Indian markets get slaughtered ahead of CAD data; deposes over 1.5%

Monday turned out to be another murky trading session for the Indian equity indices which got pounded by over one and a half percentage points. Indian barometer gauges, prolonging their southward journey for second consecutive session, witnessed blood bath and closed near their intraday lows, breaching major crucial support levels of 19,400 (Sensex) and 5,750 (Nifty) as investors remained sidelines ahead of current account deficit (CAD) data to be released by Reserve Bank of India (RBI) later in the day, which may have widened to 4 percent of GDP in the first quarter due to a surge in gold imports and a deteriorated trade gap. After a gap-down opening, the domestic bourses never looked in recovery mood and continued sliding till end. Selling was both brutal and wide-based, as barring software counter, none of sectoral indices on BSE were spared. Counters, which featured in the list of worst performers, include capital goods, banking, metal, realty and public sector undertakings.

Sentiments remained somber on RBI’s report that the listed non-financial private companies on an average posted a decline of 10.9 per cent in net profit in the first quarter of the current fiscal. Further, the markets sentiment was hit adversely by data showing that foreign funds were net sellers of Indian stocks on September 17, 2013. Foreign institutional investors (FIIs) sold shares worth a net Rs 244.95 crore on Friday.

Selling got intensified as European markets made a poor start, as investors remained concerned that an extended period of political uncertainty in the euro zone’s third largest economy i.e. Italy would delay much needed reforms and reignite the region’s debt crisis. Moreover, most of the Asian equity benchmarks shut shop in the red on concern the US government is headed for a shutdown amid a budget stalemate. In addition, weaker than expected local industrial production data of Japan also weighed on investor sentiment. Industrial production in Japan fell to a seasonally adjusted 0.7 percent in August compared to the previous month.

Back home, the rupee remained weak through the day, tailing global risk-off sentiment on a potential shutdown of the US government. The rupee was trading at Rs 62.63 at the time of equity markets closing as compared with Friday’s close of Rs 62.51 per dollar. Meanwhile, realty stocks extended previous session’s losses triggered by RBI’s governor Raghuram Rajan’s comments that the RBI is still worried about high inflation, even when taking out volatile food prices. Additionally, metal stocks like Tata Steel, NMDC, SAIL, Hindalco, JSW Steel etc. edged lower after a weak Chinese data.

The NSE’s 50-share broadly followed index Nifty declined by around one hundred points to decline below its psychological 5,750 support level, moreover Bombay Stock Exchange’s Sensitive Index -- Sensex tumbled by around three hundred and fifty points to end below its psychological 19,400 mark.

Broader markets also struggled to get traction and ended the session with a cut of around half a percent. The market breadth remained in favour of decliners, as there were 896 shares on the gaining side against 1,393 shares on the losing side, while 131 shares remained unchanged.

Finally, the BSE Sensex lost 347.50 points or 1.76%, to settle at 19379.77 while the CNX Nifty plunged 97.90 points or 1.68% to settle at 5,735.30.

The BSE Sensex touched a high and a low of 19651.31 and 19320.73, respectively. The BSE Mid cap index was down by 0.28% and Small cap index declined 0.56%.

The top gainers on the Sensex were Hindustan Unilever up 1.06%, Sun Pharma up 0.47%, Infosys up 0.30%, NTPC up 0.27% and Gail India up 0.09%, on the flip side, Tata Steel down 5.65%, BHEL down 4.58%, ICICI Bank down by 4.15%, Coal India down by 3.92%, and L&T down by 3.53%, were the top losers on the index. 

On the BSE Sectoral front, IT up by 0.06% was the only gainer, while Capital Goods down by 2.92%, Bankex down by 2.84%, Metal down by 2.44%, Realty down by 2.09%, and PSU down by 2.09%, were the top losers on the sectoral front.

Meanwhile, allaying fears of the Indian industry that the new Land Acquisition Act would make projects economically unviable, Union Minister for Rural Development Jairam Ramesh said that the new act applies only to the land acquired by Central and State authorities for any public purpose, and there would be no bar on purchase of private land. The industry must look beyond land acquisition by Government and explore land purchase opportunities, he added.

By adding further, Jairam Ramesh said that according to the new act all land sales including Land Acquisition, Rehabilitation and Resettlement will come into the public domain, which will increase transparency and will also make it easier for the corporates to purchase lands. The Rural Development minister further added that the ministry has been working towards improving land records management and promoting transparency in land sales across India. National Land Record Modernisation Programme worth Rs 1,000 crore is being implemented with focus on computerisation of land records, digitisation of maps and surveys.

To ensure that landowners benefit from the almost lopsided increase in the value of land after the development of a large infrastructure or industrial project, the new Land Acquisition Act proposes compensation by four times the market value in rural areas and twice the market value in urban areas. It also includes provision to deal with cases where compensation has not been paid in five years, and non-development of the acquired land for five years (to prevent a real estate arbitrage play). Further, new Land Acquisition Act, will also make it mandatory to obtain the consent of 80 per cent landowners for acquiring land for private sector projects and 70 per cent consent for public-private projects.

The CNX Nifty touched a high and low of 5,810.20 and 5,718.50 respectively.

The top gainers on the Nifty were ACC up by 1.13%, Hindustan Unilever up by 0.97%, HCL Technologies up by 0.86%, BPCL up by 0.52% and Lupin up by 0.20%. On the other hand, NMDC down by 5.33%, Tata Steel down by 5.24%, Jaiprakash Associates down by 4.64%, ICICI Bank down by 4.59%, and Coal India down by 4.27%, were the top losers.

The European markets were trading in red, France’s CAC 40 was down by 1.18%, Germany’s DAX was down by 0.85%, and United Kingdom’s FTSE 100 was down by 0.71%.

Most of the Asian markets barring Shanghai Composite concluded Monday’s trade in red as a possible government shutdown in the US loomed large in Asia. Indonesia’s rupiah is leading declines in emerging markets this quarter as the currency headed for its worst three-month performance since 2008 due to a record current-account deficit. The manufacturing activity at China's private and export-oriented companies expanded a bit faster in September from that in August, indicating modest improvement of the world's second largest economy. The HSBC Purchasing Managers' Index, a comprehensive gauge of operating conditions at private and export-oriented industrial companies, settled at 50.2 in September, compared with 50.1 a month earlier.

Housing starts in Japan fell unexpectedly in the last quarter. The Ministry of Land, Infrastructure and Transport stated that Japanese Housing Starts fell to a seasonally adjusted 8.8%, from 12.0% in the preceding quarter. Industrial production in Japan fell more-than-expected last month. The Ministry of Economy, Trade and Industry reported that industrial production fell to a seasonally adjusted -0.7%, from 3.4% in the preceding month. Japanese retail sales rose more-than-expected to a seasonally adjusted annual rate of 1.1%, from -0.3% in the preceding month.

The Korea National Statistical Office stated that South Korean Retail Sales rose to a seasonally adjusted annual rate of 0.4%, from 1.2% in the preceding month whose figure was revised up from 1.1%. Industrial production in South Korea rose more-than-expected last month. The Korea National Statistical Office reported that South Korean Industrial Production rose to a seasonally adjusted annual rate of 3.3%, from 0.9% in the preceding month. Thailand’s trade balance rose more-than-expected to a seasonally adjusted 2.21B, from 0.30B in the preceding month, as per National Statistical Office Thailand.