Markets continue their worst run; Sensex crashes around 600 points

Indian equity markets continued their worst run on Thursday, with Sensex & Nifty crashing over 1.50% each. Key indices made a sluggish start of the day, impacted by Care Ratings’ report that the ongoing economic slowdown has started hurting corporates as well, with companies reporting a sharp decline in both revenue and profit growth numbers in the June quarter. India Inc's net sales growth for the June quarter slid to 4.6% as against 13.5% for the same period last year, while the net profit growth moderated to 6.6% as compared to last year's 24.6%. The street also remained worried, amid a private report that unemployment in India has shot up to a 3-year high of 8.3 per cent, as on August 20. With the urban unemployment rate close to 10%, job seekers in the urban areas are suffering more than those in the rural areas.

In the second half of the session, benchmarks saw further fall to settle near their intraday low points, amid mixed cues from the global markets. Domestic sentiments remained pessimistic, with a report stating that the government’s net revenue growth from direct taxes has decelerated sharply to 4.7% for April 1-August 15 this year as against a required annual growth rate of 17.3%, reflecting lower buoyancy in the wake of an overall slowdown in the economy. Market participants also seemed taking a note of reports that Chief economic advisor K Subramanian called for a ‘mindset change’ in the private sector by desisting from the tendency to grab profit and socialise losses and also seek sops in times of stress. He also said it will be only investment and not consumption that will help the economy grow.

On the global front, European markets were trading in red, even after the euro area private sector grew at a moderate pace in August. The flash survey data from IHS Markit showed that the composite output index rose unexpectedly to 51.8 in August from a 3-month low of 51.5 in July. Asian markets ended mixed, as Japan's all industry activity declined in June. The figures from the Ministry of Economy, Trade and Industry showed that the all industry activity index declined 0.8 percent month-on-month in June, following a 0.5 percent rise in May, which was in line with expectations. Among components, construction activity dropped 1 percent, after a 1.5 percent rise in May. Industrial production declined 3.4 percent, after a 2.1 percent gain in May.

Back home, the realty sector stocks ended lower, despite a joint study carried out by the Confederation of India Industry (CII)-JLL revealed that investments into Indian real estate have more than tripled to Rs 140,000 crore between 2014 and 2018 as compared to Rs 46,500 crore between 2009 and 2013, largely supported by institutional investments. Further, stocks related to the chemical industry remained in watch, after Chemicals and petrochemicals secretary P Raghavendra Rao has said the government is planning to boost domestic production of chemicals and petrochemicals, with a view to cut down imports of chemicals and make India manufacturing hub. He added that the government wants that factories should come up in a cluster so that it could provide all infrastructure facilities at one place.

Finally, the BSE Sensex lost 587.44 points or 1.59% to 36,472.93, while the CNX Nifty was down by 177.35 points or 1.62% to 10,741.35.

The BSE Sensex touched a high and a low of 37,087.58 and 36,391.35, respectively and there were 04 stocks advancing against 27 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 1.35%, while Small cap index was down by 2.19%.

The only gaining sectoral index on the BSE was IT up by 0.30%, while Realty down by 6.01%, Metal down by 3.49%, PSU down by 2.99%, Oil & Gas down by 2.63% and Bankex down by 2.52% were the top losing indices on BSE.

The top gainers on the Sensex were Tech Mahindra up by 1.54%, TCS up by 1.33%, Hindustan Unilever up by 1.03% and HCL Tech. up by 0.58%. On the flip side, Yes Bank down by 13.91%, Vedanta down by 7.76%, Bajaj Finance down by 4.39%, Tata Motors down by 4.14% and Tata Motors - DVR down by 3.78% were the top losers.

Meanwhile, the government has initiated steps to implement provisions of the Motor Vehicles Act 2019, and 63 clauses which do not require framing of new rules are likely to be implemented from September 1 subject to clearance from the law ministry. Minister for Road Transport and Highways Nitin Gadkari has said that sixty three clauses which do not require framing of new rules have been sent to the law ministry for vetting. These clauses deal with penalties, licences, registration and National Transport Policy, among others.

Regarding the other clauses for which rules have to be framed, Gadkari said steps for this have already been initiated by the ministry, and rules will be notified as and when the due processes are completed. The minister also expressed happiness that the Motor Vehicles Act (MVA) 2019 has become a reality, saying this will go a long way in giving the country a safe and corruption free road transport system. He further said the National Transport Policy that will be brought in under the Act will help in developing an efficient, multi-modal transport system.

Gadkari expressed hope that MVA 2019 will help curb road accidents and bring down fatalities. He said the ministry is spending Rs 12,000 crore towards rectification of 786 accident black spots identified by the NHAI. In addition, talks are on with the World Bank and Asian Development Bank (ADB) for another programme worth Rs 14,000 crore for rectification of black spots on national, state and district highways. The minister also announced that FASTags will become mandatory for all vehicles from December this year. FASTag is a reloadable tag which enables automatic deduction of charges at toll plazas.

The CNX Nifty traded in a range of 10,908.25 and 10,718.30. There were 07 stocks advancing against 43 stocks declining on the index.

The top gainers on Nifty were Britannia Industries up by 1.72%, Tech Mahindra up by 1.52%, Dr. Reddy’s Lab up by 1.20%, TCS up by 1.09% and Hindustan Unilever up by 1.03%. On the flip side, Yes Bank down by 12.16%, Vedanta down by 7.61%, Bajaj Finserv down by 5.20%, Indiabulls Housing Finance down by 5.18% and Bajaj Finance down by 4.52% were the top losers.

European markets were trading in red; UK’s FTSE 100 decreased 41.07 points or 0.57% to 7,162.90, France’s CAC decreased 25.61 points or 0.47% to 5,409.87 and Germany’s DAX was down by 33.78 points or 0.29% to 11,769.07.

Asian markets ended mixed on Thursday as investors awaited the Federal Reserve chair's speech at a global central bankers' conclave for clues on future rate cuts. Meanwhile, the Wall Street has sent warning signs of a possible economic recession ahead as the trade war continues to take a toll on the overall economy. Japanese shares ended flat after reports showed Japanese manufacturing activity shrank for a fourth straight month in August as export orders fell at a sharper pace, while services sector activity expanded at the fastest pace in nearly two years. Chinese shares ended a tad higher despite uncertainty over the outlook for US interest rate cuts following the release of minutes from the Federal Reserve's last policy meeting kept investors on edge, while the Chinese yuan's slump to an 11-year low also sapped their appetite for risk.