Post Session: Quick Review

Extending their losing streak for third straight session, Indian equity benchmarks ended Monday’s trade on a pessimistic note, dented by weak global cues and sharp rupee depreciation. Markets opened lower, as traders remained cautious with India’s industrial output hit a 17-month low of 0.5 per cent in November as compared to 8.1 per cent in October mainly on the back of contraction in manufacturing sector, mining, capital goods and consumer durable goods. The previous low was in June 2017, when IIP growth contracted by 0.3 per cent. Selling further crept in with a private report that meeting the fiscal deficit target of 3.3 per cent of Gross Domestic Product (GDP) for the current fiscal could be a challenge for the government, given the shortfall in Goods and Services Tax (GST) collections, rising expenditure and slowing factory output.

However, key indices gave up most of their losses in last leg of trade and came off their intraday low points, due to some buying witnessed in Healthcare and IT stocks. Traders took comfort with data showing that Inflation based on wholesale prices fell to 8-month low of 3.80 percent in December, 2018, on softening prices of fuel and some food items. Some support also came with Asian Development Bank’s (ADB) report that the Indian economy will grow at 7.3 per cent in FY19. On the back of strong investment and GST stabilisation, the growth will improve to 7.6 per cent in FY20. Traders also took note of industry minister Suresh Prabhu’s statement that the government wants to focus on the districts as part of a bottoms-up approach for boosting growth.

On the global front, Asian markets ended lower on Monday, while European markets were trading in red, after a shock contraction in Chinese exports heightened fears of a slowdown in the world's second-largest economy. Back home, power sector stocks ended lower with report that amid stress in the power sector, woes of electricity generating firms have increased further as their outstanding dues on state distribution companies (discoms) rose to Rs 39,498 crore in October 2018, up 24.7 per cent from a year-ago levels.

The BSE Sensex ended at 35876.24, down by 133.60 points or 0.37% after trading in a range of 35691.75 and 36124.94. There were 8 stocks advancing against 23 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell 0.50%, while Small cap index was down by 0.45%. (Provisional)

The top gaining sectoral indices on the BSE were Healthcare up by 0.40%, IT up by 0.19%, TECK up by 0.08%, Energy up by 0.07% and Consumer Durables up by 0.04%, while Capital Goods down by 1.93%, Utilities down by 1.53%, Power down by 1.23%, Metal down by 1.16% and Industrials down by 0.98% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Yes Bank up by 5.95%, Infosys up by 2.76%, Sun Pharma up by 1.90%, Maruti Suzuki up by 1.46% and Bajaj Finance up by 1.40%. (Provisional)

On the flip side, Larsen & Toubro down by 2.70%, Indusind Bank down by 2.03%, Vedanta down by 1.78%, NTPC down by 1.59% and TCS down by 1.46% were the top losers. (Provisional)

Meanwhile, with an aim to reduce the burden of public sector banks (PSBs), the Reserve Bank of India (RBI) has deferred the implementation of the last tranche of Capital Conservation Buffer (CCB) by a year. This move will leave about estimated Rs 37,000 crore capital in the hands of banks. This will help PSBs increase lending by over Rs 3.5 lakh crore by leveraging ten times of the capital.

The Central Bank deferred the implementation of the last tranche of 0.625 percent of CCB from March 31, 2019 to March 31, 2020.  As a result, minimum capital conservation ratios of 2.5 percent will be applicable from on March 31, 2020. Currently, the CCB of banks stands at 1.875 percent of the core capital.

The RBI further highlighted that the pre-specified trigger for loss absorption through conversion or write-down of additional tier 1 instruments will remain at 5.5 percent of risk-weighted asset (RWA) and will rise to 6.125 percent of RWAs on March 31, 2020. However, it decided to retain the capital adequacy ratio or CRAR at 9 percent.

Besides, the CCB is the capital buffer that banks have to accumulate in normal times to be used for offsetting losses during periods of stress. It was introduced after the 2008 global financial crisis to improve the ability of banks to withstand adverse economic conditions.

The CNX Nifty ended at 10741.95, down by 53.00 points or 0.49% after trading in a range of 10692.35 and 10808.00. There were 11 stocks advancing against 39 stocks declining on the index. (Provisional)

The top gainers on Nifty were Yes Bank up by 5.89%, Infosys up by 2.78%, Sun Pharma up by 1.56%, Maruti Suzuki up by 1.41% and Bajaj Finance up by 1.30%. (Provisional)

On the flip side, Wipro down by 4.97%, GAIL India down by 4.11%, Indiabulls Housing Finance down by 3.54%, Tech Mahindra down by 2.85% and Larsen & Toubro down by 2.61% were the top losers. (Provisional)

European markets were trading in red; UK’s FTSE 100 decreased 46.68 points or 0.67% to 6,871.50, France’s CAC shed 36.77 points or 0.77% to 4,744.57 and Germany’s DAX was down by 58.75 points or 0.54% to 10,828.71.

Asian markets ended lower on Monday as a shock contraction in Chinese exports and concerns surrounding the ongoing US government shutdown and the vote on Brexit this week kept investors on the sidelines. Investors also awaited cues from the US earnings season, with several banks set to unveil their quarterly results this week. Chinese shares ended lower as the latest trade data indicated a further slowdown in the world's second-largest economy. China's exports unexpectedly fell 4.4 percent from a year earlier in the month -- the biggest monthly drop in two years, while imports also fell 7.6 percent, marking the biggest decline since July 2016. Meanwhile, the Japanese market was closed for the 'Coming of Age Day' holiday.