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Indian equity markets join global sell-off
Dec-10-2018

Indian equity benchmarks joined global sell-off on Monday, as both Sensex and Nifty ended in red, suffering from their worst losses. The start of day was disappointing, impacted by jitteriness on the street ahead of declaration of elections results of the five major states - Chhattisgarh, Madhya Pradesh, Mizoram, Telangana and Rajasthan - on December 11. The exit polls for five states showed that Prime Minister Narendra Modi’s popularity is in doubt going into 2019 election. Domestic sentiments were also got cautious with former chief economic advisor Arvind Subramanian’s statement that the new gross domestic product back-series data, released late last month by the Central Statistics Office and NITI Aayog, raised a lot of questions and hurt the credibility of official data. Adding more anxiety, the Reserve Bank of India’s (RBI) data showed that India’s current account deficit (CAD) widened to 2.9% of the Gross Domestic Product (GDP) in the second quarter of the fiscal compared to 1.1% in the year-ago period, mainly due to a large trade deficit. Some concerns also came with a report that foreign investors have pulled put close to Rs 400 crore from the Indian stock market in the last five trading sessions amid weakness in global equities due to the arrest of a high-profile Chinese executive.

The trade remained under pressure throughout the session, following weak global markets amid trade worries. Weakness continued on the markets, despite rise in direct tax collections. As per the data released by finance ministry, revenue from direct tax grew 14.7% to Rs 5.51 lakh crore in the first eight months of the current financial year 2018-19 (April-March). The market participants failed to take any sense of relief with IMF’s Chief Economist Maurice Obstfeld’s statement that India’s growth has been very solid over the past four years and he praised the fundamental economic reforms like the GST and the Insolvency and Bankruptcy Code carried out by the government. The street paid no heed towards RBI’s weekly statistical supplement showing that India’s foreign exchange (forex) reserves rose by $932.8 million during the week ended November 30. Traders even overlooked Finance Minister Arun Jaitley’s statement that the number of income tax payers can double to almost 12 crore, amid increasing formalisation of the economy. He also expects number to go up to 7.6 crore before the present government completes its five year term and noted that as many as 6.86 crore I-T returns have been filed this year.

On the global front, European markets were trading in red, as Eurozone's economic growth rate halved in the third quarter as estimated initially. The latest figures from the Eurostat showed that gross domestic product grew 0.2 percent from the second quarter, when it increased 0.4 percent. Adding some worries, Germany's industrial production in October unexpectedly dropped for the first time in three months, suggesting that manufacturing is yet to recover from a slowdown despite some improvement in demand. The preliminary figures from the Federal Statistical Office showed that industrial production dropped 0.5 percent from September, when they grew 0.1 percent, revised from 0.2 percent. Asian markets ended in red, as trade worries resurfaced after White House trade adviser Peter Navarro said the Trump administration would raise tariff rates on China if the two countries fail to resolve their issues during the 90-day truce period. Elsewhere, China reported far weaker than expected exports and imports for November and the Japanese economy contracted the most in over four years in the third quarter, adding to investor worries over slowing global growth.

Back home, metal stocks ended lower, despite the Joint Plant Committee’s (JPC) report showing that India’s crude steel output grew 3.8% to 8.92 million tonne (MT) in November 2018 as compared to 8.60 MT crude steel produced during the same period a year ago, while stocks related to auto sector also fall, as data released by the Society of Indian Automobile Manufacturers (SIAM) showed that domestic passenger vehicle sales declined 3.43% to 266,000 units in November from 275,440 units in November 2017. Domestic car sales were down marginally to 179,783 units as against 181,435 units in November 2017. Further, coal sector stocks remained under pressure, amid private repro that India’s coal import rose 9.7% to 156.08 MT in the April-November period of the ongoing fiscal, as against 142.25 MT in the corresponding months a year ago. Besides, select Diamond Cutting and Jewellery & Precious Metals stocks remained in focus with a private report stating India’s gem and jewellery exports, which witnessed a decline of 4.35% in dollar terms during April-October, may post a recovery in the remaining five months of the current fiscal year, as the improved macroeconomic conditions in the US.

Finally, the BSE Sensex plunged 713.53 points or 2.00% to 34,959.72, while the CNX Nifty was down by 205.25 points or 1.92% to 10,488.45.

