Markets witness bloodbath on Tuesday; Sensex tumbles around 650 points

Indian equity bourses witnessed bloodbath on Tuesday, amid concerns over soaring crude prices following drone attacks on Saudi Arabia's oil facilities. After a negative start, indices remained sluggish for the entire day, as the Reserve Bank of India’s Governor Shaktikanta Das said that India's current account & fiscal deficit could take a hit if oil prices continue to rise after an attack on Saudi Arabian oil facilities over the weekend. Some concerns also came with reports that lose-monetary policy alone cannot arrest the deepening slump, instead government must take demand-boosting measures, especially in rural areas, by frontloading expenditure primarily through the national rural employment scheme.

The markets extended losses during the second half of the trading session, after credit rating agency, India Ratings and Research (Ind-Ra) in its latest report stated that the recent set of measures to stimulate growth announced last week would yield only limited short-term benefits. It also said that the weakness in the economy has largely been caused by demand-side headwinds, which have been exacerbated by structural bottle-necks. Market participants paid no heed towards Commerce and Industry Minister Piyush Goyal’s statement that India and the US are in continuous dialogue and working towards early resolution of trade related issues.

On the global front, European markets were trading mostly in red terrain, as Switzerland's economic growth forecast for this year was slashed, as the country's exports and investment are being hurt by a slowing global economy and high uncertainty. The State Secretariat for Economic Affairs said that the growth forecast for this year was cut to 0.8 percent from 1.2 percent predicted in June. Asian markets ended mixed, after Indonesia's exports declined at a faster-than-expected rate in August. The figures from Statistics Indonesia showed that exports fell 9.99 percent year-on-year in August. Street had expected a 6.0 percent decrease.

Back home, the automobile sector stocks ended lower, after Traders Body Confederation of All India Traders (CAIT) said there is no slowdown in the domestic automobile sector and the industry is making hue and cry only to get a package from the government. Stocks related to the metal industry also remained lackluster during trading session, despite the Commerce and Industry Ministry launched Steel Import Monitoring System (SIMS) which will provide advance information about steel import to government and other stakeholders, including producers and consumers, to have effective policy interventions.

Finally, the BSE Sensex lost 642.22 points or 1.73% to 36,481.09, while the CNX Nifty was down by 185.90 points or 1.69% to 10,817.60.

The BSE Sensex touched a high and a low of 37,169.56 and 36,419.09, respectively and there were 03 stocks advancing against 28 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index dipped 1.77%, while Small cap index was down by 1.84%.

The top losing sectoral indices on the BSE were Auto down by 3.80%, Realty down by 3.69%, Metal down by 2.72%, Bankex down by 2.59% and PSU down by 2.35%, while there were no gaining sectoral indices on the BSE.

The few gainers on the Sensex were Hindustan Unilever up by 0.84%, Asian Paints up by 0.59% and Infosys up by 0.44%. On the flip side, Hero MotoCorp down by 6.19%, Tata Motors down by 5.13%, Tata Motors - DVR down by 4.66%, Tata Steel down by 4.62% and Axis Bank down by 4.62% were the top losers.

Meanwhile, continuing declining trend for the third consecutive month, the share of foreign portfolio investments (FPI) in domestic capital markets through participatory notes (P-notes) stood at Rs 79,088 crore in August-end. Investments through P-notes has been declining since June, while the month of May had registered an increase over the previous month. P-notes are issued by registered foreign portfolio investors (FPIs) to overseas investors who wish to be a part of the Indian stock market without registering themselves directly after going through a due diligence process.

According to the latest data from the Securities and Exchange Board of India (SEBI), the cumulative value of P-note investments in the domestic markets -- equity, debt, and derivatives -- fell to Rs 79,088 crore till August-end from Rs 81,082 crore in July-end. In June-end, the investment was at Rs 81,913 crore, while it was at Rs 82,619 crore in the end of May and Rs 81,220 crore in April-end.

Out of the total investments made till the end of August, Rs 52,150 crore was invested in the equities segment, Rs 26,259 crore in debt and Rs 678 crore in the derivatives market. The use of P-notes has been on a decline since 2017 and slumped to a nine-and-a-half year low of Rs 66,587 crore in October-end due to gradual measures taken by regulatory bodies to curb the usage of P-notes.

In July 2017, SEBI had notified stricter norms stipulating a fee of $1,000 on each instrument to check any misuse for channelising black money. It had also prohibited FPIs from issuing such notes where the underlying asset is a derivative, except those that are used for hedging purposes. Recently, the board of SEBI has approved a proposal to rationalise the framework for issuance of P-notes -- an instrument once very popular with foreign investors.

The CNX Nifty traded in a range of 11,000.10 and 10,796.50. There were 06 stocks advancing against 44 stocks declining on the index.

The top gainers on Nifty were GAIL India up by 1.85%, Titan up by 0.98%, Hindustan Unilever up by 0.97%, Asian Paints up by 0.70% and Infosys up by 0.56%. On the flip side, Hero MotoCorp down by 6.25%, Tata Motors down by 4.98%, Tata Steel down by 4.93%, Axis Bank down by 4.68% and Maruti Suzuki down by 4.62% were the top losers.

European markets were trading mostly in red; France’s CAC decreased 2.61 points or 0.05% to 5,599.62 and Germany’s DAX fell 35.68 points or 0.29% to 12,344.63, while UK’s FTSE 100 was up by 10.58 points or 0.14% to 7,331.99.

Asian markets ended mixed on Tuesday, a day after oil prices spiked and global markets slipped following a weekend attack on Saudi Arabian oil facilities. Investors also remained on the sidelines ahead of key central bank meetings this week in the U.S. and Japan. Chinese shares ended lower ahead of the next round of US-China trade talks scheduled to start in Washington on Thursday. Singapore shares finished lower on reports that the country's non-oil domestic exports declined at a slower than expected pace in August. Meanwhile, Japanese shares ended marginally higher, led by energy-related stocks as oil prices soared after attacks on Saudi oil facilities knocked out nearly half of global oil output.