Bears back in action; Sensex, Nifty lose over 2%

Bears back in the action on Thursday, as Indian equity indices registered sharp losses of over 2% to settle the session in red territory. After a gap-down opening, the markets remained under pressure, impacted by a private report stating that private equity and venture capital (PE/VC) investments in India declined 23% to $6.7 billion in the third quarter of this year as investors adopted a cautious approach. On a year to date basis however, PE/VC investments in India are higher by 17.4% and the investment tally also looks set to surpass the previous year high driven by some large deals in the pipeline, provided there is no major macro setback. Domestic sentiments also got hit with Federation of Indian Export Organisations (FIEO) President Ganesh Gupta’s statement that the delay in Goods and Services Tax (GST) refunds is mainly impacting small exporters who provide jobs in labour-intensive sectors. FIEO President made an uproar about pending refunds of Rs 22,000 crore, noting that this is creating liquidity problem for exporters and impacting overseas shipments.

Markets pain deepen, after United Nations’ latest report noted that India lost $80 billion from natural disasters in 20 years and also ranks fourth among the top 10 countries that reported economic losses due to disasters. Adding more anxiety among the investors, International Monetary Fund Managing Director Christine Lagarde warned countries of the perils of a trade or a currency war, saying they could be detrimental to global growth and hurt innocent bystanders. The market participants paid no heed towards World Bank Official’s statement that an orderly depreciation of the rupee would increase competitiveness and relieve some of the pressures in capital market. The street even overlooked reports that the government will develop a Skill Index to encourage competition between districts and improve their skill development and training performance.

On the global front, European markets were trading in red, as the UK economy stagnated in August as the increase in industrial production was offset by a contraction in construction and farm sectors. The Office for National Statistics reported that gross domestic product remained unchanged after expanding 0.4% in July. Besides, the UK’s merchandise trade deficit widened in August from the previous month and was bigger than economists expected. As per preliminary data from the Office for National Statistics, the visible trade deficit widened to GBP 11.19 billion from GBP 10.38 billion in July. Asian markets ended in red, as renewed worries about trade tensions and slowing global growth sent investors fleeing from risky assets.

Back home, on the sectoral front, aviation sector stocks ended higher, after the central government slashed the excise duty on aviation turbine fuel (ATF) from 14% to 11%. This comes as a relief to the aviation industry that has been hit hard by high fuel prices. The duty change would come into force with effect from the October 11, 2018. Stocks related to retail companies remained in limelight with FICCI- Deloitte report stating that the Indian retail sector is expected to touch $1,750 billion by 2026, a compounded annual growth rate of 7.8 percent. Further, stocks of insurance sector also remained in focus with the Insurance Regulatory and Development Authority of India (IRDAI) in favour of allowing 100% foreign direct investment (FDI) in insurance intermediaries in addition to insurance brokers.

Finally, the BSE Sensex plunged 759.74 points or 2.19% to 34,001.15, while the CNX Nifty was down by 225.45 points or 2.16% to 10,234.65.

The BSE Sensex touched a high and a low of 34,325.18 and 33,723.53, respectively and there were 3 stocks advancing against 28 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 2.34%, while Small cap index was down by 1.41%.

The only gaining sectoral indices on the BSE were Oil & Gas up by 2.88% and Energy up by 0.16%, while Metal down by 3.77%, IT down by 3.21%, Realty down by 3.16%, TECK down by 2.90% and Basic Materials down by 2.78% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 2.86%, Yes Bank up by 2.54% and Hindustan Unilever up by 0.75%. On the flip side, SBI down by 5.74%, Tata Steel down by 4.60%, Vedanta down by 4.45%, Mahindra & Mahindra down by 4.44% and Infosys down by 3.61% were the top losers.

Meanwhile, Union Minister Suresh Prabhu has said that the government will soon unveil an air cargo policy, and a vision document is being proposed to ensure sustainable growth of the Indian aviation sector for all times to come. India is one of the world's fastest-growing aviation markets and has been registering double-digit growth for nearly four years.

Highlighting that security, safety, convenience and affordability are the key aspects, Prabhu said the aviation vision for 2035 would address all the issues so that they will have a sustainable growth in air travel in India for all times. He also said that the ministry is preparing 'Vision 2035' document for the civil aviation sector.

The minister further mentioned about using new technologies to protect a person and his privacy. He said “I think we should think about new technologies on how we should protect privacy and the person... How we are going to do that will be another interesting challenge in the future. I am sure we will be able to address it.” Noting that technology itself is not a solution, he pitched for bringing in best of technology use with best of human mind.

The CNX Nifty traded in a range of 10,335.95 and 10,138.60. There were 9 stocks in green as against 41 stocks in red on the index.

The top gainers on Nifty were HPCL up by 16.21%, Indian Oil Corporation up by 5.77%, BPCL up by 4.84%, GAIL India up by 4.06% and YES Bank up by 3.04%. On the flip side, Indiabulls Housing Finance down by 9.12%, Bajaj Finserv down by 6.20%, SBI down by 6.08%, Tata Steel down by 4.99% and Hindalco down by 4.63% were the top losers.

European markets were trading in red; UK’s FTSE 100 plunged 129.09 points or 1.84% to 7,016.65, France’s CAC lost 73.18 points or 1.43% to 5,133.04 and Germany’s DAX was down by 149.91 points or 1.3% to 11,562.59.

Asian markets ended lower on Thursday, mirroring a sell-off on Wall Street overnight as renewed trade tensions between Washington and Beijing dampened the outlook for economic growth and company profits. Japanese shares hit a one-month low, hit by a sell-off in global shares and as a profit forecast cut by industrial equipment maker Yaskawa Electric Corp added to investor worries over global growth. Meanwhile, Chinese stocks hit multi-year lows to join a global rout.