Benchmarks make gap-down opening; Sensex declines below 38,900 mark

Indian equity benchmarks made a gap-down opening and are trading with a cut of around 0.75% in early deals on Monday, breaching their crucial 38,900 (Sensex) and 11,700 (Nifty) levels on  account of weak global cues amid higher crude oil prices. Market heavyweight stocks including Reliance Induatries and HDFC Bank were leading the losers. Broader indices, BSE Mid cap and Small cap were also trading in red with losses of around a percent each. Investors were cautious ahead of F&O series expiry later in the week. Traders remain concerned with a private report that business sentiments continue to decline for the country's financial and macro-economic conditions in the second quarter of the year compared to the same period a year before. As per the report, Composite Business Optimism Index stands at 78.4 during Q2 2019 as against 85.0 during Q2 2018 marking a 7.7% decline. Traders took note of Arvind Panagariya’s statement that India must focus on growth of labour-intensive sectors to create decent jobs for the masses as well as give serious thought to privatising the public sector banks (PSBs), emphasized that the reform process must be completed in the coming five years.

On the global front, Asian shares were trading mostly in red on Monday as investors took stock of recent data suggesting global growth may be stabilising, while oil prices spiked on a report the US is likely to ask all importers of Iranian oil to end their purchases or face sanctions. Back home, Jewellery industry related stocks were buzzing with the commerce ministry data showing that the country's gold imports dipped about 3 per cent in value terms to $32.8 billion during 2018-19, which is expected to keep a lid on the current account deficit. Total imports of the precious metal in 2017-18 had stood at $33.7 billion.

The BSE Sensex is currently trading at 38852.28, down by 288.00 points or 0.74% after trading in a range of 38828.77 and 39158.22. There were 4 stocks advancing against 27 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.95%, while Small cap index was down by 0.81%.

The only gaining sectoral indices on the BSE were IT up by 0.75% and TECK was up by 0.48%, while Oil & Gas down by 2.03%, Energy down by 1.97%, Realty down by 1.92%, Telecom down by 1.23%, Bankex was down by 1.13% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 1.02%, Power Grid Corporation up by 0.93%, Infosys up by 0.50% and HCL Technologies was up by 0.37%. On the flip side, Bharti Airtel down by 2.39%, Yes Bank down by 2.19%, Indusind Bank down by 1.93%, Reliance Industries down by 1.91% and Asian Paints was down by 1.64% were the top losers.

Meanwhile, in order to create decent jobs for the masses as well as give serious thought to privatising the public sector banks (PSBs), Arvind Panagariya, who had served as the first Vice Chairman of the NITI Aayog from January 2015 to August 2017, has said that India must focus on growth of labour-intensive sectors. He also highlighted that the reform process must be completed in the coming five years.

Highlighting the priority areas, he said that India needs a clear focus on the growth of labour-intensive sectors such as apparel, footwear, furniture, kitchenware and other light manufactures to create decent jobs for the masses. He said ‘We need firms in these sectors that are globally competitive and capture the space in export markets that China has been quitting due to its high wages. This requires flexible labour and land laws and an ecosystem that is yet friendlier to large firms’.

Panagariya explained that one way to achieve this is to create Shenzhen-style Coastal Employment Zones (in China) that create zones of 500 square kilometers or more along the coast that are characterized by highly entrepreneur-friendly regime with respect to land, labour and international trade. He added ‘Eventually, we must extend this regime to other parts of the country as well’. He stressed that it is also time that ‘we gave a serious thought to privatising PSBs’. He also emphasised on the need for major reforms in the area of education, saying the Right to Education Act has wholly ‘neglected quality’.

The CNX Nifty is currently trading at 11657.90, down by 94.90 points or 0.81% after trading in a range of 11646.15 and 11727.05. There were 9 stocks advancing against 41 stocks declining on the index.

The top gainers on Nifty were TCS up by 1.06%, Wipro up by 0.98%, Power Grid Corporation up by 0.93%, Tech Mahindra up by 0.81% and Infosys was up by 0.44%. On the flip side, BPCL down by 4.13%, Indian Oil Corporation down by 3.01%, Indiabulls Housing Finance down by 2.92%, Yes Bank down by 2.52% and Reliance Industries was down by 2.30% were the top losers.

Asian market were mostly trading in red; Jakarta Composite dropped 85.62 points or 1.32% to 6,421.60, Shanghai Composite declined 45.40 points or 1.39% to 3,225.40, KOSPI fell 6.74 points or 0.3% to 2,209.41 and Nikkei 225 was down by 5.53 points or 0.02% to 22,195.03. On the other side, Straits Times gained 4.39 points or 0.13% to 3,351.97 and Taiwan Weighted was up by 15.42 points or 0.14% to 10,983.92.