Benchmarks trade near lowest point of the day

Local equity markets have magnified their losses in morning session, hovering near the lowest point of the day amid weakness across Asian peers. There were no gainers on the BSE sectoral front. In line with the larger peers, the broader indices, BSE Mid cap and Small cap were too crumbling under pressure. A level of pressure was seen on frontline stocks, especially Tata Steel and Bajaj Finance. The sentiments remained in lackadaisical mood with the Association of Indian Forging Industry’s (AIFI) statement that disruption in supplies due to the coronavirus outbreak in China has hit domestic forging industry along with automobile and auto component manufacturing sectors. Traders remained anxious, as Industry body PHDCCI said that the coronavirus outbreak may negatively impact global growth by 30 basis points or $250 billion. Traders failed to draw any sense of relief as rating agency ICRA expects the growth of the Indian GDP and the gross value added (GVA) at basic prices in year-on-year (Y-o-Y) terms to rise mildly to 4.7% and 4.5%, respectively, in Q3 FY2020, from 4.5% and 4.3%, respectively, in Q2 FY2020.

On the global front, all Asian markets are trading lower after the biggest rout for equities on Wall Street since 2011, with investors flocking to the yen to find shelter from the expected blow to corporate earnings from the coronavirus. Back home, in scrip specific movements, NTPC gained on signing agreement with Central Pollution Control Board and India Cements surged as Gopikishan damani buys over 15 lakh shares in company.

The BSE Sensex is currently trading at 38648.75, down by 1096.91 points or 2.76% after trading in a range of 38551.54 and 39087.47. There were 1 stocks advancing against 29 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 3.28%, while Small cap index was down by 3.27%.

The top losing sectoral indices on the BSE were Metal down by 5.50%, Realty down by 3.96%, Basic Materials down by 3.81%, Industrials down by 3.73% and IT was down by 3.40%, while there were no gainers on the BSE sectoral front.

The only gainer on the Sensex was NTPC up by 0.50%. On the flip side, Tata Steel down by 7.86%, Bajaj Finance down by 7.11%, Tech Mahindra down by 4.79%, Infosys down by 3.86% and Mahindra & Mahindra down by 3.83% were the top losers.

Meanwhile, the Association of Indian Forging Industry (AIFI) has said disruption in supplies on account of coronavirus outbreak in China has hit Indian forging industry along with automobile and auto component manufacturing sectors. Automobile industry had already reduced their production rate due to the market conditions and on account of the impending change over to BS-VI emission norms from BS-IV from April this year. The problem is further aggravated by the Chinese government's suspension of shipments by sea until further notice and allowing air shipments only. Air shipments are not suitable for auto components and forging industries, therefore the Indian OEMs (original equipment manufacturers) are unable to plan production beyond the inventory as currently available to them.

AIFI said China is one of the leading suppliers of auto components in India, accounting for 27 per cent of the total exports, and the slowing supply of components manufactured there would result in shortage of stocks in India. Forging industry primarily caters to the $57 billion automotive industry. The association represents around 400 forging units with a cumulative annual production of 3 million tonne.

It said that the impact of the supply disruption will be more profound on passenger vehicles, commercial vehicles and two-wheeler segments. Currently, the OEMs have reduced their production plan for February and March due to non-receipt of components. It also stated that international customers have asked for shipments to be delayed till further advice as their supply lines are facing adverse impact of disruption caused due to shutting down of manufacturing facilities temporarily in China.

The CNX Nifty is currently trading at 11297.40, down by 335.90 points or 2.89% after trading in a range of 11269.80 and 11384.80. There were 1 stocks advancing against 49 stocks declining on the index.

The only gainer on Nifty was NTPC up by 0.41%, while Tata Motors down by 8.33%, Tata Steel down by 7.86%, Bajaj Finance down by 6.79%, Vedanta down by 6.47% and JSW Steel down by 5.63% were the top losers.

All Asian markets are trading lower, Nikkei 225 slipped 942.02 points or 4.29% to 21,006.21, Hang Seng decreased 748.18 points or 2.79% to 26,030.44, Jakarta Composite lost 223.73 points or 4.04% to 5,311.96, Shanghai Composite declined 100.77 points or 3.37% to 2,890.56, Straits Times tumbled 78.95 points or 2.54% to 3,032.75and KOSPI was down by 68.12 points or 3.32% to 1,986.77.