Markets bid adieu to CY 2019 on weak note

Dalal Street bade adieu to the Calendar Year 2019 on a weak note, with Sensex & Nifty closing lower by over 0.70% each. After a sluggish start, indices remained negative throughout the session, amid a private report that the government might breach the fiscal deficit target this financial year amid drop in the revenue mobilisation and expected additional expenditure by the government. Adding more worries, rating agency ICRA stated that muted economic growth, lower working capital requirements and risk aversion among lenders have compressed the incremental credit growth in current financial year (April 2019 to March 2020).

In last leg of the trade, markets extended losses, as Ind-Ra said that the aggregate fiscal deficit of states will touch 3 per cent gross domestic product in FY20 against the budgeted figure of 2.6 per cent. The fiscal slippage will originate from a decline in tax revenue, a lower nominal GDP & higher expenditure. The street overlooked Secretary in DPIIT, Guruprasad Mohapatra’s statement that enthused by a record foreign investment inflow, India is optimistic of continuing to be one of the world's favourite FDI destinations in 2020 on the back of the Modi government's liberalised norms & a significant jump in ease of doing business ranking.

On the global front, European markets were trading mixed, after Turkey's trade deficit increased sharply in November, driven by higher imports. The data from the Turkish Statistical Institute showed that the trade deficit widened to $2.23 billion from $672 million a year ago. Exports coverage imports was 87.4 percent, while it was 95.8 percent in November 2018. Asian markets ended mostly lower, as overall consumer prices in South Korea were up 0.7 percent on year in December, accelerating from the 0.2 percent increase in the previous month. On a monthly basis, overall inflation rose 0.2 percent after skidding 0.6 percent in November.

Back home, the renewable energy sector stocks remained in focus, after credit rating agency, ICRA revised its outlook for India’s renewable energy sector from stable to negative amid delays in payments from discoms and execution of projects. Further, stocks related to the steel and mining industry also remained in watch, as Steel Minister Dharmendra Pradhan has urged the steel and mining industry to undertake research activities as it will build the foundation for an advanced and vibrant sector. Pradhan remarks came after a meeting with the officials of CSIR-Institute of Minerals and Materials Technology in Bhubaneswar.

Finally, the BSE Sensex lost 304.26 points or 0.73% to 41253.74, while the CNX Nifty was down by 87.40 points or 0.71% to 12168.45.

The BSE Sensex touched high and low of 41607.49 and 41184.73, respectively and there were 05 stocks advancing against 25 stocks declining.

The broader indices ended mixed; the BSE Mid cap index fell 0.03%, while Small cap index was up by 0.37%.

The top gaining sectoral indices on the BSE were Utilities up by 0.83%, Power up by 0.62%, Realty up by 0.50%, PSU up by 0.48% and Metal up by 0.10%, while Energy down by 1.20%, Telecom down by 0.85%, Auto down by 0.85%, TECK down by 0.76% and Consumer Disc down by 0.65% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 2.01%, Sun Pharma up by 0.62%, ONGC up by 0.55%, Power Grid up by 0.29% and Ultratech Cement up by 0.11%. On the flip side, Tech Mahindra down by 2.51%, Bajaj Auto down by 2.16%, Reliance Industries down by 1.95%, Hero MotoCorp down by 1.41% and Indusind Bank down by 1.31% were the top losers.

Meanwhile, the government is working to formulate technical regulations, which includes safety and quality standards, for over 350 products, with an aim to cut the country's import bill of those non-essential items, promoting Make in India and promote sale of quality and standard goods in the market. The Department for Promotion of Industry and Internal Trade, Department of Telecommunication, Department of Chemicals, IT and electronics ministry and steel ministry was consulted for imposition of import regulations.

The government’s aim is to formulate these regulations for about 5,000 products but the current focus is on 371 items which accounts for $127 billion worth of imports. The 371 items include chemicals, steel, consumer electronics, heavy machinery, telecom goods, paper, rubber articles, glass, industrial machinery, metal articles, furniture, pharma, fertiliser, food, textiles. The Bureau of Indian Standards (BIS) has been tasked to prepare these regulations. India imports about 11,500 goods per year. BIS has also been asked to set up market surveillance mechanism on technical regulations for imported goods. In 2018-19, India's imports grew by 9 percent to $507.5 billion as compared to $465.6 billion in 2017-18.

The country's top import commodities include crude oil, gold, electronic goods, pulses, fertilisers, machine tools, and pharmaceutical products. High import bill pushes trade deficit which in turn impacts current account deficit. High imports also affect the country's foreign currency exchange rates. Further, the commerce ministry is also looking at non-tariff barriers being imposed by India's trading partners. Countries which impose one of the highest number of technical barriers to restrict imports include China, South Korea and Thailand.

The CNX Nifty traded in a range of 12,247.10 and 12,151.80. There were 11 stocks advancing against 39 stocks declining on the index.

The top gainers on Nifty were Coal India up by 2.75%, NTPC up by 2.10%, GAIL India up by 1.85%, Grasim Industries up by 1.12% and Tata Motors up by 0.52%. On the flip side, Zee Entertainment down by 3.57%, Tech Mahindra down by 2.75%, Bajaj Auto down by 2.21%, Reliance Industries down by 1.83% and Eicher Motors down by 1.69% were the top losers.

European markets were trading mixed; France’s CAC increased 3.63 points or 0.06% to 5,985.85, while UK’s FTSE 100 was down by 26.32 points or 0.35% to 7,560.73.

Asian markets ended mostly lower on Tuesday, the last trading day of 2019, as investors booked profits from gains made this month after the United States and China reached a trade deal. White House trade adviser Peter Navarro said the Sino-US phase 1 trade deal was likely to be signed in the next week but confirmation would come from President Donald Trump or US Trade Representative Robert Lighthizer. The South China Morning Post reported, citing a source, that Chinese Vice Premier Liu He is set to lead a delegation to Washington this Saturday to sign the phase one trade deal with the United States. Though, Chinese shares ended higher after official data showed that China's manufacturing sector expanded for the second straight month in December. Meanwhile, the markets in Japan, South Korea, and Indonesia were closed for New Year's Eve.