Stocks catch China flu, Sensex drops 156 pts

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NEW DELHI: Banking and financial stocks pulled equity indices lower on Monday, taking the overall market fall to the third straight session.

Indian markets fell in line with global peers after China’s December exports unexpectedly fell, pointing to weakness in the world’s second-largest economy, sparking fears of a global growth slowdown.

Weak macros in the form of a losing rupee and poor factory output growth did not help the cause of the bulls.

The BSE Sensex dropped 156 points, or 0.43 per cent, to 35,854 while its NSE counterpart Nifty slipped 57 points, or 0.53 per cent, to settle at 10,738.

In the Sensex heatmap, seven ended higher while 23 ended lower. YES Bank was the lead gainer with a rise of 5.98 per cent following the appointment of Brahm Dutt as the non-executive chairman of the bank. Reports were also doing rounds that Ravneet Gill, CEO of India, Deutsche Bank AG, is in race to succeed Rana Kapoor.

Infosys gained 2.54 per cent post its December quarter results.

However, L&T shed the most at 2.64 per cent. IndusInd Bank, Vedanta, Power Grid, NTPC and TCS were among other top losers, declining up to 2 per cent.

Jet Airways surged 16 per cent and was one of the top performers on the BSE following reports that founder and Chairman Naresh Goyal is likely to step down from the board of the embattled company and give up majority control.

Meanwhile, Avenue Supermarts with a fall of over 11 per cent turned out to be the biggest loser after as its profit for the December quarter came in flat as against a growth of 10-18 per cent as expected by analysts. Slow store addition added to investors’ concerns.

Both midcap and smallcap indices fell in step with the Sensex, weakening 0.49 per cent and 0.44 per cent, respectively.

BSE Capital Goods, Utilities, Metals and Power were the worst sectoral performers, declining over 1 per cent each. IT was the sole sector that rose today while BSE Teck remained unchanged.

Factors that dragged markets lower:

1.
Weak Chinese data

Latest data from China showed imports fell 7.6 per cent year-on-year in December when analysts had predicted a 5 per cent rise, while exports dropped 4.4 per cent, confounding expectations for a 3 percent gain, according to Reuters.

This heightened concerns of a global growth slowdown and dented investor sentiment across the globe. MSCI’s broadest index of Asia-Pacific ex-Japan shares lost around 1 per cent while index of Europe’s leading 300 shares slipped 0.7 per cent in early trade and Germany’s DAX and France’s CAC fell around 0.6 per cent.

2.
Rupee trades lower

The rupee weakened further against dollar and lost over 40 paise to hit intraday low of 70.89. At the time of writing this report, the domestic unit was down 30 paise at 70.83 against the greenback.

3.
Factory output fizzles out

Industrial output growth dropped to a 17-month low of 0.5 per cent in November on account of contraction in manufacturing sector, particularly consumer and capital goods. The previous low was in June 2017, when IIP growth contracted by 0.3 per cent.

Expert-view:

Vinod Nair, Head of Research, Geojit Financial Services

“Early hiccups to Q3 results due to mixed outcome from IT and bank blue-chips negatively influenced the domestic market. Additionally, sharp fall in IIP and headwinds from global market due to slowdown in the world economy, US shutdown and Brexit impacted sentiment. Consolidation in domestic market was broad based as FIIs were on a selling mode while DIIs were on the sidelines due to concerns over oil prices, weak rupee and fiscal deficit.”

Source: Economic Times