Markets remain in grip of bears

Indian equity benchmarks remained in grip of bears on Monday, with both the larger peers, Sensex and Nifty closing the trading session lower by around 0.90%, each. The start of the day was somber on account of weak global cues amid growing concerns about an impending US recession. Adding some worries on the street, Vice President of India M. Venkaiah Naidu called for a renewed focus on rural health care and cautioned that the quality of healthcare being delivered cannot be determined by the price being paid. Sentiments also remain dampened, as credit rating agency ICRA in its latest report warned that the tight liquidity has crimped credit growth for housing finance companies (HFCs) and is unlikely to improve much in FY20, even as the weak external environment will put a pressure on asset quality. It noted that HFCs are likely to register a 13-15% credit growth in FY19, which will inch up to 14-16% in FY20.

Markets remained under pressure throughout the day, tracking weak global markets. Domestic sentiments also remained pessimistic with a private report stating that India's industrial production is expected to stay muted in the near term, owing to weak exports, rural distress, credit constraints and uncertainty over the election outcome. According to the report, the Index of Industrial Production (IIP) is likely to have grown by 3-3.2 per cent during February 2019. Investors paid no heed towards the Reserve Bank of India’s (RBI) report showing that India’s foreign exchange reserves surged by a whopping $3.602 billion to $405.638 billion in the week to March 15, driven by rise in foreign currency assets. Traders also failed to take any sense of relief with the Employees' Provident Fund Organisation (EPFO) data report that net employment generation in the formal sector touched a 17-month high of 8.96 lakh in January. The addition in January was 131% higher as compared with 3.87 lakh EPFO subscribers added in the year-ago month.

On the global front, European markets were trading mostly in red, as Germany's private sector grew at its slowest pace in nearly six years, led by a sharp decline in manufacturing. The flash data from IHS Markit revealed that the composite output index fell to a 69-month low of 51.5 in March from 52.8 in February. The flash services Purchasing Managers' Index dropped to 54.9 in March from 55.3 in February, while the flash manufacturing PMI dropped more-than-expected to 44.7 in March from 47.6 In February. Asian markets ended in red, as investors fret about an impending US recession and the risk of Britain leaving the European Union without a deal.

Back home, stocks related to the power sector remained under pressure, amid reports that as much as Rs 3 lakh crore of investment in a dozen power plants of the private sector is at risk of turning into NPA as states buying power have not been making payment for months. Further, banking sector stocks ended lower, despite report that the RBI has deferred the implementation of the new accounting norms, Ind AS, indefinitely, as necessary amendments to the relevant law are yet to be made.

Finally, the BSE Sensex lost 355.70 points or 0.93% to 37,808.91, while the CNX Nifty was down by 102.65 points or 0.90% to 11,354.25.

The BSE Sensex touched a high and a low of 38,016.76 and 37,667.40, 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 1.06%, while Small cap index was down by 1.16%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.40%, PSU up by 0.91%, Power up by 0.46% and Utilities up by 0.41%, while Telecom down by 2.22%, Realty down by 1.83%, Basic Materials down by 1.38%, Metal down by 1.30% and Bankex down by 1.29% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 3.90%, Coal India up by 2.09%, Power Grid up by 1.56%, NTPC up by 1.19% and Bajaj Finance up by 0.56%. On the flip side, Vedanta down by 3.28%, Tata Motors down by 2.31%, Yes Bank down by 2.18%, Mahindra & Mahindra down by 2.11% and ICICI Bank down by 2.07% were the top losers.

Meanwhile, India has climbed two spots to rank at 76 out of 115 economies in the World Economic Forum’s (WEF) global energy transition index. The index benchmarks 115 countries on the current level of their energy system performance, and the readiness of their macro environment for transition to a secure, sustainable, affordable and inclusive future energy system.

As per the ‘Fostering Effective Energy Transition report’ which is part of the World Economic Forum’s System Initiative on Shaping the Future of Energy, India is amongst the countries with high pollution levels and has a relatively high CO2 intensity in its energy system. Despite this, India has made significant strides to improve energy access in recent years, and currently scores well in the area of regulation and political commitment towards energy transition.

Further, the country has scored low in terms of system performance (ranking 97 and 86, respectively), while it ranks considerably higher when it comes to readiness (45 and 61, respectively). Overall, India has moved up two places from 78th last year.

The CNX Nifty traded in a range of 11,395.65 and 11,311.60. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Indian Oil Corporation up by 4.52%, ONGC up by 4.36%, HPCL up by 2.48%, Coal India up by 2.26% and Power Grid up by 1.59%. On the flip side, Zee Entertainment down by 4.28%, Bharti Infratel down by 3.53%, Vedanta down by 3.28%, JSW Steel down by 3.08% and Tata Motors down by 2.51% were the top losers.

European markets were trading mostly in red; UK’s FTSE 100 declined 6.90 points or 0.1% to 7,200.69 and France’s CAC decreased 1.23 points or 0.02% to 5,268.69, while Germany’s DAX was up by 21.41 points or 0.19% to 11,385.58.

Asian markets ended lower on Monday due to heavy selling pressure as growing worries about growth and Brexit-related uncertainty weighed on investors' appetite for risk. With an inverted yield curve in the US stoking fears of a recession, investors ignored news that the Muller report did not find sufficient evidence against President Donald Trump. Chinese shares ended lower as investors looked forward to another round of US-China trade negotiations set to begin in Beijing this week. Further, Japanese shares ended down as an inverted yield curve suggested that a recession could be looming. A yield curve recession model by National Australia Bank is pointing to a 30-35 percent probability of a US recession occurring over the next 10-18 months.