Benchmarks witness massacre; Nifty slips below 10,900 mark

Wednesday turned-out to be a horrendous day of trade for Indian equity benchmarks with frontline gauges ending below their crucial 36,000 (Sensex) and 10,900 (Nifty) levels. Markets started the session on pessimistic note as traders remained on sidelines ahead of the Reserve Bank of India’s monetary policy review later this week and Services PMI data for the month of September to be released on October 4. Sentiments remained dampened with the government data showing that the growth of eight core sectors slowed to 4.2% in August, due to fall in output of crude oil, petroleum product and fertiliser. Besides, retail inflation for industrial workers rose to 5.61% in August from 2.52% in the year-ago month mainly due to rise in prices of food items and petroleum products. Weakness in rupee, which slipped below 73 per dollar mark for the first time, too dampened sentiments. The Indian currency dropped to a record low in opening deals on Wednesday as a sharp rise in global crude oil prices over the last two sessions weighed on sentiment for the local unit.

Selling got intensified in last leg of trade and dragged markets to end near intraday lows, as market participants remained concerned with ICRA’s latest report stating that credit quality pressure on investment grade entities has risen in the six months of April-September 2018, with an increase in the downward rating pressure on them. Anxiety also spread among traders after provisional estimate of the first phase of the 10th agricultural census showed that the average size of the Indian farmland shrank by over 6% between 2010-11 and 2015-16, with operational holding in the country dropping to 1.08 hectares from 1.15 hectares in 2010-11. Traders shrugged off report that the Commerce Ministry focusing on nine sectors, including pharma, food processing and textiles, to boost exports in the current fiscal. The ministry is targeting a minimum growth rate of 16% in exports this fiscal. Also, traders failed to get any sense of relief with report that the finance ministry expects the GST collections to cross Rs 1 lakh crore in November and December on account of festive season demand and the anti-evasion measures initiated by the revenue department.

On the global front, European markets were trading mostly in green after Italy's Prime Minister Giuseppe Conte said the euro was ‘unrenounceable’. Further, concerns about Italy's budget plan also eased amid the buzz that the country plans to reduce its budget deficit to 2% in 2021. On the data front, Euro area producer price inflation slowed for the first time in four months during August. As per preliminary data from the statistical office Eurostat, industrial producer prices on the domestic market rose 4.2% year-on-year following 4.3% in July, which was revised from 4%. However, Asian markets ended mostly in red, as worries about US-China trade tensions persisted and Japanese services sector data disappointed investors.

Back home, stocks related to steel companies remained in focused amid reports that the Centre is considering a Steel Ministry's proposal to first merge the loss-making steel firms to create a single state-owned steel manufacturer to bring in efficiency. Stocks related to power sector ended lower with report that power tariff touched a decade high of Rs 18 per unit in the spot market on Tuesday due to low hydro and wind energy production and coal shortage at thermal plants. Auto stocks edged lower on reporting sales numbers for the month of September.

Finally, the BSE Sensex declined 550.51 points or 1.51% to 35,975.63, while the CNX Nifty was down by 150.05 points or 1.36% to 10,858.25.

The BSE Sensex touched a high and a low of 36,602.85 and 35,911.82, respectively and there were 5 stocks advancing against 26 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index lost 1.11%, while Small cap index was up by 0.20%.

The few gaining sectoral indices on the BSE were Metal up by 1.74%, Oil & Gas up by 0.63%, PSU up by 0.59% and Capital Goods was up by 0.23% while, Auto down by 2.90%, Telecom down by 2.84%, TECK down by 2.38%, IT down by 2.23% and Consumer Discretionary Goods & Services was down by 2.06% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 5.79%, Vedanta up by 3.09%, Coal India up by 1.60%, ONGC up by 1.45% and Bajaj Auto up by 0.16%. On the flip side, Mahindra & Mahindra down by 6.66%, TCS down by 4.14%, Axis Bank down by 3.91%, ICICI Bank down by 3.36% and Maruti Suzuki down by 2.86% were the top losers.

Meanwhile, providing some relief to the industries, credit rating agency, Crisil in its latest report has said that credit profiles of Indian corporates improved during the first half of the current fiscal year (H1FY19). As per the report, India Inc's credit ratio stood at 1.68 times in the April to September period as against 1.45 times in the preceding six months.

However, the rating agency pointed that credit profiles were moderated when compared to the same period last year (1.88 times in the first half of the previous fiscal year). Further, the report showed that the debt-weighted credit ratio of firms at 1.20 times during April- September 2018 against 1.53 times in the year-ago period and 3.19 times in the preceding six months.

Besides, Crisil listed the various risk factors for Indian companies in future such as the rupee depreciation, rising interest rates and tariff wars. But, Crisil-rated corporates are expected to sustain their credit risk profiles even in the face of headwinds, backed by strong demand, increased government spending towards infrastructure, and leaner balance sheets.

The CNX Nifty traded in a range of 10,989.05 and 10,843.75. There were 14 stocks in green as against 36 stocks in red on the index.

The top gainers on Nifty were Yes Bank up by 5.63%, Hindalco up by 4.76%, Indiabulls Housing Finance up by 3.74%, HPCL up by 3.56% and Vedanta up by 3.35%. On the flip side, Mahindra & Mahindra down by 7.03%, Eicher Motors down by 6.79%, Bharti Infratel down by 6.45%, TCS down by 4.38% and Axis Bank down by 3.62% were the top losers.

European markets were trading mostly in green; UK’s FTSE 100 increased 28.62 points or 0.38% to 7,503.17 and France’s CAC was up by 23.99 points or 0.44% to 5,491.88, while Germany’s DAX was down by 51.45 points or 0.42% to 12,287.58.

Asian markets ended mostly lower on Wednesday as investors fretted about Italy's budgetary spending and a controversial clause in the new US-Mexico-Canada trilateral pact put the focus back on the Sino-US tariff dispute. The US-China trade dispute is unlikely to be resolved anytime soon as a provision in the new US-Mexico-Canada trade agreement gives the Trump administration an effective veto over any China trade deal by Canada or Mexico. Japanese shares ended lower as the weak yen trend paused on concerns over Italian finances and automakers skidded after posting weak US sales data. On the economic front, the latest survey from Nikkei revealed that the services sector in Japan continued to expand in September, but at a sharply slower pace, with a two-year low services PMI score of 50.2. That's down from 51.5 in August. Meanwhile, China's financial markets remain closed for the National Day holiday. South Korean markets were also closed for a public holiday.