Benchmarks witness complete blood bath in early deals

Extending southward journey, Indian equity benchmarks made a gap-down opening and are witnessing complete bloodbath in early deals, amid global selloff. Traders remained on sidelines ahead to the Reserve Bank of India’s (RBI’s) policy review meeting which will start later in the day amid expectations that the central bank will tighten its monetary policy stance in the wake of growing concerns over fiscal slippage. Investors also remained concerned on private report that lower indirect tax revenue collections may outweigh any upside risks from higher nominal GDP growth, non-tax revenue and direct tax collection. Market participants failed to get any sense of relief with Finance Minister Arun Jaitley’s statement that expediting public services and ensuring fairness in procurement will supplement rapid economic growth in the South Asian region including India.

Global cues too remained catastrophic with Asian markets trading in deep red at this point of time after Wall Street suffered its biggest decline since 2011 as investors’ faith in factors underpinning a bull run in markets began to crumble. U.S. stocks suffered sharp sell-off on Monday, as markets continued to throw a tantrum over rising interest rates. The sell-off overshadowed any corporate headlines.

Back home, sugar stocks edged lower despite the food ministry proposing doubling of the import duty on sugar to 100 per cent to curb cheaper imports, check falling wholesale prices of sweetener and ensure timely payment to cane farmers. In scrip specific development, PNB declined on suspecting fraud worth Rs 280.70 crore, while Jubilant Life Sciences leads the gainers list of ‘S&P BSE 200’ space.

The BSE Sensex is currently trading at 33576.41, down by 1180.75 points or 3.40% after trading in a range of 33482.81 and 33941.34. There were no stocks advancing against 31 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 4.24%, while Small cap index was down by 4.39%.

The top losing sectoral indices on the BSE were Realty down by 5.03%, Metal down by 4.69%, Consumer Durables down by 4.65%, Basic Materials down by 4.64% and Industrials was down by 4.31%, while there were no gainers on the BSE sectoral front.

The top losers on the Sensex were Tata Motors down by 7.45%, Tata Motors - DVR down by 7.24%, Axis Bank down by 5.14%, Yes Bank down by 4.71% and Tata Steel down by 4.33%, while there were no gainers on the Sensex.

Meanwhile, Global rating agency Moody’s Investors Service, in its latest report on India’s Union Budget 2018 has stated that slightly breaching fiscal deficit goals will have ‘no material impact’ on India’s economic strength and is in line with its expectations. It also said that the India’s Budget for 2018-19 strikes a balance between fiscal prudence and growth. The government has revised fiscal deficit projections for the current fiscal year to 3.5% of gross domestic product (GDP) as compared to 3.2% targeted earlier and it also altered 2018-19 fiscal deficit projection to 3.3% of GDP from earlier target of 3%.

In the report titled ‘Cross-Sector -- India: Fiscal 2019 budget strikes balance between fiscal prudence and growth’, the Moody’s said that the revised fiscal consolidation path is modestly shallower than the previous roadmap, but does not fundamentally alter India’s overall fiscal strength. It also said that the medium-term target to reduce the central government debt-to-GDP ratio to 40% is supportive of the sovereign credit profile. It added that the projected expenditure restraint and strong revenue growth are likely to be broadly achieved, although some measures such as the rule guiding increases in Minimum Support Prices (MSPs) and ambitious goods and services tax (GST) revenue targets could result in some further slippage.

The ratings agency also said that the budget benefits corporates as well as infrastructure and insurance sectors. It highlighted that the government will meet next year’s deficit target, based on achievable budget assumptions and demonstrated commitment to fiscal prudence. However, some ambitious revenue assumptions and uncertainty about some spending items could result in a shortfall to overall fiscal consolidation. It further stated that the budget's measures of higher rural spending, lower corporate taxes, and relaxing restrictions on the ability of financial intermediaries to invest in lower rated corporate bonds are credit positive for most of India’s corporates.

On the sectoral front, it noted that the infrastructure sector will benefit from a boost in spending and the government's continued focus on public investment will also help galvanise India's upturn in capital spending. Finally, the insurance market will benefit from the launch of a national health scheme and the merger, as well as listing, of three state-owned insurers. The insurance, and in particular non-life market, is set to benefit from the growth prospects provided by the widening of universal health insurance cover.

The CNX Nifty is currently trading at 10310.20, down by 356.35 points or 3.34% after trading in a range of 10276.30 and 10423.70. There were no stocks advancing against 50 stocks declining on the index.

The top losers on Nifty were Tata Motors down by 7.40%, Vedanta down by 5.43%, Indiabulls Housing down by 5.40%, Axis Bank down by 5.33% and Yes Bank down by 4.67%, while there were no gainers on the Nifty index.

Asian markets are trading in red; Hang Seng tumbled 1593.91 points or 4.94% to 30,651.31, Nikkei 225 crumbled 1498.79 points or 6.61% to 21,183.29, Taiwan Weighted plunged 618.68 points or 5.65% to 10,327.57, Jakarta Composite declined 149.05 points or 2.26% to 6,440.63, Shanghai Composite dropped 74.95 points or 2.15% to 3,412.55, KOSPI Index decreased 65.74 points or 2.64% to 2,426.01 and FTSE Bursa Malaysia KLCI was down by 50.04 points or 2.7% to 1,803.03.