Freaky Friday! Nifty breaches 10K on downside; 5 factors weighing on markets today

There was selling across the board, especially among metals, after news broke that China too had imposed import tariffs on 128 US goods.

  

Dragged by escalating trade tensions among global economies, the Indian market on Friday witnessed a gap-down opening, with the Nifty cracking the 10,000-mark.

There was selling across the board, especially among metals, after news broke that China too had imposed import tariffs on 128 US goods.

As such, the Indian market has been on a consolidation mode since the start of the year, led by factors such as LTCG imposition, liquidity issues, rising bond yields and volatile global markets.

On Friday, the Sensex was down over 400 points, while the Nifty managed to stay breach 10,000 and was trading in the four-digit range. The Nifty metal index is down around 3 percent, led by cuts in Hindalco, Vedanta and Tata Steel.

Meanwhile, midcaps witnessed selling pressure as well, with the Nifty Midcap was down nearly 2 percent. The Nifty had managed to breach 10,000 in the pre-opening trade as well.

Moneycontrol tells you five key reasons why the market is falling today.

Trade war fears escalate

The Street could be spooked largely on the back of escalating of trade wars between US and China. This, after China on Friday announced new tariffs on US goods. The US had earlier this month said that it will be imposing import tariffs on steel and aluminum, a move largely seen as a precursor to this decision.

The country’s commerce ministry proposed a list of 128 US products as potential retaliation targets, according to a statement on its website.

The US goods, which had an import value of USD 3 billion in 2017, include wine, fresh fruit, dried fruit and nuts, steel pipes, modified ethanol, and ginseng, the ministry said. Those products could see a 15 percent duty, while a 25 percent tariff could be imposed on US pork and recycled aluminium goods, according to the statement.

Fed rate hike

The market could also continuing to react to the interest rate hike announced by the US central bank on Thursday. It implies an improvement in the US economy and a possible redirection of fund flows from emerging markets to developed economies.

The US central bank approved the widely expected quarter-point hike that puts the new benchmark funds rate at a target of 1.5 percent to 1.75 percent. It was the sixth rate hike since the policymaking Federal Open Market Committee began raising rates off near-zero in December 2015.

The funds rate is closely tied to consumer interest rates, which generally rise as soon as the Fed moves.

Along with the increase came another upgrade in the Fed's economic forecast, and a hint that the path of rate hikes could be more aggressive. The market currently expects three hikes for 2018, and that remained the baseline forecast, but at least one more increase was added in the following two years.

Rising Crude Oil prices

A surge in crude oil prices could have impacted the market sentiment here. Higher crude prices imply increase in import costs for India as well as higher fuel expenses as well.

Oil prices jumped more than 1 percent on Friday, pushed up by Saudi plans for OPEC and Russian-led production curbs introduced in 2017 to be extended into 2019 in order to tighten the market.

The rise in oil prices defied global stock markets, which slumped on the back of worries about a trade stand-off between the United States and China. But gold, seen as a safehaven in times of economic turmoil, rallied to a two-week high on Friday.

The driver for crude futures was a statement by Saudi Arabian Energy Minister Khalid al-Falih, who said on Thursday that OPEC members will need to continue coordinating with Russia and other non-OPEC oil-producing countries on supply curbs in 2019 to reduce global oil inventories.

The Organization of the Petroleum Exporting Countries (OPEC), of which Saudi Arabia is the de-facto leader, as well as a group of non-OPEC countries led by Russia, struck an agreement in January 2017 to remove 1.8 million barrels per day (bpd) from markets to end oversupply.

Bank Fraud

Following Punjab National Bank scam, which involved fraudulent transactions to the tune of over Rs 13,000 crore, a new scam has hit, involving Union Bank of India.

The Central Bureau of Investigation (CBI) has registered a case based on a complaint filed by Union Bank of India against Hyderabad-based Totem Infrastructure, alleging it was cheated to the tune of Rs 303.84 crore by the company.

