Last hour sell-off drags Indian markets to day’s low points

Last hour sell-off dragged Indian equity bourses to their intraday low points on Wednesday, with Sensex & Nifty ending lower by around 230 and 75 points, respectively. Indices made a cautious start of the day, as State Bank of India’s Economic Research Department in its Ecowrap report sharply cut India’s Gross Domestic Product growth forecast to 5% for Fiscal Year 2019-20 from the earlier projection of 6%. Adding some worries, India's factory output growth, measured by the Index of Industrial Production, contracted by 4.3% in September as compared to a contraction 1.1% in August 2019 as all three broad-based sectors of capital goods production, consumer durables, and infrastructure and construction goods contracted.

Volatility remained over the markets for the whole day, on weak cues from global markets. Domestic sentiments remained hampered, amid a report stating that venture investment activity in India slowed down both by value and deal volumes in October to $3.312 billion in 91 transactions on account of poor show by the realty sector. Separately, according to the latest survey released by National Council of Applied Economic Research, business confidence of India Inc declined to its lowest in six years in August-October. Traders overlooked Finance Minister Nirmala Sitharaman’s statement that the Government of India’s top priority is to put the farmers’ concerns and rural development on a larger landscape.

On the global front, European markets were trading in red, as France economic growth is expected to slow slightly in the fourth quarter. The survey data from the Bank of France showed that gross domestic product is forecast to grow 0.2 percent in the fourth quarter, which is slower than the 0.3 percent expansion seen in the third quarter. Asian markets ended lower, even though Japan's money supply increased at a faster pace in October. The data from the Bank of Japan showed that the monetary aggregate M2 expanded 2.5 percent year-on-year, following August's 2.4 percent increase. This was the fastest growth in five months. The rate was forecast to remain unchanged at 2.4 percent.

Back home, textile sector stocks remained in watch, after the Home Textile Exporters' Welfare Association sought Prime Minister Narendra Modi's intervention for release of pending dues under the Rebate of State and Central Taxes and Levies on Export of Garments and Made-ups (RoSCTL), taxes and levies rebate scheme. Further, jewellery stocks remained in focus, as data given by the Gems & Jewellery Export Promotion Council showed that the gems & jewellery exports continued to be affected following geopolitical tensions as the overall shipments in October declined by 5.49 per cent to Rs 24,583.19 crore compared to the same month last year. The exports stood at Rs 26,010.87 crore in October 2018.

Finally, the BSE Sensex fell 229.02 points or 0.57% to 40,116.06, while the CNX Nifty was down by 73.00 points or 0.61% to 11,840.45.

The BSE Sensex touched a high and a low 40,447.17 and 40,061.23, 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 declined 0.77%, while Small cap index was down by 1.13%.

The few gaining sectoral indices on the BSE were Energy up by 1.60%, Consumer Durables up by 0.39% and IT up by 0.17%, while Metal down by 2.27%, PSU down by 2.07%, Realty down by 1.99%, Bankex down by 1.91% and Basic Materials down by 1.60% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 3.76%, Reliance Industries up by 3.10%, Hindustan Unilever up by 0.63%, Maruti Suzuki up by 0.31% and NTPC up by 0.04%. On the flip side, Yes Bank down by 6.51%, SBI down by 3.69%, Axis Bank down by 3.18%, Vedanta down by 2.82% and Sun Pharma down by 2.34% were the top losers.

Meanwhile, Union minister for chemicals and fertilisers Sadananda Gowda has said that the chemicals and fertilisers sector has the potential to contribute over $300 billion to Gross domestic products (GDP) over the next five years when the economy is slated to scale the $5-trillion-mount. He also said that the sector, which currently contributes nearly 7.76 percent of manufacturing now, has the potential to reach 20-25 percent in the next five years.

Assuring the industry of all the necessary support, Gowda urged the stakeholders need to work hard to realize its full potential and said certainly this is not an impossible target. He also said “though I am satisfied at the present growth rate, I believe we can grow faster on the back of the right policies.” He stated that with per capita income steadily increasing, the mid income population presents a huge market. He also expects the chemical industry to grow at 9 percent annually over the next five years.

The minister further said that the government is committed to provide a predictable and market-friendly policy framework to enable companies to take investment decisions and pointed to the enabling reforms such as GST, relaxed FDI norms, labour reforms and bankruptcy laws. He noted that these initiatives have made the country one of the most attractive investment destinations leading to an inflow of $280 billion foreign capital during the past five years alone. He added that the government has already approved setting up of four petroleum, chemicals and petrochemical investment regions in Gujarat, Andhra Pradesh, Odisha and Tamil Nadu. Upon completion, he said these regions will be home to around Rs 8 lakh crore investments, and are likely to generate over 4 million jobs.

The CNX Nifty traded in a range of 11,946.80 and 11,823.20. There were 10 stocks advancing against 39 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Britannia up by 4.85%, TCS up by 3.71%, Reliance Industries up by 2.89%, Nestle up by 0.81% and Bajaj Finserv up by 0.75%. On the flip side, Yes Bank down by 5.68%, GAIL India down by 4.83%, Zee Entertainment down by 4.65%, Adani Ports & SEZ down by 4.41% and Grasim down by 3.66% were the top losers.

European markets were trading in red; UK’s FTSE 100 decreased 59.37 points or 0.81% to 7,306.07, France’s CAC fell 44.50 points or 0.75% to 5,875.25 and Germany’s DAX was down by 137.92 points or 1.04% to 13,145.59.

Asian markets ended lower on Wednesday after US President Donald Trump's speech at the Economic Club of New York failed to provide any information on ongoing trade deal with China. The US president said a significant phase one trade deal with China ‘could happen soon’ but stressed that he would only accept an agreement that is good for US companies and workers. Trump threatened substantially more tariff hikes on Chinese imports if talks aimed at ending a trade war fail to produce an interim agreement. Worries about growing unrest in Hong Kong also kept sentiment cautious.