Benchmarks witness massacre in early deals; Nifty slips below 10K mark

Indian equity benchmarks made a gap-down opening and are witnessing bloodbath in early deals with frontline gauges tumbling below their crucial 32,700 (Sensex) and 10,000 (Nifty) levels, as market-men remained worried about the impact of a potential trade war. Traders also remained concerned on 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. 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.

Global cues remained pessimistic with all the Asian markets trading in red at this point of time, tracking sharp falls in U.S. and European stocks, which took a hit on fears of a potential trade war. The US markets closed sharply lower on Thursday, 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.

Back home, textile stocks are trading 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. In scrip specific developments, L&T Technology Services surged on bagging multi-million dollar ER&D project, while Anjani Portland Cement rises on getting nod to set up additional clinker producing unit in Telangana.

The BSE Sensex is currently trading at 32616.65, down by 389.62 points or 1.18% after trading in a range of 32534.83 and 32690.15. There were 2 stocks advancing against 29 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 1.61%, while Small cap index was down by 1.78%.

The top losing sectoral indices on the BSE were Metal down by 2.71%, Basic Materials down by 2.26%, Realty down by 2.18%, Bankex down by 1.96% and Industrials was down by 1.64%, while there were no gainers on the BSE sectoral front.

The only gainers on the Sensex were Infosys up by 0.19% and ONGC up by 0.17%. On the flip side, Yes Bank down by 3.64%, Tata Steel down by 3.02%, ICICI Bank down by 2.79%, Bajaj Auto down by 2.73% and SBI down by 2.71% were the top losers.

Meanwhile, the credit ratings agency, ICRA in its latest report has stated that India’s current account deficit (CAD) is likely to widen to $10-12 billion in the fourth quarter of the fiscal year 2017-18 (FY18), as against $3.4 billion in the same period of the previous fiscal year. It said CAD may increase on the back of higher merchandise trade deficit and added that the services trade surplus is expected to improve. Besides, the CAD had increased to $13.5 billion or 2% of the gross domestic product (GDP) in Q3FY18 as well, against $8 billion, or 1.4% of GDP in the same period a year-ago.

For the full financial year 2017-18, the rating agency expects the CAD to increase to $46-48 billion, or 1.8% of GDP, from $15.2 billion, or 0.7% of GDP in financial year 2016-17. As per the report, the country’s merchandise exports and imports are likely to expand by 8-10% in FY19 to $335-340 billion and $505-510 billion, respectively, resulting in a widening of the merchandise trade deficit to $170-175 billion, unless commodity prices recede significantly.

The report noted, given other macroeconomic fundamentals, the level of current account deficit is unlikely to pose a major macroeconomic risk. However, report said that the extent of capital flows would determine the sentiment towards the rupee and the level of foreign exchange reserves. It also said that the pace of economic growth, the strength of the recovery in corporate earnings, the magnitude of IPOs, the result of resolution of non-performing assets (NPAs) and the bank recapitalisation programme would impact FII interest in the domestic equity market in the pre-election year. ICRA said that presently it appears unlikely that aggregate FII inflows into debt and equity would record a rise in FY19 from the expected three-year high level of $21-23 billion in FY18.

The CNX Nifty is currently trading at 9986.25, down by 128.50 points or 1.27% after trading in a range of 9961.30 and 10012.85. There were 3 stocks advancing against 47 stocks declining on the index.

The few gainers on Nifty were Zee Entertainment up by 0.50%, HCL Tech up by 0.38% and ONGC up by 0.06%. On the flip side, Hindalco down by 3.97%, Yes Bank down by 3.81%, Tata Steel down by 3.17%, Vedanta down by 2.84% and ICICI Bank down by 2.72% were the top losers.

All the Asian markets are trading in red; Nikkei 225 tumbled 912.13 points or 4.22% to 20,679.86, Hang Seng declined 872.04 points or 2.81% to 30,199.01, Taiwan Weighted decreased 179.72 points or 1.63% to 10,826.12, Shanghai Composite dropped 106.59 points or 3.27% to 3,156.89, Jakarta Composite shed 104.36 points or 1.67% to 6,149.72, KOSPI Index fell 55.29 points or 2.22% to 2,440.73 and FTSE Bursa Malaysia KLCI was down by 13.76 points or 0.73% to 1,863.11.