Markets extend southward journey; Sensex falls around 250 points

Indian equity markets extended southward journey on Tuesday, as both the larger peers, Sensex and Nifty, ended the day with sharp losses. The bourses made a cautious start of the day to trade mostly in red terrain, affected by the Agricultural & Processed Food Products Export Development Authority’s (Apeda) data showing that India’s exports of agricultural commodities nosedived by up to a staggering 46 per cent in volume terms due to supply glut in the international market which prompted stockists to defer their purchase plans amid expectations of further price fall. But, losses remained limited in the first half of the trading session, with Minister of State for Micro, Small and Medium Enterprises (MSMEs) Giriraj Singh’s statement that the value of MSME related products’ export reached $147,390.08 million during 2017-18, as per the information received from Directorate General of Commercial Intelligence and Statistics (DGCIS). 

In the second half of the trading session, the key indices extended their losses to close near their intraday low points, despite positive cues from global markets. Domestic sentiments were pessimistic, amid a private report stating that India’s budgets show the government’s been fixing unrealistic revenue targets, and in the process setting itself up for falling short of fiscal deficit goals. The market participants got cautious with the Comptroller and Auditor General (CAG) report that the Ministry of Finance spent Rs 1,157 crore on various heads during 2017-18 without obtaining prior approval of Parliament. The report further noted that the Ministry of Finance did not devise a suitable mechanism in respect of new service/new instrument of service, which led to the extra spending. Investors overlooked India Ratings and Research’s (Ind-Ra) report which has maintained a stable outlook on the infrastructure sector, except thermal power, for financial year 2020.

On the global front, European markets were trading in green, after the Bank of France predicted a 0.4% growth for the French economy in the first quarter of this year, which is slightly faster than the 0.3% expansion in the final quarter of 2018. However, the Bank of France survey showed that the business confidence indicator for the manufacturing industry fell to 99 in January from 102 in December. The confidence measure for the services sector eased to 100 from 101, while the index for construction remained unchanged at 105. Asian markets ended in green, as investors bet on an end to the trade war between the U.S. and China. Two days of high-level talks starting Thursday would involve US Trade Representative Robert Lighthizer, Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He. Sentiment also got a boost after US congressional negotiators reached an agreement to avoid a new government shutdown and provide finance for the construction of new barriers along the US-Mexico border.

Back home, selected stocks of textile sector ended in green, amid reports that a major outreach programme for MSMEs in the textiles sector will be held here on February 13 to help stakeholders avail the support under 100 days programme announced by the Prime Minister. Airlines stocks ended mixed, despite aviation consultancy CAPA India’s report showing that India's airlines are poised to cut their cumulative losses by as much as two-thirds in the financial year starting in April due to a more stable oil price, with low-cost carriers returning to profitability. Further, banking sector stocks remained in focus amid reports that the government is not considering any other merger proposal in public sector banks at the moment as it would wait for completion of the amalgamation of Dena Bank and Vijaya Bank with Bank of Baroda (BoB).

Finally, the BSE Sensex fell 241.41 points or 0.66% to 36,153.62, while the CNX Nifty was down by 57.40 points or 0.53% to 10,831.40.

The BSE Sensex touched a high and a low of 36,465.40 and 36,113.91, 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 0.06%, while Small cap index was down by 0.43%.

The top gaining sectoral indices on the BSE were Metal up by 1.65%, Healthcare up by 0.30%, Energy up by 0.29% and Basic Materials up by 0.28%, while Telecom down by 1.69%, Realty down by 1.29%, IT down by 0.94%, TECK down by 0.90% and Bankex down by 0.81% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 2.00%, Coal India up by 1.92%, Tata Steel up by 1.57%, NTPC up by 0.80% and Asian Paints up by 0.75%. On the flip side, Hero MotoCorp down by 2.63%, HDFC down by 2.18%, SBI down by 1.57%, Tata Motors - DVR down by 1.54% and Infosys down by 1.47% were the top losers.

Meanwhile, defence industries have attracted a paltry sum of $0.21 million foreign direct investment (FDI) during the first half of the financial year 2019 (H1FY19). According to the data provided by Minister of State for Commerce and Industry C R Chaudhary, defence industries received $0.08 million, $0.10 million and $0.01 million foreign inflows in 2014-15, 2015-16 and 2017-18, respectively.

Data further noted that India imports around 70 percent of its defence hardware mainly from various countries. It also showed that overall, FDI in India fell by 11 percent to $22.66 billion during April-September period of 2018-19. In 2017-18 also, the growth rate of foreign direct investment recorded a five-year low of 3 percent at $44.85 billion.

Besides, the minister said that funds provided to Invest India have increased to Rs 33.19 crore in 2018-19 as against Rs 1.18 crore in 2013-14. Invest India, a non-profit company, acts as a national investment promotion and facilitation agency. The current shareholding pattern of Invest India is 51 percent of industry associations (Ficci, CII and Assocham) and the remaining 49 percent of central and state governments.

The CNX Nifty traded in a range of 10,910.90 and 10,823.80. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 4.06%, JSW Steel up by 3.98%, Sun Pharma up by 3.24%, NTPC up by 2.22% and Coal India up by 1.97%. On the flip side, Bharti Infratel down by 3.34%, Hero MotoCorp down by 3.01%, HDFC down by 2.24%, SBI down by 1.93% and ICICI Bank down by 1.73% were the top losers.

European markets were trading in green; UK’s FTSE 100 rose 23.78 points or 0.33% to 7,152.89, France’s CAC added 43.06 points or 0.86% to 5,057.53 and Germany’s DAX was up by 111.40 points or 1.01% to 11,125.99.

Asian markets ended mostly higher on Tuesday as another round of US-China trade talks got underway in Beijing and US congressional negotiators reached an agreement in principle to fund the government and avoid another shutdown ahead of a Friday midnight deadline. Chinese shares ended higher as Beijing vowed policy support for the healthcare sector. Further, Japanese shares led regional gains as markets reopened after being closed for the National Foundation Day holiday on Monday.