Sensex, Nifty fall amid concerns over earnings, economic slowdown

The index of industrial production rose 0.5%, its slowest growth since June 2017 as manufacturing output fell

The benchmark indices fell 0.5 per cent on Monday amid investor concerns regarding a weak start to the results season and worries over slowdown in economic growth. The Sensex fell 156 points, or 0.43 per cent, to end at 35,853.56, while the Nifty ended at 10,737.60, down 57 points, or 0.53 per cent.

Two of the three Nifty50 companies that have announced results missed analysts’ expectations.  Tata Consultancy Services (TCS), the biggest Indian company by market capitalisation, had missed consensus estimates for revenue and operating margins. Similarly, Infosys missed consensus estimates for its net profit.

Market participants said the earnings growth is unlikely to happen in the next two quarters. “Earnings, especially in automobiles and consumer durables, may be somewhat muted because the peak period for sales (September-November) was affected due to the non-banking financial company crisis. Moreover, real estate growth remains sluggish. If the realty market does not pick up, none of the industries will move significantly,” said Siddhartha Rastogi, managing director, Ambit Asset Management.

The index of industrial production rose 0.5 per cent, its slowest growth since June 2017 as manufacturing output fell.  Market participants said the fall in manufacturing output has added to concerns of slower economic expansion in the second half of the year. 

The weakness in other Asian markets also weighed on investor sentiment. Asian markets fell after China’s overall December exports unexpectedly fell 4.4 per cent from a year ago, the biggest monthly slide in two years.  Market participants said the fall in Chinese exports points to further weakness in the world’s second-largest economy in 2019 and deteriorating global demand.

Foreign portfolio investors sold shares worth Rs 732.46 crore, while domestic institutional investors bought shares worth Rs 527.49 crore.

Barring three, all sectoral indexes of the Sensex fell. The BSE Capital Goods Index fell 1.93 per cent and ended the session at 17,882.30.  Amongst Sensex stocks, Larsen & Toubro fell 2.64 per cent, IndusInd Bank 2 per cent.  Vedanta, TCS, NTPC, ICICI Bank, and Axis Bank fell by more than 1 per cent. Meanwhile, shares of Jet Airways rose 16 per cent amid media reports that the company is close to finalising a resolution plan.