Bears take full control over Dalal Street; Nifty slips below 10K mark

Indian equity benchmarks witnessed bloodbath on Friday with frontline gauges tumbling below their crucial 10,000 (Nifty) and 32,600 (Sensex) levels, as traders remained concerned about the impact of a potential trade war after President Donald Trump announced tariffs on at least $50 billion worth of Chinese imports. Markets started the session with a huge gap on down side and traded in a particular range throughout the day, as sentiment remained dampened on ICRA’s report stating the country’s current account deficit (CAD) is likely to treble to $10-12 billion in the fourth quarter of the current financial year, against the same year-ago period, due to higher trade deficit. The current account deficit had increased to $13.5 billion, or 2 per cent of the gross domestic product (GDP) in the third quarter as well, against $8 billion, or 1.4 per cent of GDP in the same year-ago period. Investors took note of a private report which said that handling the emerging frauds in the banking sector coupled with likely ripple effects, muted GST collections and the protectionist policy imposed by the US are some of the factors that are likely to keep risk to growth elevated. As per its economic forecast for March 2018, the report added that the government faces a challenging scenario of managing the growth momentum.

Sentiments also remained downbeat, as another private report highlighted that India has emerged as one of the Asian economies most vulnerable in an environment of rising interest rates in the US. Traders took note of Commerce Minister Suresh Prabhu’s statement that the world is facing serious challenges as the US is taking protectionist measures and India needs to explore ways to boost exports. Traders shrugged off report that  monsoon rains in India are likely to be unaffected by the El Nino weather pattern, which is likely to set in only after the four-month rainy season ends in September. Monsoon season delivers about 70 percent of India’s annual rainfall and is key to the success of the farm sector, which accounts for about 15 percent of India's $2 trillion economy but sustains nearly two thirds of the country’s 1.3 billion people.

Weak opening in European markets too dampened sentiments. European Central Bank President Mario Draghi cautioned EU leaders at a that European governments planning to raise spending even as growth picks up posed a medium-term risk to the economy. Asian markets ended in red terrain led by over four percent fall in Japanese markets after the country’s key inflation gauge ticked up in February, putting the Bank of Japan halfway to its goal of 2 percent.

Back home, stocks of banking space edged lower with PSU banking stocks falling the most. Union Bank of India (UBI) tumbled on report that the bank has registered a complaint with the Central Bureau of Investigation (CBI) against Hyderabad-based Totem Infrastructure and its promoters for a sum of Rs 1,394 crore fraud case. This apart, the bank said its asset quality has deteriorated sharply in the fourth quarter and the bank may be in for further stress in terms of profitability if it fails to contain its mounting non-performing assets. Realty stocks remained under pressure in on private report that Indian real estate has seen fewer launches, subdued sales and muted property prices in the year 2017. Textile stocks ended in red despite report that the Textile Ministry will set up an inter-ministerial committee and allocate it a sum of Rs 1,000 crore to promote research & development (R&D), technology transfer and training in the sector.

Finally, the BSE Sensex declined 409.73 points or 1.24% to 32,596.54, while the CNX Nifty was down by 116.70 points or 1.15% to 9,998.05.

The BSE Sensex touched a high and a low of 32,720.03 and 32,483.84, respectively and there were 6 stocks on gaining side as against 25 stocks on losing side on the index.

The broader indices ended in red; the BSE Mid cap index declined 1.36%, while Small cap index was down by 1.54%.

The only gaining sectoral indices on the BSE were TECK up by 0.32% and IT was up by 0.19%, while Realty down by 3.31%, Metal down by 2.89%, Basic Materials down by 2.17%, Bankex down by 2.08% and Capital Goods was down by 1.56% were the top losing indices on BSE.

The top gainers on the Sensex were Adani Ports up by 0.99%, Infosys up by 0.75%, Power Grid Corporation up by 0.54%, Mahindra & Mahindra up by 0.47% and Coal India up by 0.09%. On the flip side, Yes Bank down by 3.87%, Axis Bank down by 3.34%, SBI down by 2.90%, ICICI Bank down by 2.73% and Tata Steel down by 2.40% were the top losers.

Meanwhile, with a view to facilitate movement of goods across national borders and improve India’s ease of doing business rank, the Prime Minister’s Office (PMO) has directed the commerce ministry to take immediate steps on streamlining trade operations. The country ranked 146th among 190 countries in the latest edition of the World Bank's Trading Across Borders component of ease of doing business. As the ranking in this parameter is not good, the PMO has directed the ministry to take steps in this direction.

The newly set up logistics division of the Department of Commerce is working to significantly improve the position in the next year’s report. As part of the steps, the ministry has written to all the major stakeholders, including ports, customs, regulatory bodies such as Food Safety and Standards Authority of India to give all approvals and clearances in a paperless manner. They have asked to give all clearances for exports and imports online. Paper transaction needs to be eliminated as it increases inefficiencies.

The move would significantly help in reducing both time and cost of traders for taking different kinds of approvals. Although the government has reduced mandatory documents required for import and export of goods to three documents each, it takes time to get approval. The ministry has also asked customs to carry out ‘direct port delivery’ for majority of consignments with a view to speed up cargo movement.

The CNX Nifty traded in a range of 10,027.70 and 9,951.90. There were 11 stocks in green as against 38 stocks in red, while 1 stock remain unchanged on the index.

The top gainers on Nifty were HCL Tech up by 2.80%, Bharti Infratel up by 2.18%, Adani Ports up by 2.14%, Zee Entertainment up by 1.95% and Power Grid Corporation up by 1.06%. On the flip side, Vedanta down by 5.62%, Hindalco down by 5.24%, Axis Bank down by 3.85%, Yes Bank down by 3.64% and Lupin down by 3.23% were the top losers.

European markets were trading in red; Germany’s DAX declined 189.01 points or 1.56% to 11,911.07, France’s CAC dropped 80.02 points or 1.55% to 5,087.19 and UK’s FTSE 100 was down by 45.47 points or 0.65% to 6,907.12.

Asian stocks closed in red on Friday, the dollar weakened and safe-haven assets such as the gold and the Japanese yen strengthened after US President Donald Trump announced tariffs on at least $50 billion worth of Chinese imports and China said it would impose tariffs on up to $3 billion worth of US goods in retaliation. Chinese shares ended lower under pressure from mounting trade tensions. Further, Japanese shares closed near six-month lows as the rumblings of a global trade war shook financial markets and helped lift the yen to its highest level in more than a year against the US dollar. Investors were also spooked by the appointment of John Bolton, the former US envoy to the UN, as Trump's national security adviser.