Bears tighten grip; Markets at day’s low

The local equity benchmarks extended losses in late afternoon session to hover near intraday low levels, as bears tighten grip on the markets, amid weak opening in European markets. Mid cap and Small cap also got hit, with the proposal of long-term capital gains tax on equities investments. Finance Minister Arun Jaitley proposed to levy long-term capital gains tax (LTCG) of 10% on gains exceeding Rs 100,000 from sale of equity shares. Sentiments were also downbeat with the rating agency Fitch Ratings’ statement that high debt burden of the government constrains India's rating upgrade, a day after Finance Minister Arun Jaitley projecting a fiscal deficit of 3.5% of GDP against the earlier target of 3.2%. Besides, heavy selling in all sectoral indices along with major industry losers like Bajaj Auto, Maruti Suzuki and Reliance Industries, also weighed on the sentiments. The markets participants continued to shrugged off Finance Minister Arun Jaitley’s statement that India’s $2.5 trillion economy is now firmly on course to register a strong growth rate of over 8% and indicated that the country has grown on an average of 7.5% in the first three years of the Modi government. Therefore, he expects that the country will grow at 7.2-7.5% in the second half of the current fiscal, ending March 31.

On the global front, European markets were trading in red, as US corporate earnings disappointed and caution set in ahead of the closely-watched monthly jobs report due later in the day. US employment is expected to increase by 180,000 jobs in January after increasing 148,000 jobs in December. The unemployment rate is expected to hold at 4.1%. There is a chance of a March Fed rate hike if the report remains fairly upbeat. Asian markets were also trading in red. Back home, in scrip specific development, SML Isuzu traded in red after the company reported 6.4% fall in January 2018 sales. The company has sold 938 vehicles in January, 2018 against 1,002 vehicles sold in January, 2017.

The BSE Sensex is currently trading at 35189.64, down by 717.02 points or 2.00% after trading in a range of 35185.63 and 35738.13. There were 4 stocks advancing against 27 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 3.32%, while Small cap index was down by 4.12%.

The top losing sectoral indices on the BSE were Realty down by 6.01%, Consumer Disc down by 3.48%, Utilities down by 3.40%, Industrials down by 3.36%, Basic Materials down by 3.34%, while there were no gaining sectoral indices on the BSE.

The top gainers on the Sensex were ITC up by 0.74%, TCS up by 0.64%, Coal India up by 0.25% and Wipro up by 0.25%. On the flip side, Bajaj Auto down by 6.14%, Maruti Suzuki down by 4.09%, Reliance Industries down by 4.00%, HDFC down by 3.48% and Tata Motors - DVR down by 3.09% were the top losers.

Meanwhile, the government has planned to borrow less from the market in the next fiscal year as compared to the current fiscal’s revised estimate of net borrowing. Market borrowing by the government will be lower at Rs 4.07 lakh crore in 2018-19 as against revised estimate of Rs 4.79 lakh crore in 2017-18, a difference of around Rs 73,000 crore. However, gross borrowing for the next fiscal has been raised to Rs 6.05 lakh crore.

As per the revised estimate, net and gross market borrowing for the current fiscal, have pegged higher at Rs 4.79 lakh crore and Rs 5.99 lakh crore, respectively as against the Budget estimate of Rs 3.5 lakh crore  and Rs 5.8 lakh crore, respectively. Besides, repayment for past loans for the next fiscal has been pegged at 1.4 lakh crore.

Indicating pressure on the fiscal maths, the government deviated from the fiscal deficit target of 3 per cent to 3.3 per cent of gross domestic product (GDP) for the next fiscal. In the Budget, the government proposed to accept key recommendations of the Fiscal Reform and Budget Management Committee relating to adoption of the Debt Rule and to bring down Central Government’s Debt to GDP ratio to 40% and also accepted the recommendation to use Fiscal Deficit target as the key operational parameter.

The CNX Nifty is currently trading at 10797.80, down by 219.10 points or 1.99% after trading in a range of 10783.85 and 10954.95. There were 6 stocks advancing against 44 stocks declining on the index.

The top gainers on Nifty were ITC up by 0.84%, TCS up by 0.69%, HCL Technologies up by 0.60%, Tech Mahindra up by 0.56% and Wipro up by 0.50%. On the flip side, Bajaj Auto down by 6.04%, Bajaj Finance down by 5.00%, Maruti Suzuki down by 4.24%, Reliance Industries down by 4.17% and Ultratech Cement down by 3.91% were the top losers.

Asian markets were trading mostly in red; Nikkei 225 decreased 211.58 points or 0.9% to 23,274.53, KOSPI Index decreased 43.15 points or 1.68% to 2,525.39, Hang Seng decreased 40.31 points or 0.12% to 32,601.78 and Taiwan Weighted decreased 34.02 points or 0.3% to 11,126.23. On the flip side, FTSE Bursa Malaysia KLCI increased 1.89 points or 0.1% to 1,870.47, Shanghai Composite increased 15.1 points or 0.44% to 3,462.08 and Jakarta Composite increased 31.64 points or 0.48% to 6,630.09.

All European markets were trading in red; Germany’s DAX decreased 89.55 points or 0.69% to 12,914.35, France’s CAC decreased 32.6 points or 0.6% to 5,421.95 and UK’s FTSE 100 decreased 6.45 points or 0.09% to 7,483.94.