Bourses turn negative; Sensex plunges over 550 points

Indian equity benchmarks turned negative in late afternoon session, with Sensex losing more than 550 points, dragged by a heavy selloff in banking and realty stocks, despite firm opening in European markets. Street got cautious after former Union Finance Minister P. Chidambaram blamed the government’s heavy-handed approach to the NPA problem for the sharp decline in export credit. He said despite government’s claims of taking steps to boost exports, the export credit had declined sharply to Rs 22,300 crore in June from Rs 39,000 crore in the same month in 2017. Domestic sentiments also got hit with the EEPC India’s statement that at a time when the country is grappling with the widening of the current account deficit (CAD), any move to raise import duty on steel or steel products would severely hit India's crucial engineering exports and rather lead to further expansion of the CAD. In line with the larger peers, the broader indices too witnessed sharp plunge in late noon deals. However, the indices managed to recover some ground, amid Employment Provident Fund Organisation’s (EPFO) data report that India created 9.51 lakh new jobs in the month of July 2018. As per the report, total 9,51,423 new payrolls were created during July 2018 as against 8,57,934 created in the previous month, registering a growth of 10.90%. Some support also came with a report that Private equity investments deal tally touched $12.84 billion in January-August.

On the global front, European markets were trading in green, encouraged by the better than expected retail sales report from the UK. Retail sales volume, including auto fuel, gained 0.3% month-on-month in August, slower than the 0.9% increase seen in July, but in contrast to the expected fall of 0.2%. This was the second consecutive rise in sales volume. Traders overlooked a report that Euro area consumer confidence weakened sharply in September to its lowest level in 15 months. As per initial estimates from the European Commission, the flash consumer confidence index dropped to -2.9 from -1.9 in August. Economists had forecast a score of -2. Asian markets were also trading in green, as easing trade tensions and solid manufacturing data from Japan helped to bolster investor confidence about the global economy. Back home, in scrip specific development, Meera Industries zoomed after the company received a purchase order (along with advance) of $105,000 from a renowned yarn industry lnbolsa in Bolivia, South America.

The BSE Sensex is currently trading at 36567.09, down by 554.13 points or 1.49% after trading in a range of 35993.64 and 37489.24. There were 6 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 2.69%, while Small cap index was down by 3.94%.

The only gaining sectoral indices on the BSE were Oil & Gas up by 0.98% and Energy up by 0.78%, while Realty down by 4.77%, Bankex down by 3.64%, Healthcare down by 2.77%, Industrials down by 2.19% and IT down by 2.17% were the top losing indices on BSE.

The top gainers on the Sensex were ITC up by 0.97%, ONGC up by 0.91%, Reliance Industries up by 0.40%, Wipro up by 0.26% and Asian Paints up by 0.25%. On the flip side, Yes Bank down by 29.18%, Kotak Mahindra Bank down by 5.59%, Tata Motors - DVR down by 5.29%, Sun Pharma down by 3.38% and Adani Ports & SEZ down by 3.08% were the top losers.

Meanwhile, raising concerns over declining export credit, Commerce Minister Suresh Prabhu has suggested the Finance Minister Arun Jaitley to consider loans to exporters as priority sector lending by the banks. The minister also urged for strict timelines for grant of credit including the renewal of limits.

Prabhu cited RBI data which shows outstanding export credit fell by over 40% to Rs 22,300 crore on June 22 this year from Rs 39,000 crore as on June 23 last year. Besides, the data also shows that outstanding export credit fell by over 20% to Rs 28,300 crore as on March 30 as against Rs 22,300 crore as on June 22 this year.

Commerce Minister also underlined the impacts of declining export credit on exporters and MSME units in particular and requested Arun Jaitley to kindly have suitable instructions issued to banks to restore the flow of credit to the export sector to its expected regular levels, based on the required increase over recent peak levels, to factor in export growth currently taking place.

The CNX Nifty is currently trading at 11051.15, down by 183.20 points or 1.63% after trading in a range of 10866.45 and 11346.80. There were 11 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 2.79%, Indian Oil Corporation up by 1.92%, BPCL up by 1.47%, Hindalco up by 1.40% and ITC up by 1.23%. On the flip side, Yes Bank down by 29.01%, Indiabulls Housing Finance down by 10.85%, Bajaj Finance down by 5.94%, Kotak Mahindra Bank down by 5.18% and UPL down by 4.10% were the top losers.

All Asian markets were trading in green; Hang Seng zoomed 475.91 points or 1.7% to 27,953.58, Shanghai Composite surged 68.25 points or 2.44% to 2,797.49, Nikkei 225 jumped 195.00 points or 0.82% to 23,869.93, Jakarta Composite gained 35.04 points or 0.59% to 5,966.31, Taiwan Weighted rose 141.00 points or 1.29% to 10,972.41, Straits Times added 37.49 points or 1.17% to 3,217.92 and KOSPI was up by 15.72 points or 0.67% to 2,339.17.

All European markets were trading in green; UK’s FTSE 100 increased 65.33 points or 0.88% to 7,432.65, France’s CAC soared 44.70 points or 0.81% to 5,496.29 and Germany’s DAX was up by 113.09 points or 0.91% to 12,439.57.