Last hour sell-off drags markets near day’s low

Indian equity benchmarks ended the last trading day of the week on lackluster note with the losses of around 1 percent each. The start of trading day was sluggish, impacted by widening Fiscal deficit data. The central government’s fiscal deficit widened in the first half (H1) of current fiscal year (2018-19). Fiscal deficit was 95.3% of the Budget Estimate (BE) in the first six months (April-September) of FY19, mainly on account of slow growth in revenue collections. The street also got cautious with a private report stating that India’s tight money conditions and fears of a contagion following a debt crisis at a local lender dented demand and put a muzzle on animal spirits in the world’s fastest-growing major economy. Adding some anxiety among the traders, the Securities and Exchange Board of India (SEBI) imposed a total penalty of Rs 70 lakh on 10 entities for indulging in manipulative trade in the shares of Shree Global Tradefin. Traders took note of India ratings’ report that the rupee may average at 69.79 to the dollar in the second half, down 8.3% from the first half if the monetary authority props it up by mobilising at least $30 billion from NRIs as it has done in 2013. It added that the rupee is the worst-performing emerging market currency losing over 15% year-to-date.

The indices extended the losses in the last hours of the trade to settle near their intraday low points, tracking weak European markets. Sentiment remained pessimistic, as the provisional data from the stock exchanges showed that foreign institutional investors (FIIs) sold shares worth a net Rs 1495.71 crore on October 25, 2018. Investors paid no heed towards Director General of Foreign Trade (DGFT) Alok Chaturvedi’s statement that the commerce ministry is working on a comprehensive strategy and considering incentives for exporters with a view to boost the country’s outbound shipments. He also said that the exports, which recorded about 10% growth in 2017-18 to over $300 billion, is expected to reach $330-340 billion this fiscal. The market participants even failed to take any sense of relief with Prime Minister Narendra Modi’s statement that India offers unprecedented employment and entrepreneurial opportunities.

On the global front, European markets were trading in red, as Germany's business sentiment weakened for the second straight month in October on geopolitical tensions. The survey data from the Mannheim-based Ifo institute showed that the business climate index fell more-than-expected to 102.8 in October from 103.7 in September. The expected score was 103.2. Meanwhile, Germany's consumer confidence is set to remain stable in November. The survey data from market research group GfK showed that the forward-looking consumer sentiment index came in at 10.6 in November, the same as seen in October. While the economic and income expectations suffered losses, the propensity to buy rose again in October. Asian markets ended in red, as trade tensions and geopolitical worries kept investors from tracking a rebound on Wall Street, with observers warning of further volatility to come.

Back home, telecom stocks ended higher, aided by a private report stating that in a sign of the country's ascendancy and as a testimony to the telecom sector's blistering pace of growth, India became the world's second-largest telecom market in 2018 with over a billion subscribers. According to the report, the total mobile subscriber base is expected to reach 1.28 billion in FY 2022 and data consumption is expected to reach 7 GB (giga bit) per subscriber per month. Besides, stocks related to sugar companies ended mostly in green, despite a private report showing that India’s sugar output is likely to decline marginally this year due to the possibility of lower cane yields. The drop in output is being attributed to white grub infestation in Maharashtra and water logging in the cane fields of Uttar Pradesh. Further, agriculture industries related stocks remained in limelight, after Commerce Minister Suresh Prabhu said that the government will soon come out with a new agri export policy which would have provisions for setting up agro specific zones to boost outbound shipments.

Finally, the BSE Sensex fell 340.78 points or 1.01% to 33,349.31, while the CNX Nifty was down by 94.90 points or 0.94% to 10,030.00.

The BSE Sensex touched a high and a low of 33,776.80 and 33,291.58, respectively and there were 7 stocks advancing against 24 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index declined 0.11%, while Small cap index down by 0.04%.

The top gaining sectoral indices on the BSE were Telecom up by 0.64%, Energy up by 0.58%, Consumer Durables up by 0.14%, Industrials up by 0.13% and Auto up by 0.06%, while IT down by 2.05%, Bankex down by 1.97%, TECK down by 1.85%, FMCG down by 1.24%, Power down by 1.10% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 2.09%, Reliance Industries up by 1.41%, Bajaj Auto up by 1.13%, Bharti Airtel up by 1.06% and Tata Steel up by 0.83%. On the flip side, Yes Bank down by 8.97%, Axis Bank down by 4.04%, Indusind Bank down by 3.14%, TCS down by 2.86% and Kotak Mahindra Bank down by 2.48% were the top losers.

Meanwhile, the National Association of Software and Services Companies (NASSCOM) in its latest report titled ‘Indian start-up ecosystem - approaching escape velocity’ has stated that Indian startups has registered a 108 percent growth in total funding to $4.2 billion in 2018 as compared to $2 billion in previous year. However, it also said that the worrying factor was the decline in funding for companies at the seed stage. It said “India is becoming a startup hub. Opportunity for growth is enormous, which we had never seen in our lifetime. Challenge is how fast a company wants to transform.”

According to the report, the country added 1,200 new technology startups in 2018 as against 1,000 last year, including eight unicorns, taking the total number to 7,200 startups.  However, it noted that the seed stage funding of Indian startups has declined from $191 million in 2017 to $151 million in 2018. Besides, it said “In terms of overall funding, it is a good story. However, we are seeing a continuous decline in seed stage funding of startup companies. If you fall at the seed stage, innovation is hit. It is the area, which needs protection.” It added that there was a 50 percent increase in number of advanced tech startups since 2017.

NASSCOM further said that startup ecosystem has regained momentum after the slowdown in 2016-17. It pointed out that these companies created 40,000 new direct jobs while there was three-fold increase in indirect jobs. It also showed that post 2017, investment into startups has increased by over 100 percent, from $2.03 billion in 2017 to $4.2 billion in 2018. Adding further, it noted that the total number of startup funding deals, especially in the late stages, witnessed a massive growth of around 250 percent from $847 million in 2017 to $3 billion in 2018.

The CNX Nifty traded in a range of 10,128.85 and 10,004.55. There were 16 stocks advancing against 33 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were UPL up by 3.43%, Titan up by 2.05%, Bajaj Auto up by 1.67%, Tata Motors up by 1.48% and BPCL up by 1.23%. On the flip side, Yes Bank down by 8.65%, JSW Steel down by 5.35%, Axis Bank down by 4.51%, HCL Tech. down by 3.77% and Grasim Industries down by 3.59% were the top losers.

European markets were trading in red; UK’s FTSE 100 dipped 119.59 points or 1.74% to 6,884.51, France’s CAC lost 129.32 points or 2.64% to 4,902.98 and Germany’s DAX was down by 249.15 points or 2.25% to 11,057.97.

Asian markets ended lower on Friday, as disappointing third-quarter sales figures from Alphabet and Amazon released after the US market close spurred fresh concerns about the outlook for US corporate earnings. Further, trade tensions, concerns over Italian government finances and Brexit risks also dampened investors’ sentiments. Chinese shares slipped, but ended the week higher on hopes for more government support to boost growth. Meanwhile, Japanese shares ended modestly lower on anxiety over the outlook for US earnings growth.