Benchmarks witness bloodbath; Sensex breaches 35,800 mark

Indian equity benchmarks witnessed bloodbath on Friday with frontline gauges ending below their crucial 35,800 (Sensex) and 10,800 (Nifty) levels on global growth concern. Markets started the session on cautious note, as traders remained pessimistic with the central bank’s statement that the total external commercial borrowings (ECB) will now be rule-based and will be capped at 6.5% of the gross domestic product. The limit now works out to be about $160 billion for the current fiscal year, against the actual outstanding of $126.29 billion as on September 30. The central bank already has a rule-based exposure for foreign investors’ exposure in bonds. Foreigners are allowed to invest up to 6% of the outstanding debt. Sentiments on the street weakened further with Parliamentary Committee expressing concern over the huge losses suffered by some Central Public Sector Undertakings (CPSUs) and the low rate of return on assets and pressed the urgent need for optimum utilisation of their assets to generate better earnings.

Markets extended southward journey to end near intraday lows, as traders shrugged off report that the Lok Sabha passed the Consumer Protection Bill, and the government introduced a Bill to amend the Companies Act to further improve the ease of doing business and ensure better compliance levels. The Consumer Protection Bill seeks to strengthen the rights of consumers and provide a mechanism for redressing complaints regarding defects in goods and deficiency in services. Meanwhile, International Institute of Sustainable Development (IISD) stated that India's total energy subsidies amounted to Rs 1,51,480 crore in financial year 2017, a 36 per cent decrease since FY14. India's fossil-fuel subsidies fell sharply by nearly 70 per cent, from Rs 1,73,330 crore in FY14 to Rs 52,980 crore in FY17.

Weak opening in European counters too dampened sentiments with all the European counters trading in red at this point of time as deepening concerns over uncertain economic outlook sent investors fleeing for safety. Risk-off sentiment intensified as investors face headwinds on several fronts. However, most of the Asian counters, paring all of their early losses, to end in green terrain on Friday.

Back home, shares of information technology (IT) companies were under pressure on Friday with the Nifty IT index falling over 1 per cent and extending its decline into the fourth straight day, after the US indices extended falls as sentiment remained fragile. Banking sector stocks remained under pressure despite the Reserve Bank of India’s (RBI) data showing that bank credit rose at a healthy 15.07% to Rs 92.03 trillion in the fortnight to December 7, while deposits grew 9.66% to Rs 118.84 trillion. In the previous fortnight ended November 23, credit has risen by 15.09% to Rs 91.32 trillion, while deposits surged 9.43% to Rs 118.13 trillion.

Finally, the BSE Sensex plunged by 689.60 points or 1.89% to 35,742.07, while the CNX Nifty was down by 197.70 points or 1.81% to 10754.00.

The BSE Sensex touched a high and a low of 36,483.49 and 35,694.74, 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 declined 1.79%, while Small cap index was down by 1.00%.

The top losing sectoral indices on the BSE were IT down by 2.62%, TECK down by 2.60%, Auto down by 2.12%, Telecom down by 2.05% and Consumer Durables down by 2.04%, while there were no gainers on the BSE sectoral front.

The few gainers on the Sensex were NTPC up by 1.07%, Bajaj Finance up by 0.38% and Coal India up by 0.28%. On the flip side, Maruti Suzuki down by 3.49%, Infosys down by 3.16%, TCS down by 3.02%, Bharti Airtel down by 2.74% and Asian Paints down by 2.63% were the top losers.

Meanwhile, the Reserve Bank of India (RBI), in consultation with the government, has decided to have a rule-based dynamic limit for outstanding stock of External Commercial Borrowings (ECBs) at 6.5% of Gross domestic product (GDP) at current market prices.

The RBI has said that based on the GDP figures at March-end 2018, the soft limit works out to $160 billion for the fiscal year 2018-19. The outstanding stock of ECBs as on September 30, 2018, stood at $126.29 billion.

ECBs refer to commercial loans in the form of bank loans, securitised instruments (floating rate notes and fixed rate bonds, non-convertible, optionally convertible or partially convertible preference shares), buyers’ credit, suppliers’ credit availed of from non-resident lenders with a minimum average maturity of 3 years.

The CNX Nifty traded in a range of 10,963.65 and 10,738.65. There were 5 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were HPCL up by 2.31%, BPCL up by 0.88%, Coal India up by 0.66%, NTPC up by 0.44% and Power Grid up by 0.25%. On the flip side, Indian Oil Corporation down by 5.44%, UPL down by 4.55%, Adani Ports & SEZ down by 3.71%, ZEE down by 3.44% and Maruti Suzuki down by 3.43% were the top losers.

European markets were trading in red; UK’s FTSE 100 lost 35.13 points or 0.52% to 6,676.80, France’s CAC fell 42.87 points or 0.91% to 4,649.59 and Germany’s DAX was down by 55.13 points or 0.52% to 10,555.97.

Asian markets ended mixed on Friday as growing worries over the prospects for the world economy prompted investors to shun equities and seek safe-haven assets. Chinese shares ended lower as President Xi's highly anticipated speech on four decades of reforms as well as fresh monetary support measures announced by the People's Bank of China failed to ease investor concerns over slowing economic growth. Further, Japanese shares extended losses to close at a fresh 15-month low as the yen held gains on safe-haven demand amid rising borrowing costs in the US, political brinkmanship in Washington and fears of a slowing global economy.