Markets pain deepens; Sensex breaches 37,800 mark

Indian equity benchmarks extended their sluggish run on Wednesday, with the both larger peers, the Sensex and the Nifty plunging over a percent each, on the back of weak cues from global markets. After a negative start of the day, key indices remained under the grip of bears throughout the day, as US Commerce Secretary Wilbur Ross warned that any retaliatory tariff by India in response to the United States' planned withdrawal of trade privileges will not be appropriate under WTO rules. India has raised the prospect of higher import duties on more than 20 US goods if US President Donald Trump presses ahead with a plan announced in March to end the Generalized System of Preferences (GSP) for India. India is the biggest beneficiary of GSP, which allows preferential duty-free imports of up to $5.6 billion from the South Asian nation.

Markets saw further fall in the last leg of the trade and ended near their intraday low points. Domestic sentiments got hit, amid reports that direct Tax collections fell short by Rs 82,000 crore at Rs 11.18 lakh crore during 2018-19 with lower corporate tax collections emerging as one of the reasons for the lower mop. The government had set a target of Rs 12 lakh crore. The markets participants were pessimistic, as US Labour Secretary Alexander Acosta told US lawmakers that the Trump administration is proposing a hike in the H-1B visa application fee to raise funds for the expansion of an apprentice programme which trains American youth for technology sector jobs. The street paid no heed towards a private report that the number of business-to-business (B2B) startups jumped four times to 3,200 in 2018 from 800 in 2014, enabling faster growth of the ecosystem, attracting investments worth $3.7 billion from $797 million, during the period.

On the global front, European markets were trading in red, even though Germany's industrial production rose for a second straight month and at the fastest pace in three months in March, defying expectations of a decline, and raised hopes of a strong economic performance in the first quarter. The preliminary data from the Federal Statistical Office showed that industrial production grew 0.5 percent monthly following a 0.4 percent increase in February, which was revised from 0.7 percent. Asian markets ended mixed, as fears of an escalation in trade war between the US and China continued to keep risk appetite in check.

Back home, airlines stocks remained in focus, after the International Air Transport Association (IATA) said that the demand for air cargo globally continues to face headwinds due to weakening businesses and growing trade tensions. Stocks related to the hospital industry also remained in limelight, with rating agency, ICRA’s latest report stating that the hospital sector has witnessed consolidation and a significant jump in M&A transactions, post the stress on performance of the sector due to regulatory restrictions. According to ICRA, the total value of M&A transactions in the hospital sector in FY2019 amounted to Rs 7615 crore, as against transactions worth Rs 2991 crore done in FY2018, recording an increase of 155 per cent.

Finally, the BSE Sensex slipped 487.50 points or 1.27 % to 37,789.13, while the CNX Nifty was down by 138.45 points or 1.20% to 11,359.45.

The BSE Sensex touched a high and a low of 38,248.57 and 37,743.07, respectively and there were 02 stocks advancing against 29 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.96%, while Small cap index was down by 1.21%.

The top losing sectoral indices on the BSE were Energy down by 2.51%, Realty down by 2.13%, Power down by 1.62%, PSU down by 1.48% and Utilities down by 1.44%, while there were no gaining sectoral indices on the BSE.

The top gainers on the Sensex were HCL Tech. up by 0.29% and TCS up by 0.11%. On the flip side, Reliance Industries down by 3.35%, Bajaj Finance down by 3.22%, Tata Motors down by 2.80%, Tata Motors - DVR down by 2.63% and Bajaj Auto down by 2.55% were the top losers.

Meanwhile, in order to increase trade and investment with Africa, the commerce ministry has said Indian businesses in Africa have suggested the government to take steps such as improving line of credit system, setting up of banks and liberalise visa policies. They further said start direct flights between the India and African countries; exploring possibility of rupee trade to address the issue of shortage of dollars; creation of common database of buyer-suppliers; development of a robust trade dispute settlement mechanism; and establishment of country chapters of FICCI or CII in Africa.

Department of Commerce welcomed the suggestions and assured them that these suggestions will be shared with relevant stakeholders /Departments in order to incorporate the suggestions in the India-Africa strategy for trade promotion.

Besides, the ministry stated, as per the latest available estimates,  the current strength of the Indian Diaspora in the African countries is 2.8 million and out of those 2.5 million are PIOs and rest 2,20,967 are NRIs. The India's total trade with the African region during 2017-18 was $62.69 billion.

The CNX Nifty traded in a range of 11,479.10 and 11,346.95. There were 10 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 1.15%, UPL up by 1.14%, Titan up by 0.95%, Asian Paints up by 0.52% and Cipla up by 0.37%. On the flip side, Zee Entertainment down by 10.05%, Bajaj Finance down by 3.55%, Reliance Industries down by 3.41%, Tata Motors down by 3.12% and Bajaj Finserv down by 2.87% were the top losers.

European markets were trading in red; UK’s FTSE 100 decreased 26.30 points or 0.36% to 7,234.17, France’s CAC fell 12.30 points or 0.23% to 7,234.17 and Germany’s DAX was down by 17.45 points or 0.14% to 12,075.29.

Asian markets ended lower on Wednesday as mixed trade data from China and concerns that a US-China trade war will dent growth kept underlying sentiment cautious. Meanwhile, after the US confirmed that it planned to raise tariffs on $200 billion of Chinese goods this Friday, investors remained edgy ahead of trade talks on Thursday and Friday in Washington. Chinese shares ended lower as trade worries lingered and April exports data added to investor concerns over slowing growth. China's exports unexpectedly shrank 2.7 percent in April from a year earlier, while imports surprised with their first increase in five months. Japanese shares ended down as the yen rallied to a six-week high against the dollar on fears of worsening US-China trade tensions.