Benchmarks witness complete bloodbath in morning deals

Indian equity benchmarks made a pessimistic start and are trading with a cut of around two and a half percent, breaching their crucial 33,900 (Sensex) and 10,200 (Nifty) levels amid feeble global cues. Traders remained on sidelines ahead of corporate earnings for the financial year 2018-2019, with India’s biggest software services exporter Tata Consultancy services (TCS) reporting quarterly results today. IT companies are expected to report healthy numbers led by the ramp-up of recent large deal wins, improving the macro environment, and strong seasonality. Sentiments were dampened with 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.

Global cues too remained pitiful with all the Asian counters trading in red terrain with deep cut after Wall Street suffered its worst drubbing in eight months, a conflagration of wealth that could threaten business confidence and investment across the globe. The US markets declined on Wednesday as investors worried that sharply rising interest rates would constrain the nation’s historic economic expansion.

Back home, aviation sector stocks edged higher with report that 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. In scrip specific developments, EID Parry gained on reporting 0.26 LMT sugar sales in September and ZEEL gained despite reporting 38% fall in Q2 consolidated net profit.

The BSE Sensex is currently trading at 33896.01, down by 864.88 points or 2.49% after trading in a range of 33723.53 and 34063.82. There were 1 stocks advancing against 30 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 2.89%, while Small cap index was down by 2.51%.

The top losing sectoral indices on the BSE were Realty down by 3.91%, Metal down by 3.90%, Basic Materials down by 3.44%, IT down by 2.92% and Bankex was down by 2.86%, while there were no gainers on the BSE sectoral front.

The lone gainer on the Sensex was ONGC up by 1.21%. On the flip side, Vedanta down by 4.52%, SBI down by 4.46%, Tata Steel down by 4.30%, Axis Bank down by 3.50% and Yes Bank down by 3.14% were the top losers.

Meanwhile, the International Monetary Fund (IMF) Director of Fiscal Affairs Department, Vitor Gasper has said that India’s debt is lower than the best or emerging market economies in the world, while the global debt has reached a new record high of $182 trillion in 2017. According to the latest IMF data, in India, private debt in 2017 was 54.5% of the Gross Domestic Product (GDP) and the general government debt was 70.4% of the GDP, a total debt of about 125 of the GDP. In comparison, debt of China was 247% of the GDP. So, the country’s debt is substantially less than the global debt as percentage of world GDP.

Gasper noted that there is a positive relation between the debt to GDP ratio and the level of GDP per capita. If you compare around the world with the best economies or emerging market economies, the level of debt in India is lower. He added that debt in advanced economies, since the global financial crisis, has increased quite substantially while the private sector has been very gradually leveraging.  In the last few years in India private debt has declined from almost 60% to 54.5.

IMF Director of Fiscal Affairs Department further said ‘So, it's very stable. So, what you do see is that emerging market economies, which is where India is, there's a very fast buildup in private debt with a slowdown in the last two years, but India is basically steady. So, India is not an emerging market economy where leveraging is progressing fast.’ According to him, in emerging market economies private debt has risen much faster than public debt.

The CNX Nifty is currently trading at 10188.35, down by 271.75 points or 2.60% after trading in a range of 10138.60 and 10219.55. There were 5 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were HPCL up by 1.33%, ONGC up by 1.21%, GAIL India up by 0.89%, Bharti Infratel up by 0.29% and Zee Entertainment up by 0.03%. On the flip side, Indiabulls Housing down by 9.01%, Bajaj Finserv down by 5.24%, Grasim Industries down by 5.10%, Hindalco down by 5.05% and SBI down by 4.68% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 tumbled 1020.77 points or 4.54% to 22,485.27, Taiwan Weighted crumbled 648.71 points or 6.61% to 9,818.12, Straits Times declined 82.81 points or 2.72% to 3,048.67, Jakarta Composite decreased 98.44 points or 1.72% to 5,722.23, Hang Seng fell 986.04 points or 3.91% to 25,207.03, KOSPI decreased 93.31 points or 4.37% to 2,135.30 and Shanghai Composite was down by 118.40 points or 4.54% to 2,607.44.