Markets LIVE: Sensex Sinks 1,000 Points, Nifty Just Above 10,300; Hasmukh Adhia to Discuss Slump With Arun Jaitley

PNB Q3 EARNINGS | Punjab National Bank's Q3 earnings missed analyst expectations, but asset quality improved over previous quarter. Net profit at Rs 230.1 crore and net interest income at Rs 3,989 crore were below CNBC-TV18 poll of Rs 558.1 crore and Rs 4,122.9 crore, respectively. Gross non-performing assets were lower at 12.11 percent compared to 13.31 percent in previous quarter. Net NPAs als improved to 7.55 percent from 8.44 percent on sequential basis.

Dollar Holds Firm as Investors Scurry to Safety

The dollar stood tall on Tuesday as a rout in global equities prompted anxious investors to cut exposure to riskier assets and seek shelter in the relative safety of the greenback. The US currency held firm against most of its counterparts, although it slipped against the yen, which is viewed as a safe haven in times of market turmoil due to Japan's current account surplus. The dollar slipped to as low as 108.46 yen as the shakeout in equities persisted in Tuesday's Asian trade, but later pared its losses and last changed hands at 108.93 yen, down 0.1 percent on the day. Investor risk aversion triggered a drop in U.S. bond yields, leading to the fall in the dollar against the yen, said Sim Moh Siong, FX strategist for Bank of Singapore.

EXPERT SPEAK | Hemang Jani, head of advisory at Sharekhan.com advises that if an investor has surplus funds and has a timeframe of more than 12-24 months, this is the time to increase the allocation to equities as there is a meaningful correction in the market after a long time. Jani sees this as an opportunity for retail investors as this is happening at a time when earnings growth revival is seen across companies after a gap of almost 3 years. Some of the companies like Maruti, Escorts, HDFC, HDFC Bank, L&T and JSW Steel, which have reported good numbers this quarter and have upside potential of more than 15 percent, can be looked at in the positive light, he says.

MORNING WRAP OF INDIAN MARKETS | The benchmark BSE Sensex languished on across the board sell-off, slumping 1,025 points or 2.95 per cent in late morning deals crumbled by sharp losses in global markets. Earlier, the benchmark plunged 1,274.35 points on heavy unwinding suffered after a record-breaking loss on Wall Street after investors fret over rising US borrowing costs. Selling was led by Realty, Consumer Durables, Banks, Financials, Metal, Industrials, FMCG, Auto, IT, Teck, Power, Telecom, Energy and Utilities. The second line midcap and smallcap company shares also witnessed heavy unwinding. The 30-share Sensex was trading lower by 1025.37 points at 33,731.79 at 11:15am. The broader Nifty was also trading below 10,400-level by falling 311.35 points or 2.92 per cent at 10,355.20. Major losers were Tata Motors 5.19 per cent, Axis Bank 4.78 per cent, Tatamtrdvr 4.16 per cent, Yes Bank 4.08 per cent and HUL 3.65 per cent. Asian market tanked following a sharp sell-off on Wall Street. US stocks tumbled yesterday, as interest rates headed higher amid concerns of returning inflation. The Dow suffered its record points fall, erasing all of its 2018 gains.

ANALYSIS | The speed of Monday's jaw-dropping sell-off on Wall Street had traders and investors bumped and bruised. But few seemed surprised that a pullback had actually happened. Some were looking for the right time and opportunity to wade back in — but wary of catching a falling knife, says Reuters. Stocks have been on a bull run since 2009, accelerated in the last year by strong earnings and the Trump administration's corporate tax cut. The S&P 500 rose 19 percent in 2017 alone. But with valuations sky high after the buying binge carried deep into January, something had to give. The down days started last week. The shakeout accelerated on Friday, with the S&P's biggest drop since September 2016 after jobs data raised the spectre of inflation and spooked investors. Monday started out in the red, but calm. The afternoon was anything but, as frantic selling set in. The Dow briefly entered correction territory on Monday with a 10 percent dip from its January 26 record. It ended down 4.6 percent on the day, while the S&P 500 fell 4 percent. Since the S&P's January 26 all-time high it has fallen 7.8 percent. Of its 11 sectors, energy led the decline with a 10.5 percent drop followed by a 9.4 percent drop in healthcare and an 8.8 percent drop in materials. The best performer was utilities with a decline of just under 4 percent (3.97) followed by real estate which fell 5.1 percent and telecom, which fell 5.5 percent. After the close of trading, equity futures traded sharply down, indicating another day of selling was ahead.

