Weak trade persists; Sensex down by over 200 points

Weak trade persisted on Dalal Street in late afternoon session, with Sensex losing more than 200 points, tracking weak opening of European markets. Heavy sell-off at Energy, Oil & Gas and Metal counters kept the markets down in late noon deals. Anxiety remained among the traders, as Finance Minister Arun Jaitley criticised the Reserve Bank of India for failing to check indiscriminate lending during 2008 and 2014 that has led to the present bad loan or NPA crisis in the banking industry. Some concerns also came with credit rating agency, Crisil’s latest report that depreciating rupee puts nearly half of the solar power capacities under implementation worth around Rs 28,000 crore at viability risk. The report also noted that import of solar modules has got costlier due to rupee fall and increased the cost of setting up solar plants. The markets failed to take any sense of relief with Economic Affairs Secretary Subhash Chandra Garg’s statement that the government is trying to find ways to ensure stability of FPI fund flows into the financial markets. He also said developments like bond yield cycle, taxation reforms, in the US have not hurt Foreign Direct Investment (FDI) flow into the country.

On the global front, European markets were trading in red, as UK mortgage approvals declined in September. According to the figures from Bank of England, the number of housing loan approvals fell to 65,269 in September from 66,101 in August. Nonetheless, this was above the expected level was 64,700. Asian markets were trading in green, after China's securities regulator said it would enhance market liquidity, and encourage share buybacks and mergers and acquisitions by listed firms. Market sentiment also got a boost amid reports that China is considering a tax cut to revive its flagging automotive market. Back home, in scrip specific development, Union Bank of India surged on reporting net profit of Rs 139.03 crore for the second quarter ended September 30, 2018 as against net loss of Rs 1,530.72 crore for the same quarter in the previous year.

The BSE Sensex is currently trading at 33846.57, down by 220.83 points or 0.65% after trading in a range of 33836.12 and 34176.36. There were 13 stocks advancing against 18 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.66%, while Small cap index was up by 0.87%.

The top gaining sectoral indices on the BSE were IT up by 1.52%, TECK up by 1.50%, Capital Goods up by 0.73%, Telecom up by 0.73% and Industrials up by 0.72%, while Energy down by 2.70%, Oil & Gas down by 1.57%, Metal down by 1.07%, Bankex down by 0.72%, Healthcare down by 0.38% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.56%, Hindustan Unilever up by 2.36%, SBI up by 2.20%, Tata Motors - DVR up by 1.41% and Tata Motors up by 1.23%. On the flip side, Coal India down by 3.14%, Reliance Industries down by 2.79%, Indusind Bank down by 2.56%, Sun Pharma down by 1.82% and Power Grid Corporation down by 1.61% were the top losers.

Meanwhile, raising concerns, credit rating agency, Crisil in its latest report has said that depreciating rupee puts nearly half of the solar power capacities under implementation worth around Rs 28,000 crore at viability risk. The report also noted that import of solar modules has got costlier due to rupee fall and increased the cost of setting up solar plants.

The rating agency further mentioned about the facts related to the solar projects, saying that solar modules account for 55-60% of the project cost of a solar plant, which is typically around Rs 5 crore per MW and over 90% of them are imported at present. As per the study report, for every 10% drop in the rupee, the cost of setting up a solar power plant increases by Rs 30 lakh per MW, assuming other factors remain unchanged.

Besides, Crisil pointed that the project costs would dart up by as much as 20%, if the rupee remains weak and safeguard duty is also levied and a result of this, viable tariff for future projects will have to be higher by 30 paise per unit. Further, it added that this would impact the government's target of setting up 100 GW solar capacity by fiscal 2022.

The CNX Nifty is currently trading at 10210.80, down by 40.05 points or 0.39% after trading in a range of 10206.30 and 10285.10. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 3.96%, Grasim Industries up by 3.14%, Hindustan Unilever up by 2.46%, GAIL India up by 2.44% and Dr. Reddy’s Lab up by 2.40%. On the flip side, Cipla down by 4.02%, BPCL down by 3.48%, HPCL down by 3.45%, Coal India down by 3.24% and Reliance Industries down by 2.82% were the top losers.

Asian markets were trading mostly in green; Nikkei 225 increased 307.49 points or 1.43% to 21,457.29, KOSPI added 18.64 points or 0.93% to 2,014.69, Shanghai Composite gained 25.95 points or 1.01% to 2,568.05, Jakarta Composite rose 12.51 points or 0.22% to 5,767.12 and Taiwan Weighted surged 9.79 points or 0.1% to 9,526.11. On the flip side, Straits Times decreased 11.35 points or 0.38% to 2,970.19 and Hang Seng was down by 226.51 points or 0.92% to 24,585.53.

European markets were trading mostly in red; France’s CAC dipped 1.13 points or 0.02% to 4,988.22 and Germany’s DAX decreased 13.81 points or 0.12% to 11,321.67. On the flip side, UK’s FTSE 100 was up by 10.78 points or 0.15% to 7,037.10.