metal down by 2.30%, Realty down by 2.28% and Industrials down by 2.12% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid Corporation up by 1.38%, TCS up by 0.68%, ICICI Bank up by 0.60%, Reliance Industries up by 0.35% and Hindustan Unilever up by 0.29%. On the flip side, Tata Steel down by 3.22%, Adani Ports & SEZ down by 3.02%, Larsen & Toubro down by 2.97%, Lupin down by 2.58% and Mahindra & Mahindra down by 2.01% were the top losers.

Meanwhile, Chief Economic Adviser (CEA) Arvind Subramanian has said that Indian economy continues to face multiple challenges and stressed on the need to tackle them on various fronts, such as exchange rate, public investments while maintaining macroeconomic stability. He said that there are lots of challenges ahead with growth slowing down and investment not picking up. He also identified rising level of stressed assets to be a key area of concern.

Talking about rupee appreciation, CEA said that all developing economies face this problem, with a surge in capital inflow putting pressure on the exchange rate. He also said that different countries take measures based on their trade-offs and objectives. He also pointed out that the big appreciation in the rupee between January and April had an impact on both exports and imports. In addition, he noted that the Reserve Bank of India (RBI) had been intervening in the currency market for the past three months. He also expressed hope of moderation of forex in coming days.

Regarding the stimulus package, Subramanian has stated that it is being worked out and an announcement will be made at an appropriate time. Speculations are rife that government is planning to provide a huge stimulus to various sectors, including power and railways, with an aim to revive country’s economic growth, which plunged to 3-year low of 5.7% in April-June quarter of the financial year 2018.

The CNX Nifty is currently trading at 9854.20, down by 110.20 points or 1.11% after trading in a range of 9836.20 and 9960.50. There were 9 stocks advancing against 42 stocks declining on the index.

The top gainers on Nifty were Tata Power up by 2.11%, Power Grid Corporation up by 1.38%, Bharti Infratel up by 0.83%, GAIL India up by 0.61% and TCS up by 0.56%. On the flip side, Tata Steel down by 3.33%, Ambuja Cement down by 3.24%, Adani Ports & SEZ down by 3.12%, Indiabulls Housing Finance down by 3.09% and Larsen & Toubro down by 3.05% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 311.51 points or 1.12% to 27,569.02, Taiwan Weighted decreased 113.79 points or 1.09% to 10,335.89, Shanghai Composite decreased 10.85 points or 0.32% to 3,341.68, Jakarta Composite decreased 9.87 points or 0.17% to 5,901.83, KOSPI Index decreased 9.81 points or 0.41% to 2,378.90 and FTSE Bursa Malaysia KLCI decreased 0.31 points or 0.02% to 1,770.73. On the flip side, Nikkei 225 increased 108.58 points or 0.53% to 20,405.03.