Here's a list of top midcap losers as reported by moneycontrol.com

Task to Strengthen Public Finances Left to Next Govt: Fitch

The deferral of fiscal consolidation roadmap has left the task of strengthening weak public finances to the next government after the 2019 General Elections, Fitch Ratings said today. The government has revised its 2018-19 fiscal deficit projections to 3.3 per cent of GDP and for current fiscal to 3.5 per cent of GDP, compared with original targets of 3 per cent and 3.2 per cent, respectively. The postponement of consolidation in part reflects policies to support the economy, which was held back last year by weak investment and disruptions from demonetisation and the introduction of the Goods and Services Tax (GST), Fitch said. "The Indian government's budget has pushed back fiscal consolidation, leaving much of the task of addressing the country's relatively weak public finances to the next administration," Fitch Ratings said in a statement. However, the budget target revisions are modest, and are balanced by positive reform momentum and a strong economic outlook, the US-based agency said.

RBI to Leave Interest Rates Unchanged Despite Inflation Concerns, Says Reuters Poll

The Reserve Bank of India will keep interest rates on hold through at least the middle of 2019 even though inflation is above its medium-term target and is expected to stay that way, a Reuters poll found. A majority of economists also expect the central bank's tone to turn hawkish when it announces its latest policy decision on Wednesday. While retail inflation hit a 17-month high in December and is expected to remain above the RBI's 4 percent target over the coming 12 months, growth in Asia's third-largest economy likely slowed markedly in the fiscal year ending March 31, complicating the RBI's policy path. In the poll of 60 economists, taken after the budget announcement, 58 said the RBI would keep key rates unchanged — the repo at 6.00 percent and the reverse repo at 5.75 percent — when it meets on Wednesday. The other two forecast an increase.

Hasmukh Adhia to Discuss Market Slump With Arun Jaitley

Finance Secretary Hasmukh Adhia says government will look into what it can do over the slump in domestic market. He adds that he will discuss the issue with Finance Minister Arun Jaitley. When asked if the government will scrap or review the long term capital gains tax which was introduced last week in the federal budget, Adhia said the local markets are mimicking global weakness, "but the government will look into what it can do". Indian shares on Tuesday slid more than 3 percent and the rupee weakened as a global market rout whacked sentiment, adding to existing investor concerns ahead of a central bank meeting this week and a new capital gains tax later in the year.

EXPERT SPEAK | Is it a good time to buy? Bloomberg quotes Gautam Duggad of  Motilal Oswal Institutional Equities, as saying that it’s a “good opportunity. “The fact that we did not have any significant drawdown in 2017 is making the current correction look more ominous than it is. However, with earnings recovery... we believe the correction is offering a good opportunity to buy from a two-three year perspective.”

#MarketSellOff | Tata Steel recovers 2% from day's low pic.twitter.com/gML6vBbZiH

— CNBC-TV18 (@CNBCTV18Live) February 6, 2018

It’s Ebb and Flow, Says US Veep Mike Pence

US Vice President Mike Pence is characterising the Wall Street’s Monday plunge as "simply the ebb and flow of our stock market" and is urging people to focus on the fundamentals of the US economy. Pence says those fundamentals continue to be "very strong." He cites job growth, low unemployment and growth in wages. The Dow Jones industrial average plunged more than 1,100 points Monday with stocks taking their worst loss in six and a half years. In speaking to reporters in Anchorage, Alaska, Pence said the economy "is on the move" and that Americans can be confident that President Donald Trump will continue to advance policies that will continue to contribute to the economy's momentum. Pence is on a six-day trip to Japan and South Korea.

BSE Sensex was down 2.17% or 754.58 at 34,0002.60, while the 50-script Nifty recorded 10,312.50 points, down 3.32% or 354.00 points.

NIKKEI CLOSING | Tokyo's benchmark index closed down 4.73 percent on Tuesday as investors took their lead from a sell-off on Wall Street, while a surging yen hit exporters. The benchmark Nikkei 225 index closed down 4.73 percent or 1,071.84 points at 21,610.24, after diving more than seven percent earlier. It is the worst single-day fall in percentage points since the November 2016 election of US President Donald Trump. The broader Topix index slumped 4.40 percent, or 80.33 points, to 1,743.41. "Investors fled to sell after the large drops on Friday and Monday" on Wall Street, said Toshihiko Matsuno, analyst at SMBC Nikko Securities. "The gains since the turn of the year were rapid and the sudden downturn came as a shock," he told AFP.

