Sensex, Nifty continue to fall for 4th straight session on Wednesday

Indian equity benchmarks continued to fall for the fourth straight day on Wednesday, with Sensex and Nifty ending lower by around a percent. The start of the day was lackluster as Care Ratings in its latest report projected India’s Gross Domestic Product (GDP) growth at 4.5% for the third quarter (Q3) of current fiscal year (FY20), which is lower than 6.6% GDP growth recorded in the corresponding period a year ago. Adding more worries among market participants, the payroll data of the Employees’ State Insurance Corporation (ESIC) showed that around 12.67 lakh jobs were created in December 2019 lower against 14.59 lakh in the previous month.

In the last leg of the trade, markets fell sharply to settle near day’s low points, after Moody's Analytics said that a global recession is likely if coronavirus becomes a pandemic, and the odds of that are uncomfortably high and rising with infections surging in Italy and Korea. Traders overlooked former NITI Aayog Vice Chairman Arvind Panagariya’s statement that India's slowdown has bottomed out and now its economy needs to be opened up if the country wants to realise the ambition of a 10 per cent growth rate. He said in the next fiscal year, India's GDP growth is expected to be 6 per cent and then it will get back to 7-8 per cent which has been the case in the last 15-16 year period.

On the global front, European markets were trading in red, as Hungary's average gross earnings growth slowed in December. The figures from the Hungarian Central Statistical Office showed that average gross earnings grew 13.1 percent year-on-year in December, after a 13.9 percent increase in November. Asian markets ended lower, even after Singapore industrial production rose unexpectedly in January. The data from the Economic Development Board showed that industrial production increased 3.4 percent year-on-year in January, reversing a 3.7 percent drop in December. Among clusters, biomedical manufacturing grew 41.1 percent annually in January.

Back home, the insurance industry stocks remained in watch as the Department for Promotion of Industry and Internal Trade (DPIIT) notified the government's decision to allow 100 per cent FDI in insurance intermediaries. The FDI policy earlier allowed 49 per cent foreign investment in the insurance sector, which includes insurance intermediaries. Further, stocks related to the banking sector also remained in focus, amid credit rating agency, CRISIL Ratings’ statement that a slowdown in bank lending may be bottoming out this fiscal, while gross credit off take may rise 8-9% year-on-year in fiscal 2021 backed by retail demand.

Finally, the BSE Sensex slipped 392.24 points or 0.97% to 39,888.96, while the CNX Nifty was down by 119.40 points or 1.01% to 11,678.50.

The BSE Sensex touched high and low of 40,255.39 and 39,760.39, respectively and there were 06 stocks advancing against 24 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 1.34%, while Small cap index was down by 0.82%.

The lone gaining sectoral index on the BSE was Telecom up by 0.25%, while Realty down by 2.16%, Auto down by 2.12%, Capital Goods down by 2.10%, Utilities down by 1.75% and Oil & Gas down by 1.71% were the top losing indices on BSE.

The top gainers on the Sensex were SBI up by 0.51%, Hindustan Unilever up by 0.38%, HCL Tech. up by 0.23%, Axis Bank up by 0.12% and Asian Paints up by 0.07%. On the flip side, Sun Pharma down by 3.60%, Maruti Suzuki down by 2.73%, Larsen & Toubro down by 2.49%, Hero MotoCorp down by 1.99% and Infosys down by 1.96% were the top losers.

Meanwhile, Commerce Minister Piyush Goyal has said that India and the US can finalise a larger trade deal much fast and expressed hope that the bilateral trade target of $500 billion is certainly achievable target in the next five years. He also said both the leaders (Prime Minister Narendra Modi and US President Donald Trump) have decided to formally engage to move towards a free trade agreement (FTA) between the two big economies.

Goyal has stated that Commerce ministry will conduct comprehensive stakeholder consultations and engaged with all concerned people on issues including market access, opening up services, on investment protocols, and on areas of mutual interest. He noted that generally in a limited trade deal, two trading partners reduce customs duties on limited number of goods to enhance economic ties. On the other hand, he said FTA is a big trade deal under which two trading partners significantly reduce or eliminate customs duties on maximum number of goods traded between them. Besides, they also relax norms for promoting investments and trade in services. He said that America will also gain significantly with this partnership.

On investments, the minister said businesses invest in any country not out of charity but when they see an opportunity. He said ‘India offers that opportunity....we are providing that opportunity, people are most welcome and we invite and welcome capital. We invite your investment into India but not at the cost of our pride.’ He added that India's earlier trade agreements did not provide enough opportunities for Indian manufacturing/businesses to expand and grow but opened large amounts of our markets.

The CNX Nifty traded in a range of 11,783.25 and 11,639.60. There were 06 stocks advancing against 44 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 4.98%, SBI up by 0.41%, Bharti Infratel up by 0.14%, HCL Tech. up by 0.14% and Britannia up by 0.11%. On the flip side, GAIL India down by 5.13%, Sun Pharma down by 3.83%, Tata Motors down by 3.60%, Grasim down by 2.83% and Hindalco down by 2.64% were the top losers.

European markets were trading in red; UK’s FTSE 100 decreased 66.23 points or 0.94% to 6,951.65, France’s CAC decreased 55.88 points or 0.98% to 5,623.80 and Germany’s DAX decreased 213.20 points or 1.67% to 12,577.29.

Asian markets ended lower on Wednesday as continued fears about the growing virus outbreak, that will hurt the global economy, and officials described it was ‘a rapidly escalating epidemic’. Asia reported hundreds of new corona virus cases, including the first US soldier to be infected, as the United States warned of an inevitable pandemic, and as outbreaks in Italy and Iran spread to more countries. Japanese shares ended lower due to spike in corona virus infections beyond mainland China. Japanese Prime Minister Shinzo Abe on Wednesday called for sports and cultural events to be scrapped or curtailed for two weeks as the country battles to stem corona virus contagion amid mounting concerns the 2020 Tokyo Olympics could be cancelled.