Bears make comeback on Dalal Street after two days of halt

Bears made strong comeback on Dalal Street on Monday after two days of halt, with frontline gauges ending below their crucial 37,600 (Sensex) and 11,400 (Nifty) levels. Markets started the session on pessimistic note and never looked in recovery mood to end near intraday low levels. Sentiments remained dampened since beginning, as traders remained concerned with report that foreign exchange reserves fell below $400 billion, for the first time since November 11, 2017, in the first week of September. As on September 7, foreign exchange reserves stood at $399.28 billion, a result of the Reserve Bank of India’s intervention at a time when portfolio flows were witnessing some reversals. Some cautiousness also crept in with ICRA’s report that funding of farm loan waivers, poll-related spending and other populist measures are likely to ensure that states are set to miss their fiscal consolidation targets budgeted at the beginning of the year. The market got hit with another private report stating that India’s world-beating stock market run is over. It has downgraded domestic stocks to the equivalent of a hold rating from buy. This is the first time it has lowered Indian stocks since 2014.

Markets extended losses in last leg of trade, as market participants took a note of private report stating that ahead of the festive season, the surge in petrol rates has left consumers scrambling and cutting household expenses to adjust with the price hike. Traders shrugged off report that India’s exports rose at the fastest pace in three months to reach $27.84 billion in August on account of healthy growth in petroleum products, engineering, pharma, and gems and jewellery shipments. Besides, trade deficit during the month narrowed to $17.4 billion as against $12.72 billion in the same month last year. In July, the trade deficit soared to a near five-year high of $18.02 billion. Traders failed to take any sense of relief with Finance Minister Arun Jaitley’s statement that that the government is confident of meeting its fiscal deficit target of 3.3% of gross domestic product (GDP) in the fiscal year 2018-19. He added that the government is sure of meeting the fiscal deficit target given robust tax collections.

On the global front, European markets were trading in red in early deals, ahead of final inflation data from euro area which is due later in the session. Inflation is expected to ease to 2% in August, in line with flash estimate, from 2.1% in July. Asian markets ended in red, amid the US-China trade standoff that could imperil global economic growth.

Back home, stocks related to steel sector exhibited mixed trend with report that the decision to impose steep tariffs by the US on steel and aluminium may impact the domestic metal sector. Separately, steel minister Chaudhary Birender Singh said negotiations are under way with the US over the 25% tariff it had imposed on steel imports. Stocks related to banking counter edged lower despite report that the government is aiming to double the NPA recovery to Rs 1.5 lakh crore in the current financial year 2018-19 as against Rs 74,000 crore in 2017-18. To achieve this, the government has asked the banks to match last full fiscal year recovery number by the end of second half.

Finally, the BSE Sensex declined by 505.13 points or 1.33% to 37,585.51, while the CNX Nifty was down by 137.45 points or 1.19% to 11,377.75.

The BSE Sensex touched a high and a low of 38,027.81 and 37,548.93, respectively and there were 5 stocks advancing against 26 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index lost 0.76%, while Small cap index was down by 0.05%.

The few gaining sectoral indices on the BSE were Realty up by 1.36%, Power up by 0.14% and Utilities up by 0.04%, while Energy down by 1.30%, Consumer Durables down by 1.25%, FMCG down by 1.20%, Bankex down by 1.08% and Healthcare was down by 1.08% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid Corporation up by 0.70%, TCS up by 0.40%, Adani Ports & SEZ up by 0.37%, Indusind Bank up by 0.07% and Tata Steel up by 0.05%. On the flip side, Sun Pharma down by 2.85%, HDFC down by 2.47%, Tata Motors down by 2.35%, Tata Motors - DVR down by 2.15% and Reliance Industries down by 2.12% were the top losers.

Meanwhile, in order to promote ease of doing business for exporters, the commerce ministry’s foreign trade arm, the Directorate General of Foreign Trade (DGFT), under the Merchandise Exports from India Scheme (MEIS), has simplified the process for traders to avail export incentives. This move will enable automatic approval of claims made by exporters to avail incentives under this scheme and the latest procedure is allowed through electronic data interchange ports.

In respect of exports made through electronic data interface (EDI) shipping bills, the directorate will begin the process of system driven approval of the MEIS claim applications from September 17. Under the new system -- E com Module for MEIS, regional authorities will not check the MEIS applications, while it will be automatically approved. Besides, rewards under the scheme are payable as percentage of realised free-on-board value and MEIS duty credit scrip or certificate can be transferred or used for payment of a number of duties, including the basic customs duty.

The commerce ministry’s foreign trade arm has been on regular basis taking actions to ease the implementation process of the foreign trade policy schemes by establishing processes, which are free from manual interface and are quick and efficient.

The CNX Nifty traded in a range of 11,464.95 and 11,366.90. There were 14 stocks in green as against 36 stocks in red on the index.

The top gainers on Nifty were BPCL up by 2.74%, HPCL up by 1.88%, Tech Mahindra up by 0.94%, Indian Oil Corporation up by 0.81% and HCL Tech up by 0.70%. On the flip side, Bajaj Finance down by 2.85%, Bharti Infratel down by 2.80%, Titan Company down by 2.80%, Sun Pharma down by 2.54% and Bajaj Finserv down by 2.53% were the top losers.

All European markets were trading in red; UK’s FTSE 100 decreased 15.02 points or 0.21% to 7,289.02, France’s CAC fell 11.38 points or 0.21% to 5,341.19 and Germany’s DAX was down by 46.06 points or 0.38% to 12,078.27.

Asian markets ended in red on Monday after talks between the US and Canadian chief negotiators ended inconclusively last week and the Wall Street Journal reported that Beijing is considering declining the offer of talks with the US aimed at diffusing trade tensions, as it isn't prepared to negotiate with a ‘gun pointed to its head’. Further, reports that the Trump administration has instructed aides to proceed with plans to impose tariffs on Chinese imports as early as this week, which too dented Asian market sentiments. Chinese shares ended lower as trade concerns resurfaced before the US announcement of new US tariffs on Chinese products. Meanwhile, the markets in Japan and Malaysia were closed for the Respect for the Aged Day and Malaysia Day holidays, respectively.