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Sensex sheds 205 points, Nifty below 12,200 on earnings, growth concerns

Tata Steel was the biggest loser in the Sensex kitty of stocks, down 3.01 per cent.

, ETMarkets.com|
Last Updated: Jan 21, 2020, 04.19 PM IST
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Market breadth leaned in favour of the bears. The advance-decline ratio on BSE stood at nearly 2:3, indicating that for every five stocks that traded, three declined.
MUMBAI: Benchmark equity indices ended Tuesday’s session on a poor note, in line with the weakness in world equities, after the International Monetary Fund (IMF) slashed its growth outlook for India.

Moreover, a muted Q3 earnings season also weighed on sentiment on the Street.

The 30-share Sensex dropped 0.49 per cent or 205 points to close at 41,324, while the 50-share Nifty shed 0.45 per cent or 55 points to close at 12,170.

IMF on Monday slashed its estimate on India’s 2019 economic growth to 4.8 per cent from the 6.1 per cent expansion it projected in October, citing a sharper-than-expected slowdown in local demand and stress in the non-bank financial sector.

The steep cut in India’s growth rate has weighed on IMF’s projection on the world economy, which it now expects to have expanded 2.9 per cent in 2019 compared with the previous forecast of 3.0 per cent.

Market breadth leaned in favour of the bears. The advance-decline ratio on BSE stood at nearly 2:3, indicating that for every five stocks that traded, three declined.

Markets at a glance
In the Sensex pack, 21 of 30 stocks closed lower. Private lender HDFC Bank contributed the most to Sensex’s losses as it dropped 0.86 per cent. Cigarettes-to-hotels business ITC followed next, as it declined 1.49 per cent.

Tata Steel was the biggest loser in the Sensex kitty of stocks, down 3.01 per cent. Utilities vehicle maker Mahindra & Mahindra followed suit, with a 2.42 per cent decline.

On the other hand, Ultratech Cement, Kotak Mahindra Bank, Bharti Airtel and HDFC were the top gainers.

Midcap and Smallcap indices outperformed benchmark Sensex. The BSE Midcap index shed 0.21 per cent, while the BSE Smallcap index closed flat.

In the sectoral space, only three of 19 sectors ended in the green. BSE Power index was the top sectoral loser, down 1.47 per cent. It was followed by BSE Realty, BSE Metal and BSE Auto that declined 1.44 per cent, 1.32 per cent and 1.24 per cent, respectively.

BSE Telecom index, however, rallied 2.12 per cent and was the biggest sectoral gainer.

Shares of Vodafone Idea jumped 21.81 per cent after the Supreme Court agreed to hear the modification applications of telecom players including Tata Teleservices on AGR dues next week. Meanwhile, rival Bharti Airtel dropped 0.13 per cent.

This implies that the telcos do not have to pay their statutory dues by January 23, till the apex court’s further directions, granting them some relief.

Analysts’ views
"Investors are profit booking in mid & small caps post the decent pre-budget rally. Some subdued results in Q3 compared to the solid expectation triggered a consolidation in the market. We believe this is a rational reaction of the market which will hold in the short-term and can reverse as per the final outcome of Budget & Q3FY20 results.”

-- Vinod Nair, head of research, Geojit Financial Services.

“The bears continued to dominate for the second consecutive session as IMF cut India’s GDP growth forecast to 4.8%. Further, the global cues also remained unsupportive in today’s trade as Moody’s cut its rating for Hong Kong markets. We reiterate our cautious view on the Indian markets given the stretched valuation and muted start to the earnings season. Going forward, the IMF growth forecast cut will likely raise hopes amongst market participants of a big bang Budget. This is likely to drive momentum for sectors in the coming sessions. Further, the earnings announcement for corporates would also induce stock specific volatility.”

-- Ajit Mishra, VP - Research, Religare Broking Ltd.

Global markets
World stocks took a sudden turn for the worse on Tuesday as mounting concerns about a new strain of corona virus in China sent a ripple of risk aversion through markets, Reuters reported.

MSCI's broadest index of Asia-Pacific shares outside Japan slipped 1 per cent after a steady start. The pan-European STOXX 600 dropped 0.7 per cent with all major sub sectors in negative territory.

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