Benchmarks witness bloodbath; Nifty breaches 11k mark

Friday turned out to be a horrendous day of trade for Indian equity benchmarks with frontline gauges losing over a percent, breaching their crucial 11,000 (Nifty) and 36,600 (Sensex) levels. Sentiments remained dampened since start of the trade as traders remained wary on renewed concerns over US-China trade tiff. Traders failed to take any sense of relief with Finance Minister Piyush Goyal’s statement that the rate cut by the RBI will give a boost to the economy by providing affordable credit to small businesses and homebuyers. The RBI has reduced repo rate (at which RBI lends to banks) by 0.25% to 6.25%, a move that will translate into softening interest rates. Traders also shrugged off report that India has jumped eight places to 36th position on the International Intellectual Property (IP) Index, which analyses the IP climate in 50 global economies, this year. India's eight-point jump in 2019 from 44th position in 2018 is the highest increase among 50 nations mapped by the index. The report said the improvement reflects important reforms implemented by Indian policy-makers towards building and sustaining an innovation ecosystem for domestic entrepreneurs and foreign investors alike.

Markets extended losses as sentiment remained dull with disappointing third quarter number by Tata Motors. The company reported a consolidated net loss of Rs 26,960 crore for the third quarter of this fiscal due to asset impairment in its British arm Jaguar Land Rover (JLR). Domestic indices added losses to end near intraday low points, as sentiment on the street weakened further with report that India is unlikely to achieve its target of 100 gigawatt (GW) solar electricity capacity as it faces short-term uncertainty due to imposition of various taxes. Meanwhile, the RBI has increased the limit of collateral-free agricultural loans to Rs 1.6 lakh from the current limit of Rs 1 lakh. Earlier, in 2010, the collateral-free limit for crop loans and term loans was hiked to Rs 1 lakh from Rs 50,000. Keeping in view the overall inflation and rise in agriculture input costs since then, the RBI has decided to raise the limit for collateral-free agriculture loans to Rs 1.6 lakh.

Weakness in Asian markets too weighed on sentiments as trade tensions renewed fears of a slowdown in global growth. Though, European markets were trading mostly in green after Germany’s exports rebounded at a faster-than-expected pace in December, exceeding expectations, while imports followed suit. Exports rose a calendar and seasonally adjusted 1.5 percent from November, when they declined 0.3 percent. Street had expected 0.5 percent growth. Imports climbed 1.2 percent month-on-month, recovering from a 1.3 percent slump in November.

Back home, Auto stocks edged lower on report that Domestic passenger vehicle (PV) sales declined 1.87 per cent to 2,80,125 units in January from 2,85,467 units in the same month last year. Domestic car sales were also down 2.65 per cent to 1,79,389 units as compared to 184,264 units in January 2018. Aviation stocks ended in red despite report that aviation sector has recorded 18.6 per cent annual increase in domestic market considering the rise in Indians preferring to fly across the country last year.

Finally, the BSE Sensex fell 424.61 points or 1.15% to 36,546.48, while the CNX Nifty was down by 125.80 points or 1.14% to 10,943.60.

The BSE Sensex touched a high and a low of 36,885.58 and 36,480.62, respectively and there were 06 stocks advancing against 25 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index declined 1.40%, while Small cap index was down by 0.89%.

The only gaining sectoral indices on the BSE were Telecom up by 1.74% and Realty was up by 1.07%, while Metal down by 3.42%, Auto down by 3.37%, Industrials down by 2.56%, PSU down by 2.07% and Basic Materials was down by 2.00% were the top losing indices on BSE.

The top gainers on the Sensex were Kotak Mahindra Bank up by 0.95%, Bharti Airtel up by 0.85%, HCL Tech. up by 0.46%, HDFC Bank up by 0.29% and Bajaj Finance up by 0.25%. On the flip side, Tata Motors down by 17.28%, Tata Motors - DVR down by 13.72%, Vedanta down by 5.75%, Tata Steel down by 3.70% and ONGC down by 2.94% were the top losers.

Meanwhile, cheering the Reserve Bank of India’s (RBI) move to bring down key interest rate by 25 basis points (bps), India Inc has expressed hopes that the move would encourage banks to lower lending rates, thereby stimulating consumption and investment demand to boost the country’s Gross Domestic Product (GDP) growth.

CII President Rakesh Bharti Mittal has stated that the 25 bps reduction in repo rate taken together with the shift in RBI's stance to 'neutral' from the earlier 'calibrated tightening, would go a long way in lifting sentiment among businesses. He noted that the rate cut is in the right direction, given that the inflation footprint has been benign for some time. According to him, the resumption of rate easing cycle, which is anticipated to bring down banks' lending rates, will provide a fillip to both consumption and investment demand.

As per Federation of Indian Chambers of Commerce and Industry (FICCI), which had hoped for a larger cut in repo rate, the 25 bps reduction will be followed up with more such measures in the subsequent months. FICCI President Sandip Somany stated that the monetary policy should complement the fiscal policy and strengthen the growth impulses slowly building in the economy. He also said “this is important as we do not foresee much impetus coming from external sources of growth as the global economy continues to show signs of moderation. In such a scenario, all levers must be used to strengthen India's domestic economy through greater consumption demand and investments.”

The CNX Nifty traded in a range of 11,041.20 and 10,925.45. There were 9 stocks advancing against 41 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 7.55%, Kotak Mahindra Bank up by 1.09%, HCL Tech up by 0.48%, Bharti Airtel up by 0.39% and Cipla up by 0.34%. On the flip side, Tata Motors down by 17.88%, Indiabulls Housing down by 6.91%, Vedanta down by 5.41%, Grasim Industries down by 5.08% and Eicher Motors down by 4.99% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 3.43 points or 0.05% to 7,097.01 and France’s CAC increased 4.72 points or 0.09% to 4,990.28, while Germany’s DAX decreased 12.94 points or 0.12% to 11,009.08.

Asian markets ended mostly lower on Friday amid growth and trade worries after the European Commission lowered its growth forecasts for euro zone and US President Donald Trump said he did not plan to meet with Chinese President Xi Jinping before the March 1 deadline for reaching a trade deal. Japanese shares led regional losses to hit a one-month low as the yen strengthened on fresh worries about the US-China trade dispute. Weak earnings results also sapped investors' appetite for risk. On the economic front, a government report showed that Japan posted a current account surplus of 452.8 billion yen in December, down 43.1 percent year on year. That was shy of expectations for a surplus of 458.5 billion yen and down from 757.2 billion yen in November. Japan's trade balance in December showed a surplus of 216.2 billion yen, exceeding forecasts for 132.4 billion yen following the 559.1 billion yen deficit in the previous month. Meanwhile, markets in Taiwan and China remained closed for the Lunar New Year holidays.