The complaint mentions promoters and directors Tottempudi Salalith and Tottempudi Kavita as the accused in the case. The company allegedly took a loan from a consortium of 8 banks, of which UBI was the lead bank.

The total dues outstanding for the consortium is Rs 1,394.43 crore. The account became a non performing asset (NPA) on June 30, 2012 after a default on the loan and interest payments.

Technical factors

So far, the index had witnessed selling pressure in three out of four days when the index rose above 10200 levels. Hence, for bulls to regain control, 10,200 is crucial for the bulls.

However, if there is a downside from the current 10,100-odd levels and a fall from those levels could lead to a touching of fresh lows.

The intensity of selling pressure shall get accelerated on a close below 10049 levels which may open up more downsides for the index. Hence, at this juncture it looks prudent for traders to remain sidelines and just wait for appropriate clues before initiating the trade.

Till it holds 10,000 mark decisively, bounce back from lower levels cannot be ruled out.

MORE WILL UPDATE SOON!!

What should investors do after 500-point fall on Sensex? Buy, sell or hold

It looks like Nifty is firmly in a bear grip but the good part is that we have already fallen by over 10 percent from highs; hence, the downside could remain limited.

  

Indian market clearly is in a bear grip as Sensex fell over 500 points in afternoon trade on Friday while the Nifty50 slipped below its crucial support placed at 200-DEMA as well as 10,000 levels for the first time since October.

Equity markets across the globe came under pressure on escalating fears of trade war which could dampen global growth rate, and India will be no different. Wall Street cracked after US President Donald Trump signed a presidential memorandum that could impose tariffs on up to USD 60 billion of imports from China.

China unveiled plans to impose tariffs on up to $3 billion of U.S. imports on 128 products in retaliation against U.S. tariffs on Chinese steel and aluminum products.

Coming back to Indian markets, it looks like Nifty is firmly in a bear grip but the good part is that we have already fallen by over 10 percent from highs; hence, the downside could remain limited. And, not to forget we are still in a bull run and corrections are part of every bull run.

The Nifty has been in a downtrend for a couple of months, it’s only the acceleration which is happening now to an existing trend. We continue with our initial target of 9700 on Nifty where studies will need to be reviewed.

The level of 10000 was important due to the fact of highest Put OI existing around that, the level holds firm only if OI shifts doesn’t happen which is not the case since market opening today. Though, we still have a target of 9700 due for Nifty, taking a fresh sell position on futures now may not be favourable with diminishing reward to risk.

Put writer has already started shifting their positions lower to 9900 and Call writers are aggressive with conviction which is indicated by the fact that they are selling At the Money options of 10000 and 10100.

The long-term trends are suggesting that this is a multi-month correction inside a long-term bull market and in this correction, as indices are already down by 10 percent and it should be made use by the long-term investors as an opportunity to create or reshuffle their portfolios,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory.

Beyond 9700 levels, we are not looking at substantial price damage but there is going to be a time-wise correction for a couple of months Once it bottoms out this bull market has one more leg on the upside which should eventually take it beyond 11200 kinds of levels over a period of time may be in next 9 – 12 months.

What should investors do?

If you are short on the market:

If you are already short on the market that there is no point adding positions as the downside could be limited, instead hold on to positions for a higher target.

Off late substantial damage was already done to the markets and hence shorting at these levels may not be the right strategy as in our opinion markets are trading at critical support levels placed in the zone of 10040 – 9980 levels.

However, as negative sentiments in global markets are strengthening day by day a close below 10,000 may extend this downswing towards bigger targets of 9700 levels as of now.

Shubham of Quantsapp said that for traders already holding short positions: The strategy would be to stay put on markets and trail the stop loss to 10150 for an expectation of 9700.

If you planning to go long:

The recent price behavior suggests that Nifty is seeing sell on rallies and any bounceback towards 10200-10250 levels were used to book profits.

The idea is to use the rallies or bounce back for shorting for lower levels. The important resistance from 10500 is being brought to 10250. So any bounce towards these levels would certainly be an opportune moment to go with intermediate momentum.

