Sea of red takes over Dalal Street on Thursday

A sea of red took over Dalal Street on Thursday, as bears tighten their grip amid selloff in majority of sectors along with weak cues from global markets. Both the larger peers ended lower with the losses of more than 1.50%. After a sluggish start, the markets remained under pressure throughout the day, as Fitch Ratings revised downwards India’s GDP growth forecast to 7.2% for current fiscal citing higher financing cost and reduced credit availability. In its Global Economic Outlook, Fitch also projected that for 2019-20 and 2020-21 financial years, India’s GDP growth will be 7% and 7.1% respectively. The rating agency has also forecasted Indian rupee to weaken to 75 to a dollar by end of 2019. Adding more anxiety among the traders, Fitch Solutions said that the slow pace of land reforms will continue to result in project delays and rising costs, posing a downside risk for the road and rail sectors. Some concerns also came with a private report stating that officers of the indirect tax department have started issuing preliminary notices to captive units of multinationals and Indian companies exporting offshore support services.

The street paid no heed towards Finance Minister Arun Jaitley’s statement that India, among the world's fastest growing emerging economies, is likely to maintain the high growth rate of 7-8% over the next decade. He emphasized that landmark reforms such as the Insolvency and Bankruptcy Code offer an attractive and conducive environment to foreign investors to the country. The markets participants also overlooked the finance ministry’s statement that the assessment of growth and inflation made by the Reserve bank of India’s (RBI) Monetary Policy Committee (MPC) is in line with government's reading.  Traders took note of RBI governor Urjit Patel’s statement that if the upside risks to inflation do not materialise, the bank may change its monetary policy accordingly, raising prospects of rate cuts. Meanwhile, Economic Affairs Secretary Subhash Chandra Garg said the calibrated tightening stance of RBI’s MPC probably needed a rethink even as he welcomed the decision on policy rate.

On the global front, European markets were trading in red, as Eurozone's private sector growth was the lowest in more than two years during November, led by Germany, though the pace of slowdown was less than what was estimated initially. The final Eurozone Composite purchasing managers' index fell to 52.7 from October's 53.1. Besides, UK services sector growth slowed to its weakest level in nearly two-and-a-half years in November, amid weaker growth in both business activity and new work as Brexit concerns intensified, defying expectations for a modest improvement. The CIPS UK Services purchasing managers' index, or PMI, fell to 50.4 from 52.2 in October. Asian markets ended in red, as the arrest of a senior Huawei executive over potential violation of US sanctions on Iran raised more questions about the Trump administration's overall China strategy. The recent drop in US 10-year Treasury yields, Brexit-related uncertainty and caution ahead of a crucial meeting of the Organization of Petroleum Exporting Countries also weighed on markets.

Back home, banking stocks ended lower, after the RBI said it would link retail loans to external benchmarks replacing MCLR. Port sector stocks also edged lower, despite report that rating agency ICRA maintained stable year-end outlook for the port sector, terming rebound in coal volumes and steady progress on the Sagarmala project positive for Indian port sector players in the medium term. Further, Non-banking finance companies’ (NBFCs) stocks fell, with Crisil’s report that difficulties in getting funding will halve the non-bank lenders’ asset growth to around 10% in the second half of the current fiscal. It added that the asset quality of retail loans is resilient, but the NBFCs’ non-retail book has to be monitored for potential stress. Besides, shares related to agri industry were in limelight, amid reports that the Union Cabinet is expected to approve a policy to boost exports of agriculture commodities such as tea, coffee and rice and increase the country's share in global agri trade.
Finally, the BSE Sensex plunged 572.28 points or 1.59% to 35,312.13, while the CNX Nifty was down by 181.75 points or 1.69% to 10,601.15.

The BSE Sensex touched a high and a low of 35,707.23 and 35,266.76, respectively and there were 1 stocks advancing against 30 stocks declining on the index.
The broader indices ended in red; the BSE Mid cap index fell 1.54%, while Small cap index was down by 1.36%.

The top losing sectoral indices on the BSE were Energy down by 2.35%, Auto down by 2.26%, Realty down by 2.26%, Telecom down by 2.11% and Consumer Disc down by 1.83%, while there were no gaining sectoral indices on the BSE.

The lone gainer on the Sensex was Sun Pharma up by 1.57%. On the flip side, Maruti Suzuki down by 4.63%, Tata Motors - DVR down by 4.22%, Tata Motors down by 4.02%, Yes Bank down by 3.08% and Adani Ports &Special down by 2.74% were the top losers.

Meanwhile, rating agency ICRA has maintained stable year-end outlook for the port sector, in its year-end assessment, and stated that rebound in coal volumes and steady progress on the Sagarmala project are positive for Indian port sector players in the medium term.  The agency is expecting that the prospects for the Indian port sector players in the medium term will be favourable, supported by continuing healthy growth in cargo of major volume drivers - Coal, Crude and Containers.

It highlighted that coal imports, which had become a concern over the last 2 years, have been witnessing a rebound and could continue to with the momentum witnessed in first half of FY 2019, adding that demand revival from the power sector and key consumer industries will be critical for sustained pick-up in coal imports.

Besides, it expects that over the medium to long term, overall cargo growth will gain further traction, driven by domestic requirements of crude oil, for meeting domestic petroleum requirements; and containers, given the cost and logistical advantages associated with containerization. Moreover, it emphasized that the major ports are already being targeted for modernisation and efficiency improvement under the Sagarmala project. Over the last two years, there has been progress on the port capacity enhancement, efficiency improvement and port connectivity.

The CNX Nifty traded in a range of 10,722.65 and 10,588.25. There were 4 stocks advancing against 46 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 1.11%, JSW Steel up by 0.54%, GAIL up by 0.19% and Power Grid Corporation up by 0.03%. On the flip side, Indiabulls Housing Finance down by 5.97%, Maruti Suzuki down by 4.67%, Bajaj Finserv down by 4.43%, Tech Mahindra down by 4.38% and Tata Motors down by 3.96% were the top losers.

European markets are trading in red; FTSE 100 plunged 177.49 points or 2.63% to 6,744.35, CAC 40 fell 120.82 points or 2.50% to 4,823.55 and DAX was down by 260.91 points or 2.39% to 10,939.33.

Asian markets ended in red on Thursday as the arrest of a senior Huawei executive over potential violation of US sanctions on Iran raised more questions about the Trump administration's overall China strategy. The recent drop in US 10-year Treasury yields, Brexit-related uncertainty and caution ahead of a crucial meeting of the Organization of Petroleum Exporting Countries also weighed on markets. Japanese shares closed lower, with chip-related stocks coming under heavy selling pressure. Meanwhile, Tech stocks paced the declines on concerns that they might be hurt seriously in view of security concerns over the Chinese telecoms group Huawei.  On economic front, Bank of Japan Governor Haruhiko Kuroda told parliament that economic risks from abroad could be severe and the central bank would respond appropriately as needed. Seoul stocks ended sharply lower on skepticism about the U.S.-China trade deal.