Spotlight on Virtual Currencies as Bitcoin Plunges

Digital currencies such as Bitcoin will be in the spotlight again on Tuesday as lawmakers in the US Senate question top markets watchdogs over how to better regulate the highly volatile and risky emerging asset class. Christopher Giancarlo, chairman of the Commodity Futures Trading Commission (CFTC), and Jay Clayton, chairman of the Securities and Exchange Commission (SEC), will give testimony to the Senate Banking Committee amid growing global unease about the risks virtual currencies pose to investors and the financial system. The hearing follows a rout in the price of Bitcoin, which plunged more than 15 percent to near a three-month low on Monday on concerns ranging from a global regulatory clampdown to a ban by some banks on using credit cards to buy Bitcoin. On the Luxembourg-based Bitstamp exchange, Bitcoin fell as low as $6,853.53 in early afternoon trading in New York. That marked a fall of more than half from a peak of almost $20,000 in December. The currency surged more than 1,300 percent last year.

RUPEE UPDATE | The rupee fell by 23 paise to hover near one-and-a-half-month low at 64.30 against the US currency in late morning on sustained bouts of dollar demand from importers and banks amid sell-off in local equities. The rupee opened sharply lower at 64.35 per dollar as against yesterday's closing level of 64.07 at the inter-bank foreign exchange here. It plunged further to 64.40 taking cues from weak domestic equities reacting to global sell-off. The benchmark Sensex fell over 1,200 points in early trade. The Indian unit were trading between 64.40 and 64.30 per dollar during morning deals. The US dollar stood tall against its major rivals in early Asian trade as a rout in global equities prompted anxious investors to cut exposure to riskier assets and seek shelter in the relative safety of the greenback. The 30-share BSE Sensex slumped by 1,012.67 points or 2.91 per cent at 33,744.49 at 11:05 hrs.

Market Plunge Washes Away Rs 4.95 Lakh Crore Investor Wealth

Investors lost around Rs 4.95 lakh crore amid sell-off in the broader market today where the benchmark BSE Sensex tumbled 1,275 points or 3.6 per cent in opening trade. The BSE Sensex cracked below the 34,000-mark by plunging about 1,275 points or 3.6 percent in opening trade today due to across-the-board losses after investor sentiment was hit by a sell-off in world markets. Following the downfall, the total market capitalization of BSE listed companies eroded by Rs 4,94,766 crore to Rs 1,43,00,981 crore. Extending its falling streak for the sixth straight session, the 30-share index fell by 1,274.35 points, or 3.66 percent, to 33,482.81 with all sectoral indices led by realty, consumer durables, metal and banking tradings in the negative zone. On BSE, 2,221 stocks declined, while 169 advanced and 83 remained unchanged. 

EXPERT SPEAK | Are we witnessing a market bubble burst? Federal Reserve chief Janet Yellen said US stocks and commercial real estate prices are elevated, but stopped short of saying those markets are in a bubble. “Well, I don’t want to say too high. But I do want to say high,” Yellen said on CBS’s “Sunday Morning” in an interview recorded Friday as she prepared to leave the central bank. “Price-earnings ratios are near the high end of their historical ranges.” Commercial real estate prices are now “quite high relative to rents,” Yellen said. “Now, is that a bubble or is it too high? And there it’s very hard to tell. But it is a source of some concern that asset valuations are so high.”

It’s Ripple Effect, Says Finance Secretary Hasmukh Adhia

Finance Secretary Hasmukh Adhia says Indian markets are seeing ripple effect. “What happened on February 2 and 5 was mainly because of global shakeup. We aren't living in an island so there will be ripple effect of what is happening in the world on Indian stock markets. Otherwise, the Sensex and Nifty would have come down on Day 1 itself,” says Adhia.

Also, the government's decision to remove anti-money laundering regulation, the Prevention of Money Laundering Act (PMLA), from jewellery helped boost demand.

India VIX Goes Up Further

India VIX has increased further, rising 32.11 percent to 21.2075, indicating too much volatility going ahead. A high India VIX value would suggest that the market expects significant changes in the Nifty, while a low India VIX value would suggest that the market expects minimal change. It has also been observed that a negative correlation exists between the two. Volatility indices enable market participants to trade expected changes in market volatility in a single transaction. Investors expecting rising volatility levels will go long, whereas investors expecting decline in volatility will go short.

NIFTY ALL RED AGAIN | Not a single stock on Nifty 50 is trading in green, reports moneycontrol.com. HDFC Bank, HDFC, Reliance Industries, ICICI Bank, Tata Motors, ITC and L&T are top contributors to the fall, sinking 2.5-6 percent.

