Benchmarks witness bloodbath in early deals

Indian equity benchmarks made a gap-down opening and are witnessing bloodbath in early deals on Wednesday with frontline gauges tumbling below their crucial 35,200 (Sensex) and 10,600 (Nifty) levels. Traders remained cautious with former chief economic advisor Kaushik Basu’s statement that distress in some sectors of the economy has slowed India’s GDP growth, the consequences of which could be far reaching. Basu said distress has been very much visible in the agriculture sector as the condition of farmers is bad. Traders also remain concerned about a private report that as India near 2019 general elections, populist steps by the government may exert pressure on India’s fiscal scenario. It expected the general government debt at 70.1% of the GDP in FY19. Traders took note of a report that despite a global trade war, India managed to grow its exports in 2018 but high crude prices and rising domestic demand continued to inflate the trade deficit at a faster rate. The year started with monthly trade deficit soaring to a 56-month high. By October, it had risen to more than $153 billion.

Global cues too remained sluggish with most of the Asian counters trading in red at this point of time following the losses on Wall Street on Christmas eve in the face of a series of unnerving US political developments, including a US federal government shutdown and President Donald Trump’s increasingly hostile stance toward the Federal Reserve chairman. The US markets remained closed on Tuesday on account of Christmas Day holiday.

Back home, power sector stocks edged lower amid report that fresh capacity addition in thermal and hydro power plunged 69% in the April-November period of this fiscal, as green energy gained momentum. In scrip specific developments, Adani Transmission gained on acquiring stake in Obra-C Badaun Transmission and HCC soared on inaugurating Bogibeel Bridge in Assam.

The BSE Sensex is currently trading at 35111.51, down by 358.64 points or 1.01% after trading in a range of 35059.86 and 35443.99. 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 1.43%, while Small cap index was down by 1.50%.

The top losing sectoral indices on the BSE were Telecom down by 1.62%, Healthcare down by 1.55%, IT down by 1.42%, Realty down by 1.40% and Basic Materials was down by 1.35%, while there were no losers on the BSE sectoral front.

The lone gainer on the Sensex was HDFC Bank up by 0.06%. On the flip side, Yes Bank down by 3.35%, Sun Pharma down by 2.77%, Indusind Bank down by 2.03%, TCS down by 1.97% and Kotak Mahindra Bank down by 1.89% were the top losers.

Meanwhile, expressing concerns over India’s economic growth, former chief economic advisor Kaushik Basu stated that the country’s Gross Domestic Product (GDP) growth rate has slowed down due to distress in some sectors of the economy and the consequences of which could be far reaching. He added that this has resulted in a decrease in job creation and it is a cause for concern.

Basu highlighted that distress has been ‘very much visible in the agriculture sector’ as the ‘condition of farmers is bad’. According to the latest government data, the country’s economy grew at 7.1% in July-September, the lowest in three quarters. Noting that the slowdown may continue for six months to one year and its consequences could be far reaching, he said the government needs to pay attention to the condition of people in villages.

Former chief economic advisor said the agriculture sector is still feeling the effects of demonetisation, while other sectors had factored in the note ban to a large extent. He also said ‘Many farmers who had resorted to heavy borrowings in the December 2016-January 2017 period could not tide over the situation as yet. The distress in the agri sector is very much there’. Talking about farm loan waiver, he said it was needed in India because of ‘special circumstances’.

The CNX Nifty is currently trading at 10559.35, down by 104.15 points or 0.98% after trading in a range of 10541.30 and 10635.45. There were 6 stocks advancing against 44 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 2.13%, HPCL up by 1.36%, Indian Oil Corporation up by 1%, BPCL up by 0.93% and Adani Ports & SEZ up by 0.82%. On the flip side, Yes Bank down by 3.35%, Sun Pharma down by 2.76%, Indiabulls Housing down by 2.67%, TCS down by 2.14% and Tata Motors down by 2.06% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 24.13 points or 0.13% to 19,131.61, Straits Times declined 37.53 points or 1.23% to 3,013.53, KOSPI tumbled 32.46 points or 1.58% to 2,022.55, Jakarta Composite shed 31.74 points or 0.51% to 6,131.86 and Shanghai Composite was down by 0.49 points or 0.02% to 2,504.33.