Markets extend losses to second straight day

Indian equity benchmarks traded choppy for most part of the day and witnessed sharp selling activity in final hour of trade which forced to close Tuesday’s session near of the day’s low. Markets made slightly positive start, as the government is planning to raise at least Rs 10,000 crore through the seventh tranche of CPSE ETF which will open for anchor investors on Thursday. Some optimism also came with a private report indicated that Finance Minister Nirmala Sitharaman's first full year Budget is expected to provide short-term stimulants to boost consumer demand, and such measures will get a positive response from markets. However, key indices erased gains and turned choppy in early noon deals with traders turning cautious ahead of the presentation of Union Budget due on Saturday, which may include government measures to revive economic growth that has slipped to a more than six-year low.

Markets witnessed sudden selloff in the last leg of trade, as the investors sentiment were weighed by the impact of coronavirus on China’s and the world economy. Some anxiety also came with Nobel laureate and economist Abhijit Banerjee’s statement that the country could be passing through a phase of recession, and there is ‘nothing in the data’ that suggests otherwise. He added that the priority of the government should be on refinancing the banking sector, which is in ‘doldrums’. Meanwhile, Labour Minister Santosh Gangwar has expressed confidence that Occupational, Safety, Health and Working Conditions (OSH) code will get Parliament approval in the Budget session beginning this Friday.

On the global front, Asian markets ended lower on Tuesday, on growing concerns about a hit to global economic growth after Chinese health authorities reported 24 more deaths from corona virus epidemic, taking the number of fatalities to 106 as the confirmed cases of pneumonia caused by the outbreak stand at 4,515. European markets were trading mostly in green. Back home, pharma sector remained in focus with rating agency ICRA stating that the growth trajectory for the Indian pharmaceutical industry is likely to remain at 10-13 percent in 2020-21 despite challenges. The expected growth in the next financial year is on the back of healthy demand from the domestic market given increasing spend on healthcare along with improving access. Besides, steel sector stocks remained in limelight as India's crude steel output increased marginally by 1.8 percent to 111.2 million tonnes (MT) in 2019, according to World Steel Association. The country's crude steel production was at 109.3 MT in 2018.

Finally, the BSE Sensex slipped 188.26 points or 0.46% to 40,966.86, while the CNX Nifty was down by 63.20 points or 0.52% to 12,055.80.

The BSE Sensex touched high and low of 41,333.25 and 40,869.75, respectively and there were 08 stocks advancing against 21 stocks declining, while one stock remain unchanged.

The broader indices ended in red; the BSE Mid cap index fell 0.52%, while Small cap index was down by 0.19%.

The only gaining sectoral indices on the BSE were Oil & Gas up by 0.24% and IT up by 0.20%, while Telecom down by 4.11%, Metal down by 2.58%, Energy down by 1.63%, Power down by 1.20% and Auto down by 1.18% were the top losing indices on BSE.

The top gainers on the Sensex were HDFC up by 1.53%, Bajaj Finance up by 1.14%, Sun Pharma up by 0.96%, HDFC Bank up by 0.82% and TCS up by 0.71%. On the flip side, Bharti Airtel down by 4.55%, Tata Steel down by 3.49%, Reliance Industries down by 2.34%, Maruti Suzuki down by 2.05% and ITC down by 1.66% were the top losers.

Meanwhile, after receiving robust response for earlier stake sale, the government has decided to launch seventh tranche of Central Public Sector Enterprises (CPSE) Exchange Traded Fund (ETF) with base issue size of Rs 10,000 crore with a greenshoe option to retain a portion of the oversubscription. The issue will open for anchor investors on January 30 and for other institutional and retail investors, the next day-- Nippon Life India Asset Management -- which has been mandated to manage the CPSE ETF on behalf of the government. It added that the investors would get a 3% discount over the issue price.

The proceeds from the ETF will help the government meet its disinvestment target of Rs 1.05 lakh crore for the current financial year. It had aimed to garner Rs 85,000 crore through disinvestment in the preceding financial year. Besides, CPSE ETF runs a concentrated portfolio with a handful of stocks having weights of as high as 20% on the underlying index. The portfolio is concentrated towards the energy and oil sector.

Retail investors can invest a minimum of Rs 5,000, while non-institutional investors and qualified institutional buyers (other than anchor investors) can invest a minimum of Rs 2 lakh. The minimum investment for anchor investor is fixed at Rs 10 crore. Through the earlier six tranches of the CPSE ETF, the government has already raised about Rs 50,000 crore; Rs 3,000 crore from the first tranche in March 2014, Rs 6,000 crore in January 2017, Rs 2,500 crore from the third in March 2017, Rs 17,000 crore in November 2018 and Rs 10,000 crore in March 2019 and Rs 11,500 crore in July 2019.

The CNX Nifty traded in a range of 12,163.55 and 12,024.50. There were 13 stocks advancing against 36 stocks declining, while one stock remain unchanged on the index.

The top gainers on Nifty were BPCL up by 2.49%, HDFC up by 1.57%, Bajaj Finance up by 1.24%, Sun Pharma up by 1.00% and Bajaj Finserv up by 0.92%. On the flip side, Vedanta down by 4.53%, Bharti Airtel down by 4.37%, Tata Motors down by 3.18%, Tata Steel down by 2.93% and JSW Steel down by 2.85% were the top losers.

European markets were trading mostly in green; UK’s FTSE 100 increased 13.90 points or 0.19% to 7,425.95 and France’s CAC rose 13.13 points or 0.22% to 5,876.15, while Germany’s DAX was down by 3.34 points or 0.03% to 13,201.43.

Asian markets ended lower on Tuesday on growing concerns about a hit to global economic growth after Chinese health authorities reported 24 more deaths from corona virus epidemic, taking the number of fatalities to 106 as the confirmed cases of pneumonia caused by the outbreak stand at 4,515. The virus has now spread to more than ten countries, including the US, France, Australia and Canada. Seoul shares ended lower amid worries that the corona virus outbreak will have a significant impact on China's GDP this quarter. In an effort to curb the outbreak, China has extended the Lunar New Year holiday to 2 February from the original 30 January date to reduce travel. Authorities have also locked down cities with a combined 40 million people around Wuhan, as they race to contain the virus. The US consulate in Wuhan plans to evacuate some Americans in a charter flight, while France and Japan have also said they plan to repatriate citizens. Global corporations are also stepping up their response in an effort to protect workers. Markets in China, Hong Kong and Taiwan were closed for the Lunar New Year holidays.