Post Session: Quick Review

Indian equity benchmarks extended their losing streak for second straight session and ended with losses of around a percent, with Sensex and Nifty slipping below their crucial 35,700 and 10,700 levels, respectively. A selloff witnessed in banking, financial services, auto and pharma stocks pulled the markets lower. Markets traded in red after a cautious start as traders remained wary with Moody’s Investors Service’s statement that the steps announced by the government to aid MSMEs and the measures being planned to support farmers will increase the risk of fiscal slippage and push deficit to 3.4 per cent of GDP in the current financial year. The government budgeted the fiscal deficit for the current financial year at 3.3 per cent of the gross domestic product (GDP). Selling further crept in with report that foreign investors have pulled out close to Rs 6,000 crore so far from the Indian stock markets in January and experts believe this trend will continue in the coming months as well.

Domestic indices continued their weak run in the last hour of trading session, as sentiments on the street weakened further a private report stating that the economy is likely to lose steam and may clip at 6.6 percent in the first half of 2019 from 7.4 percent a year ago, on account of the global slowdown and the uncertainty about the outcome of the forthcoming general elections. Adding some woes, another private report showed that the government is set breach the fiscal deficit target yet again by 40 bps for 2018-19, and raise the target to 3.5 percent for next fiscal in the forthcoming budget that may be skewed towards the rural economy. Traders also remained on sidelines ahead the announcement of the Interim Budget on Friday. 

On the global front, Asian markets ended mostly in red on Monday, while European markets were trading in red after US President Donald Trump announced an agreement to temporarily end the record-setting 35-day-old government shutdown without getting the $5.7 billion he had demanded from Congress for a border wall. Investors looked ahead to the next round of US-China trade talks as well as the next key Brexit debate in the House of Commons for further direction. Back home, banking sector stocks were in focus with report that the government has empowered PSU banks to request lookout circulars (LOCs) against wilful defaulters and fraudsters. The Home Ministry has also authorised the Serious Fraud Investigation Office (SFIO), a statutory corporate fraud investigation agency, to request LOCs if it feels the suspect may escape from India.

The BSE Sensex ended at 35690.16, down by 335.38 points or 0.93% after trading in a range of 35565.15 and 36124.26. There were 7 stocks advancing against 24 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell 1.74%, while Small cap index was down by 1.89%. (Provisional)

The few gaining sectoral indices on the BSE were TECK up by 0.98% and IT up by 0.60%, while Healthcare down by 2.06%, Basic Materials down by 2.01%, Bankex down by 1.69%, Industrials down by 1.39% and Auto down by 1.31% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were TCS up by 1.89%, Larsen & Toubro up by 1.35%, Coal India up by 1.29%, Power Grid up by 0.73% and HCL Tech. up by 0.56%. (Provisional)

On the flip side, Yes Bank down by 5.53%, Bajaj Finance down by 5.29%, ICICI Bank down by 3.42%, Indusind Bank down by 2.60% and Hero MotoCorp down by 2.53% were the top losers. (Provisional)

Meanwhile, expressing optimism over growth of Indian economy, the Economic Advisory Council to the Prime Minister (EAC-PM) has said that the country’s economic growth is likely to remain in the range of 7-7.5 per cent in the next few years. It added that the growth rate can be easily increased by 1 per cent by addressing structural problems through reforms. Besides, the Central Statistics Office (CSO) in its latest forecast pegged the growth at 7.2 per cent for 2018-19.

The Council strongly feels that there should be no deviation from the fiscal consolidation target but there must be continued emphasis on social sector interventions. It noted that the macro-economic fundamentals of the economy are sound but challenges remain, several of which are structural in nature. It highlighted that while the prospect for world economic growth does not look very promising, particularly in advanced economies, there is sufficient amount of growth momentum in emerging market economies. India is not insulated from global developments, nevertheless, India's growth expected to be in the 7-7.5 per cent range in the next few years.

The panel felt that the exchanger rate management of the rupee by RBI has been sound despite the volatility in price of the crude oil. There are indications that financial savings have started going up and there is credit uptick through private banks to the services sector. The reform in the financial sector should be strengthened further building upon what the government is already doing. It also felt that the challenge of insularity being seen in external trade should be reversed through supportive policy interventions because there is a positive turn in exports that are visible now. It noted that the challenges in the agriculture sector should be addressed by looking closely at the credit flow and support to employment programmes like MNREGA.

The CNX Nifty ended at 10675.80, down by 104.75 points or 0.97% after trading in a range of 10630.95 and 10804.45. There were 14 stocks advancing against 36 stocks declining on the index. (Provisional)

The top gainers on Nifty were Zee Entertainment up by 16.91%, Bharti Infratel up by 2.54%, TCS up by 2.04%, Coal India up by 1.81% and Larsen & Toubro up by 1.30%. (Provisional)

On the flip side, Adani Ports &SEZ down by 12.37%, Indiabulls Housing Finance down by 6.44%, Yes Bank down by 5.40%, Bajaj Finance down by 5.33% and Bajaj Finserv down by 4.29% were the top losers. (Provisional)

European markets were trading in red; UK’s FTSE 100 fell 2.91 points or 0.04% to 6,806.31, France’s CAC decreased 16.25 points or 0.33% to 4,909.57 and Germany’s DAX was down by 22.60 points or 0.2% to 11,259.19.

Asian markets ended mostly in red on Monday after US President Donald Trump announced an agreement to temporarily end the record-setting 35-day-old government shutdown without getting the $5.7 billion he had demanded from Congress for a border wall. Investors looked ahead to the next round of US-China trade talks as well as the next key Brexit debate in the House of Commons for further direction. US-China trade talks will resume in Washington this week, with markets hoping for a thaw in the escalating tensions after US Treasury Secretary Steven Mnuchin said the two countries were ‘making a lot of progress’ in trade talks. Investors also shifted their attention to the Federal Open Market Committee's (FOMC) two-day meeting starting Tuesday amid growing expectations of dovish hints from the US central bank. Chinese shares ended lower amid reports that the Trump's administration has been pressuring America's allies to bar Huawei and other Chinese tech firms from building the infrastructure needed for the implementation of the next generation 5G wireless standard. Further, Japanese shares closed down as the yen strengthened and investors braced for earnings results from major US tech companies such as Apple and Microsoft.