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Market Witness Bloodbath On Monday
Indian equity benchmarks witnessed a bloodbath on Monday's trading session by falling over a percent. After a weak start, markets remained under a grip of bears for the whole day, amid a private report indicating that the country's fiscal deficit for 2019-20 is expected to widen to 3.8% and the upcoming Budget may set a target of 3.5% for 2020-21. Some concerns also came with a report stating that India plans to increase import duties on more than 50 items including electronics, electrical goods, chemicals and handicrafts, targeting about $56 billion worth of imports from China and elsewhere.
In the last leg of the trade, losses got extended on the streets, as Nobel laureate and economist Abhijit Banerjee said that the banking sector in the country is ‘stressed’ and the government is in no position to bail it out. He said the demand slowdown in the automobile sector also shows that people are lacking confidence in the economy. Market participants paid no heed towards the Reserve bank of India (RBI) Governor Shaktikanta Das’ statement that structural reforms and fiscal measures may have to be continued and further activated to provide a durable push to demand and boost growth.
On the global front, European markets were trading in red, as Finland's manufacturing sentiment deteriorated in January. The survey data from the Confederation of Finnish Industries showed that the manufacturing confidence index decreased to -8 in January from -5 in December. The reading was well below its long-term average of +1. Asian markets ended lower, with most countries in the Asia-Pacific region celebrating the lunar New Year holiday. Most of the regional stock are also closed for the holiday, including South Korea, Malaysia, Singapore, Taiwan, China and Hong Kong, among others.
Back home, the infrastructure sector stocks remained in focus, on the back of the Union minister Nitin Gadkari’s statement that the government plans to complete three of the 22 expressways and green corridors in the next three years, including the flagship Delhi Mumbai Expressway being built at a new alignment. Stocks related to the jewellery industry also remained in watch, amid the commerce ministry’s data report showing that gold imports fell 6.77% to $23 billion during the April-December period of the current financial year.
Finally, the BSE Sensex slipped 458.07 points or 1.10% to 41,155.12, while the CNX Nifty was down by 129.25 points or 1.06% to 12,119.00.
The BSE Sensex touched high and low of 41,516.27 and 41,122.48, respectively and there were 09 stocks advancing against 21 stocks declining.
The broader indices ended mixed; the BSE Mid cap index lost 0.40%, while Small cap index was up by 0.03%.
The lone gaining sectoral index on the BSE was Healthcare up by 1.43%, while Metal down by 3.25%, Telecom down by 1.75%, Power down by 1.48%, PSU down by 1.37% and Bankex down by 1.18% were the top losing indices on BSE.
The top gainers on the Sensex were Mahindra & Mahindra up by 1.85%, Ultratech Cement up by 1.05%, Tech Mahindra up by 0.50%, ICICI Bank up by 0.45% and Axis Bank up by 0.37%. On the flip side, Tata Steel down by 4.31%, Indusind Bank down by 3.37%, HDFC Bank down by 2.51%, SBI down by 2.42% and Power Grid down by 2.26% were the top losers.
Meanwhile, the government is likely to soon decide on allowing Indian companies to list their equity shares in foreign countries. Overseas listing of shares would help is providing an additional fund raising avenue for the corporates looking to expand and boost their business activities along with help in bringing more capital into the country. Many companies are interested in listing their equity shares in foreign countries.
Presently, quite a few Indian companies have American Depository Receipts (ADRs) that are traded in the US. Some other corporates have their Global Depository Receipts (GDRs). The corporate affairs ministry and markets regulator SEBI are in favour of allowing Indian firms to list their equity shares overseas. Other departments and regulators are also expected to be on board.
A decision is likely soon and changes would need to be done in the companies law and SEBI regulations for permitting listing of domestic companies overseas. Further, only public companies are likely to be given permission for overseas listing of equity shares. A depository receipt is a foreign currency denominated instrument, listed on an international exchange, issued by a foreign depository to a domestic custodian and includes GDRs.
The CNX Nifty traded in a range of 12,216.60 and 12,107.00. There were 11 stocks advancing against 39 stocks declining on the index.
The top gainers on Nifty were Dr. Reddy’s Lab up by 5.56%, Mahindra & Mahindra up by 1.87%, Cipla up by 1.17%, Ultratech Cement up by 0.93% and Eicher Motors up by 0.77%. On the flip side, Vedanta down by 4.84%, Tata Steel down by 4.73%, JSW Steel down by 4.25%, Indusind Bank down by 3.12% and Hindalco down by 2.63% were the top losers.
European markets were trading in red; UK’s FTSE 100 decreased 167.24 points or 2.2% to 7,418.74, France’s CAC fell 121.18 points or 2.01% to 5,903.08 and Germany’s DAX was down by 255.02 points or 1.88% to 13,321.66.
Asian markets ended lower on Monday amid lingering worries over the potential impact of a new coronavirus that has killed at least 80 people in China. Trading volumes were thin as several markets including China, Hong Kong, Malaysia, Singapore, South Korea and Taiwan were closed for public holidays. Japanese shares ended down as the coronavirus infection has spread to France, Nepal, Australia, and Malaysia, with investors nervously watching reports about the increasing number of patients. Investors also shifted their focus to corporate earnings results that will be out this week.
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