Sensex, Nifty fall over 2% on poor macroeconomic indicators

Worries over the deteriorating health of the Indian economy spooked investors as the domestic equity market witnessed strong selloff on September 3.

The market witnessed some recovery last week after FM Nirmala Sitharaman introduced a slew of measure to revive economy. However, gross domestic product (GDP) data released on August 30, which marked growth at 5 percent in April-June 2019, ruined investor sentiment. The GDP growth was at 8 percent in the same quarter of 2018-19.

Gross value added (GVA), which is GDP minus taxes, and, therefore, a more realistic proxy to measure economic activity, grew 4.9 percent in April-June, compared to 7.7 percent in the same period in 2018 and 5.7 percent in January-March this year.

Besides, an alarming fall in auto sales numbers during the month of August aggravated the worries. Domestic passenger vehicle sales dropped 30.9 percent year-on-year (YoY) to 1,95,558 units in August 2019, falling for the tenth consecutive month.

The market opened in the lower terrain on September 3 in the light of weak macroeconomic indicators and lurched sharply lower in the afternoon trade.

Other than the worries over poor health of the domestic economy, rupee’s fall against the US dollar, weak global sentiment and sustained capital outflow of foreign funds continued weighing on market sentiment.

The Indian rupee suffered a significant loss on September 3, closing at fresh 2019 low at 72.39 per dollar, down by almost 99 paise from the previous close.

Sensex closed with a strong loss of 770 points, or 2.06 percent, at 36,562.91, with only two stocks – Tech Mahindra (up 1.24 percent) and HCL Technologies (up 0.62 percent) in the green.

ICICI Bank (down 4.45 percent) emerged as the top loser in the Sensex pack, followed by Tata Steel (down 3.93 percent), Vedanta (down 3.70 percent), HDFC (3.67 percent) and IndusInd Bank (down 3.61 percent).

The Nifty50 finished 225 points, or 2.04 percent, down at 10,797.90, with 48 stocks in the red.

BSE Midcap and Smallcap indices closed the day 1.65 percent and 1.32 percent down, respectively, outperforming Sensex.

All sectoral indices on the BSE settled with losses, with BSE Metal (down 3.23 percent) as the top loser.

Energy, basic materials, finance, industrials, telecom, utilities, bank, capital goods, consumer durables, oil & gas, power and realty packs declined over 2 percent each.

The breadth of the market remained heavily tilted towards decliners as 1,613 stocks incurred losses on BSE against 817 that logged gains. Some 178 stocks remained unchanged.

As many as 207 stocks, including IRB Infrastructure Developers, Bharat Forge, Canara Bank, Union Bank of India and Indiabulls Integrated Services, hit 52-week lows on BSE.

The sharp selloff in equities dragged the overall market capitalisation of BSE listed firms to Rs 1,38,42,866.10 crore against Rs 1,40,98,451.66 on August 30, making investors poorer by Rs 2.56 lakh crore in just one session.

Top news of the day:

The Supreme Court said the CBI custody of former finance minister P Chidambaram would continue till September 5 in the INX Media corruption case.

Prime Minister Narendra Modi and Russian President Vladimir Putin will hold a bilateral meeting in Vladivostok later this week. The manufacturing of assault rifles and military helicopters in India will be among the top items on the agenda.

British Prime Minister Boris Johnson will seek a general election on October 14 if Members of Parliament (MPs) block the option of leaving the European Union (EU) without a deal.

Prime Minister Imran Khan said his government will issue multiple and on-arrival visas to Sikhs pilgrims coming from India.

RBI has extended KYC deadline by 6 months by giving mobile wallet companies time till February 29, 2020, to comply with Know Your Customer (KYC) norms.

Four people have been killed and three seriously injured in a fire at an ONGC site in Mumbai, Reuters reported.

Stocks in news:

Shares of Reliance Power surged 8.64 percentto close at Rs 3.52 on BSE after it said it has signed a partnership agreement with Japanese energy major JERA for jointly setting up 750 megawatt (MW) gas-based combined cycle power project (phase-1) at Meghnaghat, Bangladesh.

Shares of IDBI Bank settled at Rs 28.80, up 7.66 percent, after reports that LIC and government will infuse funds in the bank. Of the Rs 9,300 crore needed, LIC would infuse Rs 4,743 crore and the government will infuse Rs 4,557 crore.

Shares of MOIL slipped 3.27 percent to Rs 121.30 after the company reduced prices of different grades of manganese ore and other products.

Shares of Reliance Naval and Engineering shed 4.35 percent to end at Rs 0.88 after its subsidiary company admitted for a corporate insolvency resolution process.

Shares of Oil and Natural Gas Corporation (ONGC) slipped 3.34 percent to Rs 117.15 after a major fire broke out at the company’s Uran plant in Maharashtra.

Tata Steel shares declined 3.93 percent to Rs 331.40 after the company announced the sale of some of its European business.

PSU bank stocks ended with deep cuts. The weakness appeared to be a fallout of the government’s announcement of the merger of 10 PSBs into four on August 30 and the worries surrounding it. The Nifty PSU Bank index closed 4.87 percent down with all components in the red. Indian Bank (down 11.96 percent), Canara Bank (down 11.94 percent) and Union Bank of India (down 10.11 percent) emerged as the top losers in the index.

Global markets:

European shares fell for the first time in four sessions, as uncertainty over Britain’s chaotic exit from the European Union and trade tensions between the United States and China weighed on sentiment, reported Reuters.

Asian markets ended slightly lower on the trade war concerns. Nikkei ended flat at 20,625.16, while Kospi was down 0.18 percent at 1,965.69.

Technical view:

Nifty broke multiple support levels on intraday charts and closed below 10,800.

“Going ahead 10,775 will be crucial for any upmove to be seen in the next couple of days. However, if Nifty trades below 10,775 consistently then it can approach the previous panic low of 10,640,” said Gaurav Bissa, AVP Derivatives & Technicals, LKP Securities.Get access to India’s fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code “GETPRO”. Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.