Shubham of Quantsapp for traders stuck with long positions: Deploy a high yielding bearish options strategy like Put Ratio Back-spread as a hedge to existing positions which will cap further losses on existing positions.

If you are looking to bottom fish:

Long-term investors would welcome such a big fall in the index and can use this slide to buy into quality stocks. Global trade wars have pulled the equity markets down globally, and for India as well the bias has turned negative.

The Nifty has fallen over 10% from highs and has a strong base near 9700 levels. Investors should use the opportunity to buy into quality stocks which are now available at attractive valuations.

We believe that the correction of close to 10% from the recent highs largely factors in a lot of negatives and is in line with the past two corrections; first one in December 2015 (triggered by interest rate hikes in the US after a gap of almost a decade) followed by dip in November 2016 (triggered by demonitisation and its unknown ramifications).

Notably, the equity markets recovered quickly in both the incidents after a fall of 10-12% from the recent peak. Thus, we continue to remain constructive on equity markets over the medium term though the volatility is likely to sustain in near term.

Wait for 9700 as the level of accumulation and to make additional returns on the intention write Out of The Money Put options with levels of intended buying. “These short puts can later be converted to a cash holding and will reduce the cost of acquisition.

MORE WILL UPDATE SOON!!

We are in a ‘sell on rally’ market; Pain in the midcaps may aggravate further

Going forward, we expect the Nifty to consolidate around its 200-DMA before we could see a resumption of the downtrend.

  

The relief rally which market witnessed off late didn't seem to last for long as the "Sell on Rally" theme continues.

Multiple triggers like the rising crude oil prices, rising bond yields, and the troubled Indian banking system continue to haunt the sentiments on the Dalal Street.

However, notably the legendary 200-DEMA (10110) which was broken for the first time since December 2016 lows has been held on to for the second consecutive day.

The 10220-10230 zone is exactly the Falling Wedge declining trendline resistance from where Nifty saw some profit-taking. This indicates it’s still very evident that every small upswing is being utilized to either trim positions or build fresh shorts.

Going forward, we expect the Nifty to consolidate around its 200-DMA before we could see a resumption of the downtrend.

On the flipside, Nifty could see a Falling Wedge pattern breakout once the index manages to break past the 10250 zone and close above the same. Till then the strategy remains to sell on rallies.

The Nifty bank, on the other hand, made an attempt to surpass its 200-DEMA in the previous session but has failed to do so. Immediate support for the index is now seen around the 24000 psychological mark below which fresh downside is likely.

The pain in the midcaps may aggravate further as the Nifty midcap 100 index analysis indicates that it is on the verge of another bearish scallop breakdown on the daily chart which would also mean the extension of the weekly Head and Shoulder pattern breakdown witnessed in the previous week. Although, there are pockets that may see some outperformance.

Here is a list of top three stocks which could give up to 7% return:

Larsen & Toubro Infotech (LTI): BUY| Target 1450| Stop Loss 1310| Returns 7%

The midcap IT stocks are seeing good demand and LTI has shown signs of a reversal after falling from its all-time high of Rs 1549 hit on February 22, 2018. The stock has formed a Bullish engulfing pattern on the daily charts and has seen good follow up buying too.

In addition, LTI has also found support around its 50-DEMA and has bounced back. Positive crossovers on other oscillators further confirm the probability of an upswing from here on for LTI

Jubilant Foodworks Ltd: BUY| Target 2380| Stop Loss 2223| Returns 5%

The stock has been a complete stand out performer and has sustained its upward trajectory even when markets have sharply corrected. The stock has broken out from a four-day consolidation pattern on the daily chart.

The price outburst has been accompanied by a smart uptick in traded volumes too. The relative strength indicates that the current upswing is likely to extend further. We expect Jubilant Food to make a dash towards its all-time high of 2320 levels in the medium term.

Titan Company Ltd: BUY| Target 935| Stop Loss 865| Returns 5%

The stock has been consolidating for over five trading sessions and has finally broken out from a consolidation pattern on the daily chart.