What White House Says on Dow Decline

After US stocks plummeted on Monday, the White House sought to play down concerns, saying President Donald Trump was focused on "exceptionally strong" underlying fundamentals in the economy. White House spokeswoman Sarah Sanders said the economy was experiencing "strengthening US economic growth, historically low unemployment, and increasing wages for American workers”. But Trump himself did not comment on the market, even as share prices sold off dramatically while he was touting the economy and last year's tax cuts in a speech in Ohio. That was a contrast to recent months when Trump has often talked about stocks, taking credit for the rally the market enjoyed during 2017 and the first few weeks of this year. It was a sign that Trump may be absorbing a tough message, underscored by former White House advisers, that American presidents traditionally have avoided commenting directly on Wall Street's fickle trends. Gene Sperling, a top economic adviser to Democratic former presidents Bill Clinton and Barack Obama, said Trump erred in recent months by focusing so heavily on the stock market.

Edelweiss Securities says it’s the right time to enter the markets.

#MarketSellOff | Edelweiss Securities sees current fall in market, a good opportunity to enter. It holds #Nifty target of 11,100 for the year pic.twitter.com/FlmyY4fWDE

— CNBC-TV18 (@CNBCTV18Live) February 6, 2018

Nikkei Down 7.1%, Japanese Officials Downplay Concerns

Top Japanese officials are seeking to downplay concerns about plunging share prices, pointing to strong growth and corporate earnings as reasons for calm. The comments came as the benchmark Nikkei 225 index dipped 7.1 percent in Tuesday afternoon (local time) trading, before recovering slightly. A short time later, the index was down 6.5 percent at 21,205.03. Japanese Finance Minister Taro Aso said he didn't want to comment on share prices, but he did ask reporters if corporate performances were getting worse, indicating they are not. Toshimitsu Motegi, an economy minister, said he was watching market movements closely but that the economy was stable and improving. By early afternoon in Asia, Dow and S&P futures were both down more than 4 percent, suggesting a weak open for US markets. 

EXPERT SPEAK | Sanjay Mookim of Bank of America Merrill Lynch says this is not the time to buy midcaps. “When market is underperforming, low PE stocks will perform well.”

The BSE had opened at 33,543.20 points, while the 50-share Nifty opened at 10,290.50 points. Both indices had already been reeling under the Long-Term Capital Gains tax on equity gains of more than Rs 1 lakh since the Budget.

India's Gold Demand Up 9% in 2017

India's gold demand grew by 9.1 percent to 727 tonne in 2017 due to low prices coinciding with Dhanteras, positive economic backdrop and improved consumer sentiment especially in rural areas, according to a World Gold Council (WGC) report. The total demand stood at 666.1 tonnes in 2016, WGC said in its latest Gold Demand Trends report. "The demand was mainly driven by jewellery, which  grew as GST stabilised, stock markets performed well and GDP growth leading to better economy and consumer sentiment, particularly in the rural areas, as the effect of demonetisation wore off," WGC Managing Director, India, Somasundaram PR told news agency PTI. Also, the government's decision to remove anti-money laundering regulation, the Prevention of Money Laundering Act (PMLA), from jewellery helped boost demand.

Gold Steadies After Friday's Slide

Gold prices steadied on Monday as a slide in stock markets helped the precious metal claw back some lost ground after logging its biggest one-day loss in two months in the previous session. Prices fell 1.2 percent on Friday after stronger-than-expected US payrolls data shored up expectations that a pickup in inflation would spur further US interest rate hikes this year. That boosted the US dollar, in which gold is priced. The greenback rose slightly on Monday, while stock markets were routed around the globe as resurgent US inflation raised the possibility that the Federal Reserve would tighten policy more aggressively than previously expected. Spot gold steadied at $1,334.40 an ounce by 1:34 pm EST (00:04 IST), still well below late January's 17-month high of $1,366.07. US gold futures for April delivery settled down 80 cents, or 0.1 percent, at $1,336.50.

Bulls argue that strong US corporate earnings, including a boost from the Donald Trump administration's tax cuts, will ultimately support market valuations. Bears, including short sellers that bet on the market decline, say that the market is over-stretched in the context of rising bond yields as central banks withdraw their easy money policies of recent years. The US stock market has climbed to record peaks since President Donald Trump's election, on the prospect of tax cuts, corporate deregulation and infrastructure spending, and it remains up 23.8 percent since his victory. Trump has frequently taken credit for the rise of the stock market during his presidency, though the rally and economic recovery was well underway during the Obama administration. As the stock market fell on Monday, the White House said the fundamentals of the US economy are strong. US economic growth was running at a 2.6 annualised rate in the fourth quarter last year and the unemployment rate is at a 17-year low of 4.1 percent.