The BSE Sensex touched a high and a low of 35,246.97 and 34,915.77, respectively and there were 2 stocks advancing against 29 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 1.84%, while Small cap index was down by 1.84%.

The top losing sectoral indices on the BSE were Realty down by 3.15%, Telecom down by 2.73%, Energy down by 2.56%, Capital Goods down by 2.04% and Bankex down by 2.04%, while there were no gaining sectoral indices on the BSE.

The only gainers on the Sensex were Coal India up by 0.76% and Maruti Suzuki up by 0.49%. On the flip side, Kotak Mahindra Bank down by 6.56%, Reliance Industries down by 3.95%, Asian Paints down by 3.48%, Tata Motors down by 3.45% and Adani Ports & SEZ down by 3.41% were the top losers.

Meanwhile, in a relief measure for trade and industry, the Finance Ministry has extended the last date for filing annual Goods and Services Tax (GST) return forms by three months until March 31, 2019.  The annual returns form in which businesses registered under the GST have to provide consolidated details of sales, purchases and input tax credit (ITC) benefits accrued to them during 2017-18 fiscal was notified in September. The last date for filing was set at December 31, 2018.

Besides, the Central Board of Indirect Taxes and Customs (CBIC) has underlined that the competent authority has decided to extend the due date for filing Form GSTR-9, GSTR-9A and GSTR-9C till March 31, 2019. The requisite Forms shall be made available on the GST common portal shortly.

GSTR-9 is the annual return form for normal taxpayers, GSTR-9A is composition taxpayers, while GSTR-9C is a reconciliation statement. Trade and industry players have been seeking an extension of the deadline for filing the annual returns. Earlier, the Confederation of All India Traders (CAIT) had urged Finance Minister Arun Jaitley to extend the last date of filing annual GST return up to March 31, 2019.

The CNX Nifty traded in a range of 10,558.85 and 10,474.95. There were 5 stocks advancing against 44 stocks declining, while 1 remained unchanged on the index.

The top gainers on Nifty were Indian Oil Corporation up by 3.51%, BPCL up by 1.72%, Coal India up by 0.32%, HPCL up by 0.29% and Maruti Suzuki up by 0.15%. On the flip side, Kotak Mahindra Bank down by 6.11%, Indiabulls Housing Finance down by 4.79%, Reliance Industries down by 4.30%, Ultratech Cement down by 4.01%, and Bharti Airtel down by 3.93% were the top losers.

European markets are trading in red; FTSE fell 28.36 points or 0.42% to 6,749.75, CAC lost 23.71 points or 0.49% to 4,789.42 and DAX was down by 64.37 points or 0.60% to 10,723.72.

Asian markets ended in red on Monday as weaker-than-expected US jobs data for November as well as weak data from China and Japan raised fresh concerns over global growth. Brexit-related uncertainty and rising tensions between the US and China over the detention of tech company Huawei's CFO Meng Wanzhou also dented investor sentiment. Chinese shares closed down as weaker-than-expected data on trade pointed to slower global demand. Reports showed China's exports rose 5.4 percent from a year earlier in November, marking the weakest performance since a 3 percent contraction in March. Import growth stood at 3 percent, the slowest since October 2016. Separately, China's consumer inflation and producer price inflation eased in November, giving policymakers more room to loosen fiscal and monetary policies. Further, Japanese shares ended lower on worries over fresh Sino-US trade tensions after White House trade adviser Peter Navarro said the Trump administration would raise tariff rates on China if the two countries fail to resolve their issues during the 90-day truce period. Data showing that the Japanese economy contracted the most in over four years in the third quarter also added to investor worries over slowing global growth. GDP shrank at an annualized rate of 2.5 percent in July-September, worse than an initial estimate of a 1.2 percent contraction, revised data showed.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

2,584.58
-21.31
-0.82

Hang Seng

25,752.38
-311.38
-1.19

Jakarta Composite

6,111.36
-15.00
-0.24

KLSE Composite

1,663.31

-17.23

-1.03

Nikkei 225

21,219.50
-459.18
-2.12

Straits Times

3,072.44
-38.68
-1.24

KOSPI Composite

2,053.79
-21.97
-1.06

Taiwan Weighted

9,647.54
-113.34
-1.16
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