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Market mayhem: Sensex, Nifty down 21% from record highs


Moneycontrol Bureau

10:55 am Fund raising:

State-owned IDBI Bank raised Rs 1,000 crore from bonds on private placement basis to fund infrastructure projects.

IDBI Omni Infrastructure Bonds 2015-16 Series III are unsecured, non-covertible redeemable bonds, the bank said in a statement.

The 10-year bonds will have coupon rate of 8.80 percent, it added.

10:45 am Gold discounts: Indian gold traders say they are struggling to draw buyers despite offering record discounts over rallying international prices, as consumers wait to see if rates can fall further after the federal budget this month.

The bullion industry expects the government to cut the record 10 percent import duty on gold in the annual budget for 2016/17 that will be presented on Feb. 29, potentially boosting supply and driving domestic prices lower.

Indian gold prices also swung into deep discounts before the last budget, when the government surprised the market with no cut in duty on the metal. India is the world’s second biggest gold consumer.

10:30 am Market outlook: The Indian market has been caught in a global storm that has engulfed equities but seasoned analysts are advising that investors should stay the course and not jump out of stocks.

“The Indian economy is fundamentally strong. While we may see panic for the next few months, investors will come back,” Edelweiss CEO Rashesh Shah told CNBC-TV18. He added that the market would also take cues from the Union Budget, which the government must ensure is reform-oriented and kickstarts consumption.

Valuations-wise, the Indian market has reverted to its historical average, said Sanjay Mookim of Bank of America-Merrill Lynch. “We expect earnings to grow 12 percent next fiscal, thanks to a modest consumption-led recovery.”

10:15 am World news: Markets are tensed up ahead of testimony from Fed Chair Janet Yellen, who is expected to attempt to balance the central bank’s stated goal of raising interest rates against the risks of a weaker global economy.

Yellen is scheduled to testify on the economy before congressional committees Wednesday and Thursday. She is likely to be asked about everything from rate hikes to banking reform. But her bigger audience will be world financial markets, rattled by the fact that the Fed’s forecast continues to show rate hikes as markets gyrate over fears of a weakening world outlook and divergent central bank maneuvering.

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Mayhem in market continues as selling pressure intensifies led by banks, capital goods, pharma and metals. Both the benchmark indices are down 21 percent from record highs. The Sensex is down 193.01 points or 0.8 percent at 23827.97 and the Nifty is down 59 points or 0.8 percent at 7239.20. About 406 shares have advanced, 1315 shares declined, and 73 shares are unchanged.

Tata Motors, Adani Ports, Dr Reddy’s Labs, ICICI Bank and Axis Bank are major laggards in the Sensex. Infosys, HUL and TCS are gainers in the Sensex.

Asian equity markets remained wobbly after being hit hard early in the week by worries about the health of the euro zone banking sector, with very accommodative monetary policy seen crimping bank profits and their ability to repay debt.

Trouble for equities has meant a boon for government bonds, with the Japanese government bond 10-year yield at minus-0.035 percent after dropping into the negative for the first time on Tuesday. The US Treasury benchmark yield stood near a one-year trough and the 10-year German bund yield was at its lowest in 10 months.

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