Bourses end near day’s low points; Sensex plummets over 300 points

Key Indian equity benchmarks ended near their intraday low points on Wednesday, with Sensex and Nifty losing over 300 and 90 points, respectively. The markets made slightly higher opening of the day, amid reports that the Reserve Bank of India (RBI) has decided to infuse Rs 10,000 crore on January 24, 2019. This is in line with its continuous efforts to adhere commitment of providing adequate liquidity. The street got also comfort in early morning deals with Employment Provident Fund Organisation’s (EPFO) latest ‘Net Payroll Data’ report showing that India created 7.32 lakh new jobs in the month of November 2018. The job creation increased from the revised figure of 666437 in October to 732083 in November. Some support came with former RBI governor Raghuram Rajan’s statement that India will eventually surpass China in economic size and will be in a better position to create the infrastructure being promised by the Chinese side in South Asian countries.

However, the key indices soon turned lackluster and ended the session with notable losses, as trading sentiments got hit after a private report showed that India's industrial activity is expected to remain subdued in the near term, owing to muted domestic demand, weak global economic outlook and uncertainty among businesses over the outcome of Lok Sabha elections, 2019. Weak opening of European markets also influenced the mood of Indian equities. The market participants failed to take any senses of relief with reports that the commerce ministry sought stakeholders' views on a report submitted by a panel to revive special economic zones (SEZs). Investors also overlooked NITI Aayog CEO Amitabh Kant’s statement that urbanisation will be a big driver of economic growth in India going forward, supported by favourable macroeconomic factors, accelerated infrastructure building and continuing reforms. He also said that the Indian economy may even exceed the IMF growth forecast of 7.5 per cent for the country.

On the global front, European markets were trading in red, as UK budget deficit for December exceeded street’s expectations. The figures from the Office for National Statistics showed that the public sector net borrowing, or PSNB, was GBP 3 billion in December, which was GBP 0.3 billion more than a year ago. The PSNB was GBP 35.9 billion in the year-to-date period, which was GBP 13.1 billion less than the same period in 2017. Traders overlooked reports that the UK employment hit a record high in December and the workers' pay grew at the fastest pace in a decade amid steady unemployment, despite the Brexit chaos. As per figures from the Office for National Statistics, the employment level grew by 141,000 sequentially to a record high 32.54 million in the three months to November. Asian markets ended mostly in red, with mounting signs of slowing global growth and concerns over a yet-unresolved Sino-US trade dispute kept investors on edge.

Back home, metal stocks ended higher with Steel Minister Chaudhary Birender Singh’s statement that India is expected to edge past the US with regard to steel consumption this year. The minister further said that  growth trend in steel consumption in India will continue, due to strong manufacturing sector, diversified demand demographics, accelerated expenditure on infrastructure, anticipated increase in GDP and strong focus on 'Make in India'. Besides, power stocks remained in focused, with Power Minister R K Singh’s statement that the government will soon approve the power tariff policy which would provide for a penalty for unscheduled power cuts by distribution companies from April 1, while stocks related to the agri industry remained in limelight amid State Bank of India’s (SBI) latest report stating that the government should choose for the unconditional cash transfer to farmers to alleviate agrarian distress rather than Universal Basic Income (UBI) scheme.

Finally, the BSE Sensex fell 336.17 points or 0.92% to 36,108.47, while the CNX Nifty was down by 91.25 points or 0.84% to 10,831.50.

The BSE Sensex touched a high and a low of 36,521.47 and 36,037.90, respectively and there were 08 stocks advancing against 23 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index lost 0.28%, while Small cap index was down by 0.16%.

The only gaining sectoral indices on the BSE were Metal up by 0.63% and Healthcare up by 0.44%, while FMCG down by 1.38%, Power down by 1.24%, Consumer Durables down by 1.16%, PSU down by 0.85% and IT down by 0.85% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 3.04%, Yes Bank up by 2.71%, Tata Steel up by 1.53%, Hindustan Unilever up by 0.90% and Bajaj Finance up by 0.75%. On the flip side, ITC down by 4.16%, Power Grid down by 1.85%, Infosys down by 1.73%, Mahindra & Mahindra down by 1.65% and NTPC down by 1.58% were the top losers.

Meanwhile, global rating agency Moody’s Investors Service in its latest report has said that Indian insurance and reinsurance industry will register strong growth on the back of robust Gross domestic product (GDP) expansion and evolving regulatory regime. It indicated that during fiscal 2018, total gross premiums for the non-life and life insurance sectors grew 11.5 percent to Rs 6.1 trillion, bringing the five-year compound annual growth rate (CAGR) to 11 per cent.

Moody's also projected India’s real GDP to grow at 7.4 percent in fiscal 2019 and at 7.3 percent in 2019-20, making India one of the world's fastest-growing economy. It also said that the Insurance Regulatory and Development Authority of India (IRDAI) is proactively introducing regulations that will support insurers' balance sheets and improve their access to capital, a credit positive. According to the report, liberalisation of the reinsurance sector - with the admission of foreign reinsurers since 2017 and IRDAI's steps to ensure that they can compete with incumbents - will specifically benefit the non-life sector. It noted that regulatory reforms will also improve the sector's capital strength.

Rating agency further informed that in 2015, IRDAI raised the ceiling on foreign ownership of Indian insurers to 49 percent from 26 percent, encouraging global players to buy holdings in local entities. It added that the government's launch of a new program in 2018 to provide health insurance for 100 million families is credit positive as it will help grow health premiums and provide insurers with cross-selling opportunities.

 The CNX Nifty traded in a range of 10,944.80 and 10,811.95. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 2.73%, Yes Bank up by 2.63%, Tata Steel up by 1.43%, Wipro up by 1.30% and Zee Entertainment up by 1.19%. On the flip side, ITC down by 4.75%, Grasim Industries down by 2.97%, Indiabulls Housing Finance down by 2.53%, Titan down by 2.30% and M&M down by 2.03% were the top losers.

European markets were trading mostly in red; UK’s FTSE 100 decreased 26.24 points or 0.38% to 6,875.15 and Germany’s DAX fell 6.65 points or 0.06% to 11,083.46, while France’s CAC was up by 5.61 points or 0.12% to 4,853.14.

Asian markets ended mostly in red on Wednesday as worries about global economic growth and the uncertainty over US-China trade talks kept investors on the sidelines. Underlying sentiment remained cautious after the reports suggested that the United States has rejected Beijing's offer to hold a preparatory meeting in Washington ahead of next week's high-level trade talks. However, White House adviser Lawrence Kudlow stressed that the two sides were on track to have ‘very, very important’ high-level talks at the end of the month that will be ‘determinative’. Chinese shares ended marginally higher on hopes that increased Chinese spending would stem an economic slowdown. Further, Japanese shares closed tad lower as export data fell short of expectations and the Bank of Japan kept monetary policy steady, as widely expected, and cut its price projections. The Bank of Japan kept its monetary policy unchanged today but downgraded the inflation forecast for this year primarily driven by a sharp fall in oil prices.