Bourses crash on fears of missing fiscal deficit target

Mumbai: The markets plunged sharply on Thursday as India’s fiscal deficit as at the end of October 2017 reached 96.1 per cent of the Budget Estimate (BE) for FY18 triggering a sharp sell-off in frontline stocks.

The Nifty slumped 134.75 points or 1.30 per cent to end the day at 10,226.55 while the Sensex lost 453.41 points or 1.35 per cent to close the day at 33,149.35.

The sentiments also remained cautious ahead of the release of Q2 GDP data due to which short term traders aggressively trimmed their long positions (bullish bets) following the expiry of November derivative contracts.

“The fiscal deficit numbers were unsupportive for markets with the seven months figure coming in at about 96 per cent of the government’s estimates for FY18.

This was up substantially from the 79 per cent number, which came in at the same time last year. Equities reacted far more than bonds to the news,” said Kunj Bansal, ED & CIO — equity at Centrum Wealth Management.

“While the sentiments remain positive, some profit booking cannot be ruled out at higher levels. Thus corrections should be used as a buying opportunity,” said Jayant Manglik, president – retail sales, Religare Securities.

According to the provisional data, FPIs offloaded shares worth Rs 1,500.76 crore.  The bank stocks were hammered badly on Thursday with SBI, Kotak Bank, Axis Bank and ICICI Bank closing lower by over 2 per cent.

“In F&O segment, traders carried forward just 63.28 per cent of their outstanding contracts in Nifty futures, which suggests that a decent amount of positions have been lightened up ahead of upcoming events like RBI policy, US Federal Reserve meeting and more importantly the Gujarat poll results,” said Sneha Seth, derivative analysts at Angel Broking.