Bears hold grip on markets

Bears held their grip on Indian equity benchmarks in late afternoon session, with Sensex and Nifty falling more than 150 and 50 points, respectively. Weak opening of European markets along with heavy losses led by the broader indices, kept the markets in red terrain. There was some anxiety among the traders with Asian Development Bank (ADB) Country Director Kenichi Yokoyama’s statement that farm loan waivers were against economic principles and cannot effectively address the agrarian distress. The markets failed to cheer with Finance Minister Arun Jaitley’s statement that the government will forego revenue of close to Rs 1 trillion on all the items whose rates have revised to lower slabs under the goods and services tax (GST) regime. He also said that the various income tax benefits given to the middle class during the Narendra Modi government's existing tenure will lead to revenue foregone of Rs 97,000 crore. Investors also overlooked 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 sectoral front, auto stocks were trading lower, impacted with data released by the Society of Indian Automobile Manufacturers (SIAM) that domestic passenger vehicle (PV) sales declined to 2,38,692 units in December from 2,39,723 units in the same month previous year. Besides, domestic car sales declined 2.01 per cent to 1,55,159 units compared to 1,58,338 in December 2017. Further, metal stocks were also under pressure, amid reports that India's crude steel production fell by 1.4 percent to 8.936 million tonnes (MT) in December 2018. The country had produced 9.067 MT crude steel in December 2017.

On the global front, European markets were trading in red, as Italy's industrial production decreased at the fastest pace in four months in November and the fall was worse than expected. The preliminary data from the statistical office ISTAT showed that industrial production fell a seasonally adjusted 1.6 percent in November, after a 0.1 percent drop in October. Asian markets were also trading in red, as Chinese trade data for December disappointed investors. 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. Investors also looked ahead to US bank earnings this week and Tuesday's key Commons vote on Brexit for directional cues.

The BSE Sensex is currently trading at 35827.78, down by 182.06 points or 0.51% after trading in a range of 35691.75 and 36124.94. There were 7 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.54%, while Small cap index was down by 0.43%.

The only gaining sectoral indices on the BSE were Consumer Durables up by 0.20%, Healthcare up by 0.16% and IT up by 0.02%, while Capital Goods down by 1.73%, Utilities down by 1.39%, Metal down by 1.17%, Power down by 1.02% and Industrials down by 0.96% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 6.61%, Infosys up by 2.38%, Tata Motors up by 1.08%, Sun Pharma up by 1.02% and Tata Motors - DVR up by 0.78%. On the flip side, Larsen & Toubro down by 2.54%, Indusind Bank down by 2.24%, Vedanta down by 1.63%, TCS down by 1.41% and HDFC down by 1.39% were the top losers.

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 is currently trading at 10731.00, down by 63.95 points or 0.59% after trading in a range of 10692.35 and 10808.00. There were 10 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 6.78%, Infosys up by 2.60%, Bharti Infratel up by 1.44%, Tata Motors up by 1.08% and Sun Pharma up by 1.04%. On the flip side, Wipro down by 4.21%, GAIL India down by 4.11%, Larsen & Toubro down by 2.53%, Tech Mahindra down by 2.40% and Indusind Bank down by 2.13% were the top losers.

All Asian markets were trading in red; Hang Seng decreased 368.94 points or 1.38% to 26,298.33, KOSPI fell 11.05 points or 0.53% to 2,064.52, Jakarta Composite dropped 35.84 points or 0.56% to 6,325.63, Taiwan Weighted dropped 51.18 points or 0.52% to 9,708.22, Shanghai Composite declined 20.53 points or 0.8% to 2,533.30 and Straits Times was down by 17.21 points or 0.54% to 3,181.44.

All European markets were trading in red; UK’s FTSE 100 fell 33.06 points or 0.48% to 6,885.12, France’s CAC lost 30.97 points or 0.65% to 4,750.37 and Germany’s DAX was down by 57.77 points or 0.53% to 10,829.69.