Sensex slips 281 points to close at 33,033; did Q2 earnings fail to justify the rally?

Indian stock market tumbled on Monday as caution flows among the investors following mixed corporate earnings for the second quarter of the financial year 2018. BSE Sensex ended lower by 0.84% or 281 points at 33,033.56 while NSE Nifty lost 0.94% or 96.8 points to settle at 10,224.95. A profit booking in the shares of heavyweight companies such as HDFC, ICICI Bank, L&T, Reliance Industries and ITC led to a heavy slump in the key indices. During the day, the benchmark Sensex dropped 314.58 points made a low of 32,999.98 whereas the broader Nifty lost as much as -105.5 points to mark the day’s low of 10,216.25.

Earlier on Friday, Leo Puri, Managing Director of UTI Asset Management Company in an interview to ET Now said, “ In the long-run, we have to look for earnings, and earnings recovery, but that remains tepid. There are early signs, but it will take at least 12-18 months for strong earnings recovery.”

Shares of Adani Ports, Coal India, ONGC, HDFC, L&T, Tata Steel, ICICI Bank lost up to 4.1% while TCS, M&M, and Sun Pharma gained up to 2.06%. Shares of Adani Ports and Special Economic Zone plunged 4.6% to the day’s low of Rs 411.9 before closing down 4.11% at Rs 414.05 after the logistics arm of Adani Group reported a 7.88% decline in consolidated net profit to Rs 992.37 crore for the second quarter ended 30 September. The heavyweight stocks of HDFC, L&T, ICICI Bank, RIL, ITC, ONGC, Infosys contributed the most to the Sensex decline. These six stocks washed off about 215 points out of the 281-point slump in the index while TCS helped to trim the losses, stock alone added 29 points to the index.

Lower-than-expected macroeconomic data and dull Q2 earnings and the curiousness over CPI inflation data which is scheduled to be released later in the day led the pessimism amid market participants. Indian rupee also tripped heavily today, depreciated by 35 paise to 65.51 against the dollar during the day on fears that the tax rate decision of the GST Council will have a revenue implication of Rs 20,000 crore annually. Industrial production (IIP) grew at a slower pace of 3.8% in September, mainly due to the subdued performance of the manufacturing sector coupled with the contraction in output of consumer durables.

Foreign portfolio investors (FPIs) sold shares worth a net Rs 529.22 crore last Friday, as per provisional data released by stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 1,920.87 crore. Among the regional markets, the Shanghai Composite Index rose 0.4% to 3,447.84 while Tokyo’s Nikkei 225 fell 1.3% to 22,380.99, Hong Kong’s Hang Seng gained 0.2% to 29,182.18 and Seoul’s Kospi shed 0.5% to 2,530.35.