Sensex plunges 505 points over rupee woes, trade tiff

The benchmark indices ended in the red on Monday for the third time in the last five trading sessions as rupee woes and global trade war worries spooked investors despite the government announcing measures to stem a steep fall in the domestic currency.

The Sensex closed at 37,585.51 down 505.13 points or 1.3%, while the broader Nifty ended the session at 11,377.75 with a loss of 137.45 points or 1.2%.

With Monday’s loss, the Sensex has shed 804.31 points in the last five trading sessions.

As the broader market breadth was firmly tilted in favour of sellers throughout the year, a significant clutch of companies listed on the NSE ended mostly in the red in 2018 so far. Of the 177 trading days so far this year, 113 days saw a higher number of decliners than advancers with February 2 witnessing as many as 1,618 decliners against just 87 advancers.

Amid weak sentiment, more than half of the companies with a market capitalisation of Rs 1,000 crore have lost over 10% of their value since January 1, leaving investors with little reasons to cheer. Of the 789 companies in this universe, 305 have lost more than 20% of their value, while about a third have lost more than 25%.

The Nifty MidCap Index has given up about 9% since the start of the year, and 67% of its constituents have lost value. The Nifty Small Cap Index has shed 18.6% since January, and 85% of its members have seen a fall in prices.

Of the 19 sectoral indices, all barring BSE Utilities, BSE Power and BSE Realty posted losses on Monday with BSE Finance, BSE Energy and BSE FMCG losing anywhere between 1.2% and 1.4%.

The stocks that pulled down the Sensex are Reliance Industries (RIL), HDFC, HDFC Bank, ITC and Infosys. These five companies together have contributed 320 points to the index fall of 505.13 points on Monday.

Goldman Sachs has lowered its rating on the country’s equity market to ‘marketweight’ from ‘overweight’ citing a less favourable environment amid elevated valuations, a potential slowdown in economic growth and upcoming elections.

“Valuations are stretched for Indian equities and are the most expensive in Asia, trading at a record 58% premia to region. At these levels, equities have historically posted negative returns over next 3-6 months” the brokerage said in a note dated September 16.

At 37,585.51, the benchmark Sensex trades at a price-earnings (PE) of 18.4 times to the estimated one-year forward earnings, a premium of 13% to the long-term average PE of 16.2 times. This compares with 8.7 times for Kospi and 13.7 times for Jakarta Composite. Brazilian Bovespa and the Shanghai Composite are trading at a PE of 9.9 and 9.7 times respectively, data from Bloomberg showed.

Foreign portfolio investors (FPIs) sold shares worth $14.7 million on Monday, showed provisional data on the stock exchanges, taking their year-to-date sales tally in 2018 to $909 million. This compares with the domestic institutional investors’ (DIIs) buying of a whopping $10.5 billion so far this year.