Benchmarks made gap-down opening; Nifty breaches 10,700 mark

Indian equity benchmarks made a gap-down opening and are trading with a cut of around one and a half percent with frontline gauges declining below their crucial 35,500 (Sensex) and 10,700 (Nifty) levels. Traders remained on sidelines ahead of Services PMI data for the month of September to be out later in the day. Traders remained cautious with Exporters’ body Federation of Indian Export Organisations’ (FIEO) statement that the growth of country’s exports is likely to slow in the coming months owing to various domestic and global factors. It said Indian exports have always been influenced by the growth in global trade and therefore, the subdued global trade forecast of 3.9% in 2018 and 3.7% in 2019 will have adverse bearing on export. Besides, the Confederation of Indian Industry (CII) has submitted a dozen suggestions to the Prime Minister’s Office, the finance minister and Reserve Bank of India (RBI) on curbing rupee volatility and controlling the current account deficit (CAD).

On the global front, all the Asian counters trading in red at this point of time, as oil prices near four-year highs threatened to roil emerging economies while concerns over the persisting US-China trade war continued to weigh on investors’ sentiment. The US markets ended higher on Wednesday on encouraging reports on hiring and growth in the service sector.

Back home, stocks related to oil marketing companies (OMC) edged higher with report that the RBI allowed the OMCs to raise External Commercial Borrowings (ECB) from all recognised lenders under the automatic route. However, stocks of public sector banks edged lower with report that the government will release the second tranche of capital infusion into the public sector banks (PSBs) under its recapitalisation programme.

The BSE Sensex is currently trading at 35457.10, down by 518.53 points or 1.44% after trading in a range of 35341.68 and 35820.53. There were 8 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.81%, while Small cap index was down by 1.02%.

The few gaining sectoral indices on the BSE were Capital Goods up by 1.10%, Metal up by 0.80% and Industrials was up by 0.18%, while Energy down by 3.01%, IT down by 2.35%, TECK down by 2.08%, Oil & Gas down by 1.77% and Realty was down by 1.73% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 2.45%, Yes Bank up by 1.36%, Mahindra & Mahindra up by 0.96%, Tata Motors - DVR up by 0.95% and Axis Bank up by 0.87%. On the flip side, Reliance Industries down by 4.26%, Hero MotoCorp down by 3.23%, TCS down by 3.18%, HDFC down by 2.47% and ICICI Bank down by 2.36% were the top losers.

Meanwhile, expressing cautiousness on India’s exports, exporters’ body the Federation of Indian Export Organisations (FIEO) has said that the exports growth in the country is likely to slow down in the coming months due to various domestic and global factors. The FIEO President Ganesh Kumar Gupta said Indian exports have always been influenced by the growth in global trade and therefore, the subdued global trade forecast of 3.9% in 2018 and 3.7% in 2019 will have adverse bearing on exports.

Gupta also said in the first five months of the current fiscal, exports have done well, but they are likely to face greater challenges in months to come. He added that the export growth for September to November has to be watched carefully as exports in these months clocked over 25% growth in 2017 and thus would have the disadvantage of high base effect. He further said that the sanctions on Iran, payment problems in Venezuela, huge depreciation of currencies of Argentina, Turkey, South Africa, Russia, Brazil and banking restrictions on large number of countries like Syria, Sudan, Libya, and Iraq are affecting exports.

On domestic front, the FIEO President said flow of credit to the export sector is a huge issue as export credit declined by over 41% in April-June. He said such mismatch does not augur well for exports and thus needs to be addressed immediately and effectively and the GST refund pendency should be resolved immediately. However, he expressed optimism that the country's exports would touch $350 billion exports in 2018-19. Last time in March, exports entered negative zone. It dipped by 0.66% in that month. Besides, exports were up by 16.13% to $136.10 billion in April-August 2018-19.

The CNX Nifty is currently trading at 10696.10, down by 162.15 points or 1.49% after trading in a range of 10663.65 and 10754.70. There were 12 stocks advancing against 38 stocks declining on the index.

The top gainers on Nifty were Larsen & Toubro up by 2.68%, Bharti Infratel up by 2.48%, Yes Bank up by 1.67%, Hindalco up by 1.26% and Tata Steel up by 0.92%. On the flip side, Eicher Motors down by 5.40%, Reliance Industries down by 4.38%, Tech Mahindra down by 4.27%, TCS down by 3.37% and Hero MotoCorp down by 2.93% were the top losers.

Asian markets are trading in red; Nikkei 225 declined 66.67 points or 0.28% to 24,044.29, Taiwan Weighted dropped 142.17 points or 1.33% to 10,721.77, Straits Times shed 31.97 points or 0.99% to 3,235.43, Jakarta Composite fell 93.93 points or 1.63% to 5,773.81, Hang Seng shed 456.25 points or 1.71% to 26,635.01 and KOSPI was down by 33.11 points or 1.45% to 2,276.46.