Benchmarks crash like house of card; Sensex breaches 32,900 mark

Friday turned out to be a dismal day of trade for Indian equity benchmarks, where frontline gauges ending with a cut of around a percentage point on mixed economic data. Traders also remained on sideline ahead of Reserve Bank of India (RBI) Policy, Federal Reserve meet and Gujarat assembly elections. Markets started on optimistic note but soon gave up all their gains to enter into red terrain, as traders turned cautious after the eight core sectors grew at a slower pace of 4.7% in October, chiefly due to subdued performance of cement, steel and refinery segments. Market participants also remained a bit cautious with India’s fiscal deficit at the end of October hitting 96.1% of the budget target for 2017-18 on account of lower revenues and increase in expenditure. The fiscal deficit was 79.3 per cent in the same period last year.

Markets somehow managed to cap losses for most part of the day taking support from good Gross Domestic Product (GDP) numbers for the second quarter ended September. Reversing a five-quarter slide and setting itself on course for revival GDP rose 6.3% in the July-September period, compared with the three year low of 5.7% growth in the April-June quarter and 7.5% in the year earlier. Reacting to the GDP growth data, Finance Minister Arun Jaitley has said the impact of demonetization and GST is behind us and growth in coming quarters will be on upward trajectory. But, selloff in last leg of trade mainly dragged the markets below their crucial 32,900 (Sensex) and 10,150 (Nifty) levels. Sentiments remained dampened with chief statistician TCA Anant’s statement that the Goods and Services Tax (GST) regime, which kicked in from July 1, has posed fresh a new challenge for calculating India’s GDP. GST has consolidated a welter of local and central levies such as value added tax, excise and service tax into a single levy. Also, traders failed to draw any sense of relief with the Nikkei India Manufacturing Purchasing Managers’ Index, or PMI, which rose to a 13-month high of 52.6 in November from October’s 50.3. It enlightened that growth in output and new orders picked up to the fastest since October 2016, reportedly supported by reductions in GST rates and stronger underlying demand conditions.

Weak opening in European counters too dampened sentiments, as euro zone factories posted their busiest month in over 17 years in November. Asian markets ended mixed, as investors awaited the US Senate’s vote on tax reform legislation. China’s manufacturing activity grew at the weakest pace in five months in November as input costs remained high and tougher pollution measures weighed on business confidence. The Caixin/Markit Manufacturing PMI dipped to 50.8 from 51.0 in October.

Back home, the RBI is meeting next week at a time of rising concern about a rally in crude prices, which rose following OPEC’s decision to extend production curbs. On the sectoral front, select auto stocks were buzzing in today’s trade on back of monthly auto sales number. Mixed reactions were witnessed in aviation stocks as aviation fuel price has been hiked by Rs 3,206 per kilolitre to Rs 57349 per kilolitre in Delhi.

Finally, the BSE Sensex tumbled 316.41 points or 0.95% to 32,832.94, while the CNX Nifty was down by 104.75 points or 1.02% to 10,121.80.

The BSE Sensex touched a high and a low of 33,300.81 and 32,797.78, respectively and there were 3 stocks on gaining side as against 28 stocks on losing side on the index.

The broader indices ended in red; the BSE Mid cap index declined 0.95%, while Small cap index was down by 1.16%.

The top losing sectoral indices on the BSE were Realty down by 1.99%, Utilities down by 1.77%, Metal down by 1.75%, Telecom down by 1.64% and Oil & Gas was down by 1.47%, while there were no gainers on the BSE sectoral front.

The few gainers on the Sensex were Kotak Mahindra Bank up by 0.47%, NTPC up by 0.14% and Maruti Suzuki up by 0.06%. On the flip side, Adani Ports down by 3.00%, Bajaj Auto down by 2.99%, Bharti Airtel down by 2.74%, Sun Pharma down by 2.59% and SBI down by 2.47% were the top losers.

Meanwhile, India’s fiscal deficit, the gap between expenditure and revenue, touched 96.1% of the budget estimate (BE) in the first seven months of financial year 2017-18, mainly because of lower revenue collections and increase in expenditure. As per the data released by the Controller General of Accounts (CGA), in absolute terms, the fiscal deficit was Rs 5.25 lakh crore during the April-October period of 2017-18. It also showed that during the same period of last financial year, the deficit was 79.3% of the target.

For 2017-18, the government aims to bring down the fiscal deficit to 3.2% of the GDP, after it met the deficit target of 3.5% of the GDP in the last fiscal. As per the CGA data, the government’s revenue receipts were at Rs 7.29 lakh crore during April-October period, which amounts to 48.1% of the BE of Rs 15.15 lakh crore for the whole year. In the comparable period last fiscal, revenue receipts comprising taxes and other items were 50.7% of the target. 

The data further revealed that the government’s total expenditure was Rs 12.92 lakh crore at October-end, or 60.2% of the budget estimate. It was 58.2% of the budget estimate a year ago.  Besides, it noted that capital expenditure during April- October 2017-18 was only 52.6% of BE as compared to 50.7% in the same period of last fiscal. It also indicated that the revenue expenditure, including interest payment, was 61.5% of the BE during April- October 2017-18, compared with 59.2% in the corresponding period of 2016-17.

The CNX Nifty traded in a range of 10,272.70 and 10,108.55. There were 8 stocks in green as against 42 stocks in red on the index.

The top gainers on Nifty were Ambuja Cement up by 0.63%, Kotak Mahindra Bank up by 0.57%, Bharti Infratel up by 0.34%, NTPC up by 0.19% and Maruti Suzuki up by 0.18%. On the flip side, Tech Mahindra down by 4.03%, Indiabulls Housing down by 3.80%, Adani Ports down by 3.27%, Vedanta down by 3.23% and GAIL down by 3.07% were the top losers.

The European markets were trading mostly in red; Germany’s DAX declined 182.33 points or 1.4% to 12,841.65, France’s CAC dropped 70.31 points or 1.31% to 5,302.48 and UK’s FTSE 100 was down by 27.3 points or 0.37% to 7,299.37.

Asian equity markets ended mixed on Friday after a Senate vote on US tax bill got delayed and a private survey showed that activity in China's vast manufacturing sector fell in November to the weakest pace in five months. The dollar held steady against the Japanese yen and oil prices extended overnight gains after a decision by the world’s biggest oil producers to extend oil output cuts until the end of 2018, helping support underlying sentiments to some extent. Regional manufacturing surveys also painted a mostly positive picture. Japanese shares ended higher as the yen weakened against the greenback. Chinese shares ended flat on concerns over slowing growth after the Caixin manufacturing PMI dropped to 50.8 in November from 51.0 in October, signaling a slight slowdown in economic activity. Meanwhile, Markets in Indonesia and Malaysia were closed in observance of the birth of the prophet Muhammad.