Losing streak continues on D-Street for ninth straight session

Losing streak continued on the Dalal Street for ninth straight session on Monday, as Sensex and Nifty ended lower with sharp losses of over 350 and 100 points, respectively. The markets made a cautious start of day, as India industrial production measured by Index of Industrial Production (IIP) contracted to 0.1% in March 2019, the lowest in 21 months. It had grown by 5.3% in March 2018. As per the data released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation, IIP with base 2011-12 for the month of March 2019 stood at 140.2, which is 0.1% lower as compared to the level in the month of March 2018. Markets remained volatile throughout the day, even though the FICCI’s survey report indicated that the overall sentiment in the manufacturing sector remains positive as the proportion of respondents reporting higher output growth (around 54 percent) during the January-March 2018-19 (Q4FY19) remained the same as compared to Q3 (October-December) of 2018-19.

In the last leg of trade, key indices saw steepest fall, on the back of weak cues from global markets along with heavy selling by traders. Domestic sentiments got further hit, amid reports that reversing their three-month buying streak, foreign investors pulled out a net Rs 3,207 crore from the Indian capital markets in the first seven trading sessions of May amid the US-China trade tensions and uncertainty over the election results. Prior to this, foreign portfolio investors (FPI) poured in a net Rs 16,093 crore in April, Rs 45,981 crore in March and Rs 11,182 crore in February in the domestic capital markets (both equity and debt). Further, investors also remained concerned with a private report stating that even as factory output fell to a 21-month low in March, the situation may not improve in the first few months of FY20 on account of the increased likelihood of lower investment activity and uncertainties around the elections.

On the global front, European markets were trading in red, as Italy's industrial production fell to the steepest rate in three months in March. The data from the statistical office ISTAT showed that industrial production fell 1.4 percent year-on-year in March, after a 0.9 percent rise in February. The latest decline in production was the worst since last December, when it fell 5.7 percent. Asian markets ended in red, as the US-China trade talks ended without an agreement and expectations over a deal between Labour and the Conservatives faded, making British Prime Minister Theresa May's position increasingly vulnerable.

Back home, stocks related to auto industry ended lower, as the Society of Indian Automobile Manufacturers (SIAM) in its latest report showed fall of 17.07% in domestic passenger vehicle (PV) sales to stand 2,47,541 units in April 2019 from 2,98,504 units in the year-ago month. Further, sugar stocks remained in focus, after the All India Sugar Trade Association (AISTA) data showed that the country's sugar exports surged to 21.29 lakh tonne so far in the current marketing year ending September, as against about five lakh tonnes shipped in the entire 2017-18. Out of the 21.29 lakh tonnes exported between October 1 and April 6, raw sugar accounted for 9.76 lakh tonnes.

Finally, the BSE Sensex slipped 372.17 points or 0.99% to 37,090.82, while the CNX Nifty was down by 130.70 points or 1.16% to 11,148.20.

The BSE Sensex touched a high and a low of 37,583.57 and 36,999.84, 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 fell 1.84%, while Small cap index was down by 2.15%.

The lone gaining sectoral index on the BSE was IT up by 0.11%, while Healthcare down by 3.53%, Capital Goods down by 2.52%, Power down by 2.42%, Industrials down by 2.38% and Utilities down by 2.36% were the top losing indices on BSE.

The top gainers on the Sensex were HDFC up by 1.06%, Hindustan Unilever up by 0.87%, Infosys up by 0.56%, Bajaj Finance up by 0.24% and Coal India up by 0.23%. On the flip side, Sun Pharma down by 9.39%, Yes Bank down by 5.58%, Tata Motors - DVR down by 4.48%, Tata Steel down by 3.22% and Indusind Bank down by 3.20% were the top losers.

Meanwhile, the government has decided to constitute a committee under the Director General of Foreign Trade (DGFT) to look into availability of steel at competitive prices for engineering goods exporters. The committee will submit its report to steel and commerce ministries within two months. The committee will also have members from the engineering sector. It will suggest measures which will be a win-win situation for both steel producers and engineering exporters.

Engineering goods exporters are demanding that they should get steel at global prices as domestic rates are higher. They also said steel should be made available at competitive rates so that outbound shipments can be pushed further. However, steel producers state that freight charges and cost of production is high in the country, which push up prices.

India’s engineering exports surged by 6.36 percent to $83.7 billion in 2018-19 as compared to $78.7 billion in 2017-18. These exports accounts for over 25 percent of the country's total merchandise exports, which stood at $331 billion last fiscal. Engineering exports include transport equipment, capital goods, other machinery/equipment and light engineering products like castings, forgings and fasteners.

The CNX Nifty traded in a range of 11,300.20 and 11,125.60. There were 10 stocks advancing against 40 stocks declining on the index.

The top gainers on Nifty were Titan up by 1.49%, HDFC up by 1.31%, Bharti Infratel up by 1.24%, Tech Mahindra up by 0.82% and Hindustan Unilever up by 0.69%. On the flip side, Eicher Motors down by 8.13%, Zee Entertainment down by 6.64%, Sun Pharma down by 5.43%, Indiabulls Housing Finance down by 5.42% and Yes Bank down by 4.94% were the top losers.

European markets were trading mostly in red; France’s CAC decreased 25.38 points or 0.48% to 5,302.06 and Germany’s DAX decreased 72.70 points or 0.6% to 11,987.13, while, UK’s FTSE 100 increased 5.06 points or 0.07% to 7,208.35.

Asian markets ended in red on Monday after trade talks between the United States and China ended without a resolution last week and US President Donald Trump on Sunday defended his tariff policy, saying ‘we are right where we want to be with China’. Chinese shares ended lower as investors await Beijing's next move on the trade front. Meanwhile, the Hong Kong market was closed for a holiday.