Weakness hits over Indian markets; Sensex loses 470 points

Weakness hit over Indian equity benchmarks on Thursday, with both the larger peers, Sensex and Nifty, closing lower by around 1.25% each. The markets made a lackluster start of the day, as tax collection missed target by a wide margin. As against a steep 17.5 percent higher tax collection budgeted for the full year, the government could mop-up only 4.7 percent more so far this year, with the direct tax kitty growing to Rs 5.50 lakh crore as of September 17, up from Rs 5.25 lakh crore a year-ago. Adding more concerns, the India Meteorological Department’s (IMD) report showed that monsoon rains in India in the week to September 18 were above average for a third straight week, with floods hitting many districts in the central parts of the country and damaging crops such as soybean and pulses.

Indices remained under pressure for the whole day, amid a private report that India’s slowdown & a simmering shadow banking crisis is putting Prime Minister Narendra Modi’s goal of crafting a $5 trillion economy by 2025 at risk. Traders paid no heed towards reports that the government decided to set up an 11-member panel. The latest decision is in line with the government's objective of promoting ease of doing business for law abiding corporates, fostering improved corporate compliance for stakeholders at large & also to address emerging issues having impact on the working of companies in the country. Investors also overlooked Niti Aayog CEO Amitabh Kant’s statement that the government is doing everything possible to turn around the Indian economy & bring it back to a high trajectory growth path.

On the global front, European markets were trading in green, despite Switzerland's exports declined for the second straight month, while imports grew in August. The data from the Federal Customs Administration showed that exports decreased by real 4.4 percent month-on-month in August, following a revised 1.2 percent fall in July. Imports rose 1.0 percent in August, after remaining unchanged in the previous month, following revision. Asian markets ended mostly lower, after the Bank of Japan kept its monetary policy unchanged as widely expected, after the US Federal Reserve resorted to further easing. The Policy Board of the BoJ voted 7-2 to maintain interest rate at -0.1 percent on current accounts that financial institutions maintain at the bank.

Back home, the metal industry stocks ended lower, as rating agency ICRA in its latest report stated India’s steel consumption growth may decelerate to 6% in the current financial year (FY20) as compared to 7.9% in last financial year (FY19) on the back of an unprecedented slowdown in economic activity, as reflected by GDP (gross domestic product) growth tapering down to 5% in Q1 FY20. Further, airlines stocks remained in focus, after the domestic air passenger count surged 3.87% in the month of August 2019. According to the Directorate General of Civil Aviation (DGCA) data, domestic airlines flew 117.93 lakh passengers in August 2019, as against 113.54 lakh passengers carried in the same month of last year.

Finally, the BSE Sensex fell 470.41 points or 1.29% to 36,093.47, while the CNX Nifty was down by 135.85 points or 1.25% to 10,704.80.

The BSE Sensex touched a high and a low of 36,613.93 and 35,987.80, respectively and there were 05 stocks advancing against 26 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index slipped 1.15%, while Small cap index was down by 1.48%.

The lone gaining sectoral index on the BSE was Telecom up by 0.17%, while Energy down by 2.00%, Oil & Gas down by 1.94%, Bankex down by 1.69%, Metal down by 1.63% and Realty down by 1.62% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 1.97%, Tata Motors - DVR up by 1.43%, HDFC Bank up by 0.63%, Bharti Airtel up by 0.58% and Asian Paints up by 0.40%. On the flip side, Yes Bank down by 15.52%, Tata Steel down by 3.66%, Indusind Bank down by 3.59%, ICICI Bank down by 3.16% and Maruti Suzuki down by 2.55% were the top losers.

Meanwhile, the Department for Promotion of Industry and Internal Trade (DPIIT), under the commerce and industry ministry, has notified the recent decisions on liberalising foreign direct investment (FDI) regulations in single brand retail trading, coal mining and contract manufacturing. It has also notified the decision to allow 26 percent FDI in digital media, a move over which certain industry and experts have raised issues.

According to the DPIIT, 100 percent FDI is allowed for sale of coal, coal mining activities including associated processing infrastructure subject to the provisions of Coal Mines (Special Provisions) Act, 2015 and the Mines and Minerals (Development and Regulation) Act, 1957. Amending FDI norms for the manufacturing sector, it said foreign investment in 'manufacturing' sector is under automatic route. It added that manufacturing activities may be either self-manufacturing by the investee entity or contract manufacturing in India through a legally tenable contract, whether on principal to principal or principal to agent basis.

For single brand retail trading, the Department said retail trading through e-commerce can also be undertaken prior to opening of brick and mortar stores, subject to the condition that the company opens brick and mortar stores within two years from date of start of online retail. It added that a single brand retail company with FDI selling Indian brands now will not have to follow the condition that such firm should sell products under the same brand internationally.

The CNX Nifty traded in a range of 10,845.20 and 10,670.25. There were 07 stocks advancing against 43 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 2.01%, Coal India up by 0.70%, HDFC Bank up by 0.56%, UPL up by 0.53% and Bharti Airtel up by 0.42%. On the flip side, Yes Bank down by 15.76%, Zee Entertainment down by 7.83%, Indiabulls Housing Finance down by 4.59%, Indusind Bank down by 3.75% and Tata Steel down by 3.55% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 27.64 points or 0.38% to 7,341.69, France’s CAC rose 22.60 points or 0.4% to 5,643.25 and Germany’s DAX gained 13.75 points or 0.11% to 12,403.37.

Asian markets ended mostly lower on Thursday after the Federal Reserve signaled a higher bar to further policy easing. Meanwhile, the Bank of Japan kept its monetary policy unchanged and the Bank said that it would not hesitate to take additional easing measures if needed. Investors are waited to see whether China would lower its new lending reference rate on Friday following the Fed's rate cut and the easing by the European central bank. Seoul shares ended higher as Saudi Arabia's rapid recovery efforts helped ease concerns over oil supply and investors pinned hopes for progress in upcoming Sino-US trade talks.