Dalal Street witnesses bloodbath on Monday

Dalal Street on Monday witnessed a bloodbath as both the larger peers, Sensex and Nifty, crashed by over a percent. The start of the day was negative, with India Meteorological Department’s statement that the overall monsoon deficiency in the country has reached 43 per cent due to its sluggish pace. Adding more anxiety among market participants, the data released by the Commerce Ministry showed that trade deficit, gap between imports and exports, widened to $15.36 billion during the month under review, as against the deficit of $14.62 billion in May 2018. But, India’s merchandise exports grew by 3.93 percent in May to $29.99 billion as compared to same period of last year, on the back of healthy growth in electronics and chemicals shipments.

Weak trade continued on Dalal Street throughout the day, amid heavy selling in almost all the sectoral indices along with mixed cues from other Asian markets. Traders paid no heed towards rating agency ICRA’s report that though macro fundamentals of the Indian economy have taken an unfavourable turn in the past few quarters, the continuity of National Democratic Alliance (NDA) led by Prime Minister Narendra Modi after the general elections augers well for key sectors of the economy. The street also overlooked the Reserve Bank of India’s report showing that inching closer to its historic peak, India's forex kitty increased by $1.686 billion to $423.554 billion for the week to June 7.

On the global front, European markets were trading in green, as Italy's consumer price inflation slowed more than initially estimated to a 13-month low in May. The final data from the statistical office Istat showed that consumer prices advanced 0.8 percent year-on-year in May, slower than the 1.1 percent increase in April. The annual rate was revised down from 0.9 percent estimated on May 31. Asian markets ended mixed, after Singapore's non-oil domestic exports declined the most in more than three years in May as shipments to almost all major markets, especially to China, plunged from a year ago amid escalating trade disputes.

Back home, stocks related to tea industry remained in focus, as the commerce ministry's Tea Board is considering an industry demand for setting up minimum benchmark prices for different grades of tea leaves. Indian Tea Association (ITA) has demanded that the government should set up minimum benchmark prices for different grades of tea leaves to promote the growth of the sector and push exports. Further, housing finance companies stocks came under pressure, amid ICRA’s report that housing finance growth is set to slow down to 13-15 percent this fiscal, lower than the average of the past three years, due to the lingering liquidity issues faced by non-banking lenders.

Finally, the BSE Sensex declined 491.28 points or 1.25% to 38,960.79, while the CNX Nifty was down by 151.15 points or 1.28% to 11,672.15.

The BSE Sensex touched a high and a low of 39,540.42 and 38,911.49, respectively and there were 02 stocks advancing against 28 stocks declining, while 1 stock remain unchanged on the index.

The broader indices ended in red; the BSE Mid cap index declined 1.29%, while Small cap index down by was 1.35%.

The top losing sectoral indices on the BSE were Metal down by 3.05%, Energy down by 2.49%, Oil & Gas down by 2.34%, Basic Materials down by 2.32% and Telecom down by 2.19%, while there were no gaining sectoral indices on the BSE.

The only gainers on the Sensex were Yes Bank up by 0.74% and Coal India up by 0.10%. On the flip side, Tata Steel down by 5.66%, Vedanta down by 3.33%, Tata Motors down by 3.20%, Tata Motors - DVR down by 3.11% and Axis Bank down by 2.93% were the top losers.

Meanwhile,  the Commerce Ministry in its latest study has stated that the ongoing tariff or customs duties war between the US and China proves a big window of opportunity to India for enhancing exports of as many 350 products such as chemicals and granite to these countries. It noted that both the US and China are imposing heavy import duties on each other’s products, which has caused a trade war kind of situation.

According to the study, as much 151 domestic products including diesel, X-ray tubes and certain chemicals have an outright advantage to displace the US exports to China. Similarly, 203 Indian goods like rubber and graphite electrodes have the advantage to displace Chinese exports to the US. It said that the specific products in which India can potentially expand exports to China immediately based on its strengths and available market access in the neighbouring country and also those in which concerted efforts need to be made to acquire market access are being shared with the line ministries.

The ministry further stated that the ongoing trade war may bring about a shift in the global trading patterns due to spillover effects and displacement of the bilaterally traded communities to other countries. It pointed out that the Indian products which can tap the Chinese market include copper ores, rubber, paper/paperboard, equipment for transmission voice/data in a wired network, tunes and pipes. Similarly, domestic goods which can grab exports opportunities in the US market include industrial valves, vulcanised rubber, carbon or graphite electrodes and natural honey. It added that increasing exports would help India narrow the widening trade deficit with China, which stood at $50.12 billion during April-February 2018-19.

The CNX Nifty traded in a range of 11,844.05 and 11,657.75. There were 04 stocks advancing against 46 stocks declining on the index.

The few gainers on Nifty were Yes Bank up by 0.74%, Zee Entertainment up by 0.36%, Coal India up by 0.14% and Wipro up by 0.12%. On the flip side, Tata Steel down by 5.78%, JSW Steel down by 3.78%, Tata Motors down by 3.47%, Indiabulls Housing Finance down by 3.46% and ONGC down by 3.25% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 9.68 points or 0.13% to 7,355.46, France’s CAC rose 14.43 points or 0.27% to 5,382.05 and Germany’s DAX was up by 22.99 points or 0.19% to 12,119.39.

Asian markets ended mixed on Monday as investors awaited the outcome of the US Federal Reserve and the Bank of Japan meetings due this week. Political tensions in the Middle East and Hong Kong also kept risk-appetite in check. Chinese shares ended up as investors watched the US Trade Representative's public hearings on the Trump administration's plans to impose fresh tariffs on Chinese-made goods, starting June 19. Further, Hong Kong shares ended higher after the territory's leader Carrie Lam climbed down on a bill that would have allowed extradition to China.