Markets carry on weak run; Sensex closes below 35,600 level

Indian equity bourses carried on their weak run on Tuesday, with Sensex and Nifty closing the day below their crucial levels of 35,600 and 10,700, respectively. The markets made a cautious start of the day, tracking other weak Asian markets. Anxiety spread on the street, after the Income Tax Department launched searches at 74 places in Tamil Nadu in connection with a tax evasion probe against some real estate groups and a retail store chain in the state. Investors also took note of a report that the Income Tax Department has confiscated assets worth Rs 6,900 crore till now as part of its action under the anti-benami transactions law. Domestic sentiments remained lackluster throughout the day, even after Finance Minister Piyush Goyal urged public sector banks (PSBs) to step up lending to micro, small and medium enterprises (MSMEs), agriculture and housing sectors and also assured these lenders of all kinds of support. Goyal in its meeting with the heads of PSU banks discussed internal mechanism to resolve cases under the RBI guidelines and within the framework set in the bankruptcy court.

However, key indices managed to come off their intraday low points in the last leg of the trade, taking support from the Reserve Bank of India’s (RBI) latest data report that foreign direct investment (FDI) during the previous fiscal grew 18 per cent to Rs 28.25 lakh crore. As per data, FDI increased by Rs 4,33,300 crore, including revaluation of past investments, during 2017-18 to reach Rs 28,24,600 crore in March 2018 at market value. The RBI said as many as 23,065 companies responded to the latest round of the census, of which, 20,732 firms had FDI or ODI in their balance sheet in March 2018. Some relief also came after RBI Governor Shaktikanta Das asked PSBs to extend credit while observing prudential norms without getting excessively conservative. He highlighted the importance of PSBs for the economy at all times and especially at the current juncture in helping meet broader economic goals.

On the global front, European markets were trading in green, after Finland's consumer confidence improved in January after falling in the previous month. The figures from Statistics Finland showed that the consumer confidence index rose to 17.2 in January from 16.1 in December. Traders also took note of European Central Bank’s report stating that Eurozone lending growth maintained its momentum in December, while a measure of broad money rose at the fastest pace in six months. Lending to households rose 3.3 percent year-on-year in December, same as in November. Asian markets ended in red, as earnings concerns as well as renewed US-China tensions sapped investors' appetite for risk. Trade worries resurfaced after the US Department of Justice unsealed sweeping criminal charges against Chinese tech giant Huawei and its chief financial officer Meng Wanzhou.

Back home, stocks of IT industry ended higher, amid private report that worldwide IT spending is projected to total at $3.76 trillion in 2019, an increase of 3.2 percent from last year. The overall IT spending is expected to grow at 2.8 percent in 2020 to touch $ 3.87 trillion. Further, mining and minerals stocks remained in limelight, with Union steel minister Chaudhary Birender Singh’s statement that to ensure that there is no massive shortage of iron ore and coal from 2020 when the captive mining leases are expiring, the government is looking at mining of these resources in the Northeastern states. Shares of oil companies also remained in focused, after the ratings agency India Ratings indicated that oil prices expected to remain range bound at $ 55-65 per barrel due to a rise in supply from the US, debt crisis in Venezuela and the limited clarity on the sanctions on Iran.

Finally, the BSE Sensex lost 64.20 points or 0.18% to 35,592.50, while the CNX Nifty was down by 9.35 points or 0.09% to 10,652.20.

The BSE Sensex touched a high and a low of 35,734.14 and 35,375.51, respectively and there were 18 stocks advancing against 13 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index rose 0.39%, while Small cap index was down by 0.10%.

The top gaining sectoral indices on the BSE were Telecom up by 0.98%, Healthcare up by 0.75%, TECK up by 0.73%, IT up by 0.65% and FMCG up by 0.59%, while Energy down by 1.20%, Capital Goods down by 1.01%, Oil & Gas down by 0.92%, Realty down by 0.62% and Auto down by 0.38% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 2.61%, Bajaj Finance up by 2.27%, Tata Motors - DVR up by 1.69%, TCS up by 1.60% and Asian Paints up by 1.51%. On the flip side, Yes Bank down by 2.43%, Larsen & Toubro down by 1.73%, HDFC down by 1.53%, Reliance Industries down by 1.52% and HDFC Bank down by 1.22% were the top losers.

Meanwhile, with an aim to produce more scrap, Union Steel Minister Chaudhary Birender Singh has said the government is formulating a draft National Scrap Policy. At present, the nation’s requirement of scrap is round 8.3 million tonne (MT) and a big portion of the requirement is met via imports. The minister mentioned that a National Scrap Policy is being drafted which will be ready in a few months. This will make available nearly 7 MT scrap in the country. Steel produced out of scrap is of good quality and is environment friendly.

Singh had earlier said in order to augment the country's production capacity the government is also planning to set up scrap-based steel plants in north and west parts of India. Stressing that the scrap-based steel plants are environment-friendly, energy-efficient and cost effective, he said these plants would be on the lines of 'melt and manufacture' steel technology used in the US.

He had also mentioned India imports around six million tonne of scrap steel every year and is the second-largest importer of scrap after Turkey, adding that by 2025, the country will be able to generate 7.5 million tonne of scrap every year. He had said ‘I would like you to deliberate on the cost-benefit analysis of setting up scrap-based steel plants in north and west India. These regions are important from the perspective of scrap-availability and steel import hubs. The plants will have the capability to produce special high-grade steels, a pre-requisite for 'Make in Steel’.

The CNX Nifty traded in a range of 10,690.35 and 10,583.65. There were 31 stocks advancing against 19 stocks declining on the index.

The top gainers on Nifty were Adani Ports & SEZ up by 5.95%, Bajaj Finance up by 4.45%, Bajaj Finserv up by 4.03%, Bharti Infratel up by 3.72% and Indiabulls Housing Finance up by 3.18%. On the flip side, Eicher Motors down by 5.82%, GAIL India down by 2.76%, Larsen & Toubro down by 1.49%, HPCL down by 1.36% and Power Grid down by 1.28% were the top losers.

European markets were trading mostly in green; UK’s FTSE 100 gained 67.54 points or 1% to 6,814.64 and France’s CAC rose 19.31 points or 0.4% to 4,907.89, while Germany’s DAX was down by 11.05 points or 0.1% to 11,199.26.

Asian markets ended mostly lower on Tuesday as weak earnings guidance from heavy equipment maker Caterpillar and chipmaker Nvidia stoked fresh fears over falling demand in China. Concerns over trade also dented sentiment after the US Department of Justice unsealed sweeping criminal charges against Chinese tech giant Huawei and its chief financial officer Meng Wanzhou. Chinese shares ended lower, but losses were limited by Beijing’s fresh measures to prop the market and stimulate the sluggish economy. Though, Japanese shares ended higher, led by gains in defensive shares such as utilities.