Bears tighten grip on Dalal Street; Nifty slips below 10,200 mark

Bears took full control on Dalal Street with frontline gauges ending Wednesday’s trade with a cut of around a percent, breaching their crucial 10,200 (Nifty) and 33,100 (Sensex) levels, as growing fears over the PNB scam and continued selling pressure from FIIs on expectations of faster than anticipated interest rate hike in the US kept the underlying sentiments cautious. After a cautious start, markets extended their downfall to end near intraday lows as sentiments turned pessimistic with a private report that private equity and venture capital investments in February registered a sharp 60% month-on-month decline to $1.4 billion across 63 deals, due to the absence of any mega deals. As per the report, no major deals above the value of $300 million happened last month, causing the decline from January, which registered deals worth $3.5 billion. Separately, following the new norms on stressed assets issued by the RBI last month, power companies fear that two-thirds of private thermal power capacity is at high risk of being declared as non-performing assets (NPA). Severe impact is expected on 51,000-Mw existing power generation capacity set up with investments of more than Rs 4 lakh crore, and another 28,000-Mw plants are under construction.

Traders failed to get any sense of relief with report that the government is planning to pitch for an upgrade in its sovereign ratings from global rating agency Fitch, highlighting its structural reform initiatives and a revised fiscal consolidation framework. Officials from the Finance Ministry are scheduled to meet representatives from Fitch Ratings on March 7 as part of the annual review by the agency. Traders failed to get any solace with private report that the Indian economy is likely to recover gradually to 7.1% in the 2018-19 financial year, as GST-related disruptions have eased and consumption levels have improved.

Weakness in European counters too dampened sentiments after resignation of Donald Trump’s economic adviser Gary Cohn, seen as a bulwark against protectionist forces within the US government. Asian markets ended mostly in red after White House chief economic adviser Gary Cohn, an advocate for free trade, resigned from the Trump administration, raising concerns that Trump will go ahead with his plan to impose tariffs and risk a trade war. 

Back home, banking stocks remained under pressure on media report that the extent of the unraveling fraud at India’s state-run Punjab National Bank could rise beyond the nearly $2 billion mark so far outlined by the lender. Separately, a foreign brokerage expects that PSU banks will report treasury loss of Rs 20K crore in Q4. It is of the view that the bond hit will add to Q4 woes while over ownership will weigh on earnings. Telecom stocks edged lower despite report that the Cabinet will take a call on providing relief to telecom operators, and look at raising the spectrum cap from the current 25% to the industry demand of 35%, among other things. Sugar stocks were under pressure in today’s trade on report that the industry body has revised country’s 2017-18 sugar production upward by about 13% at 29.5 million tonnes from its second advance estimate of 26.1 million tonnes.

Finally, the BSE Sensex declined 284.11 points or 0.85% to 33,033.09, while the CNX Nifty was down by 95.05 points or 0.93% to 10,154.20.

The BSE Sensex touched a high and a low of 33,331.21 and 32,991.14, respectively and there were 7 stocks on gaining side as against 23 stocks on losing side, while 1 stock remained unchanged on the index.

The broader indices ended in red; the BSE Mid cap index declined 1.32%, while Small cap index was down by 2.16%.

The few gaining sectoral indices on the BSE were Consumer Durables gained 0.37% and FMCG was up by 0.09%, while Telecom down by 2.28%, Capital Goods down by 1.94%, Power down by 1.86%, Industrials down by 1.79% and Energy was down by 1.69% were the top losing indices on BSE.

 The top gainers on the Sensex were ITC up by 1.05%, Maruti Suzuki up by 0.70%, Bajaj Auto up by 0.64%, Asian Paints up by 0.47% and Kotak Mahindra Bank up by 0.42%. On the flip side, Adani Ports & SEZ down by 6.53%, SBI down by 3.84%, ICICI Bank down by 2.85%, Bharti Airtel down by 2.53% and ONGC down by 2.32% were the top losers.

Meanwhile, the government has said that the implementation of nationwide e-way Bill system, to be generated under the goods and services tax (GST) for intra-state movement of goods valued at over Rs 50,000, will become mandatory within a state from June 01, 2018. Minister of State for Finance Shiv Pratap Shukla has clarified that as per the GST Council decision, the states may choose any date before June 01 for implementing the national e-way bill system for intra-state movement of goods but all states shall implement it latest by June 01.

Shukla has stated that all states had joined the government's centralised e-way bill system for inter-state road transportation of goods under the GST regime. Accordingly, he said that the government, on the recommendations of the GST Council, appointed the first day of February as the date from which the provisions of the e-way bill rules shall come into force for inter-state movement of goods.

However, the minister said that in view of the difficulties faced by the traders in generating the e-way bill due to initial technological glitches, it was decided by the GST Council to extend the trial phase for generation of e-way bills, both for inter-state and intra-state movement of goods. For inter-state movement of goods, the system is expected to become mandatory from April 1 if the recommendation of the Group of Ministers on Information Technology is approved by the GST Council during its March 10 meeting.

The CNX Nifty traded in a range of 10,243.35 and 10,141.55. There were 14 stocks in green as against 36 stocks in red on the index.

The top gainers on Nifty were HCL Tech up by 1.84%, ITC up by 1.27%, Zee Entertainment up by 0.97%, Maruti Suzuki up by 0.91% and Asian Paints up by 0.58%. On the flip side, Adani Ports & SEZ down by 6.45%, SBI down by 3.84%, Indiabulls Housing Finance down by 3.37%, Bharti Airtel down by 2.65% and ICICI Bank down by 2.46% were the top losers.

European markets were trading mostly in red; France’s CAC decreased 13.14 points or 0.25% to 5,157.09 and Germany’s DAX was down by 13.06 points or 0.11% to 12,100.81, while UK’s FTSE 100 was up by 7.67 points or 0.11% to 7,154.42.

Asian markets closed in red on Wednesday after White House chief economic adviser Gary Cohn, an advocate for free trade, resigned from the Trump administration, raising concerns that Trump will go ahead with his plan to impose tariffs and risk a trade war. Further, worries about the potential impact of a trade war overshadowed easing geopolitical concerns after North Korea said it is willing to talk about denuclearization. Japanese shares closed lower as steelmakers extended recent losses on trade tariff worries.