The stock has also convincingly closed above the short term as well as medium-term moving averages. Volumes have backed up the price outburst seen which further accentuates our bullish stance on the stock.

MORE WILL UPDATE SOON!!

Weakness in market may continue but top 10 stocks can give up to 50% return

According to experts, the volatility is here to stay for some more time and another 4-5 per cent correction can't be ruled out.

  

Bears continued to be in a dominant position at Dalal Street for last two months, though bulls tried intermittently to get charged. Negative sentiment on account of many reasons - global trade war, banking fraud, LTCG risk, political uncertainty etc - pulled down the Nifty around 1,200 points from record high touched just before the Budget.

Not only India but also global markets corrected during the same period but the correction in India is more than global counterparts. The major reasons apart from listed above are rising capital cost, likely NPA problems in PSU banks etc but investors should not worry as experts feel whenever economic growth happens, interest rates always go up.

According to them, the volatility is here to stay for some more time and another 4-5 percent correction can't be ruled out. But that should be offering a big buying opportunity for investors who missed the bus earlier.

Indian equity markets reacted negatively today, in-line with global markets. With US imposing fresh tariff targeted China, there is an increasing fear of a trade war which could impact economic growth.

According to him, markets are expected to remain volatile ahead of F&O expiry next week, as well as end of Indian financial year (last week before the LTCG tax kicks in).

Deven Choksey of KR Choksey Securities said as far as long term trade is concerned, technically in the market anything can be possible, capitulation with multiple headwinds can pull the market down to 9,750 on the Nifty but fundamentals are not supporting the fall now.

He further said while the negative sentiment is refraining retail investors from participating in the market, for long term investors opportunities are plenty in the market, given the strong earnings visibility for next 6-8 quarters.

Kemka also said while traders should remain cautious, decline in good fundamental stocks would offer buying opportunities for long term investors.

Here is the list of top 10 picks that can give up to 50 percent return:-

Brokerage: Kotak Securities

Talbros Automotive Components | Rating - Buy | Target - Rs 389 | Return - 45%

Company continues to stay on a strong growth trajectory. We expect TBA to benefit from expected healthy automobile demand over FY18-FY20E.

Addition of new customers and new orders gives visibility to robust revenue growth in FY19/FY20. Company is also working on new products which are expected to gain acceptance with BSVI implementation.

On the EBITDA margin, the company expects to witness improvement through cost reduction, import substitution of raw material, operating leverage and turnaround in one of joint ventures. In the forging business, the company recently announced an order of Rs 35 crore per annum from Dana Spicer India Pvt Ltd.

We expect the company to post robust revenue growth across divisions. We expect TBA’s earnings to grow at 30 percent CAGR over FY17-FY20E. We retain Buy on the stock with an unchanged price target of Rs 389.

Brokerage: Elara Capital

Tata Metaliks | Rating - Accumulate | Target - Rs 838 | Return - 14%

Tata Metaliks has evolved from a pig iron manufacturer into a significant player in ductile iron (DI) pipes in the past six years. The recent uptrend in DI pipes and higher margin have prompted management to increase DI pipes revenue share from 35 percent in FY14 to around 60 percent in FY17.

As it is a part of Tata Steel, the company has access to good quality (low phosphorous) iron ore and produces 40 percent of its coke requirements via its coke oven plant.

We expect EBITDA margin to expand by around 300bp over FY17 to around 20 percent by FY20E, driven by higher operating leverage, improved cost efficiency and expected stability in raw material prices. Better operational performance is likely to lead to a 24 percent net profit CAGR over FY17-120.

We initiate coverage of Tata Metaliks with Accumulate rating and a target of Rs 838, implying 14 percent upside.

Superior management and prudent capital allocation has led to its shift from a loss-making, indebted company to a financially sound & cost-efficient firm and emerge as a large player in the DI pipes segment. Given significant improvement in profitability, we assign a higher multiple than its historical five-year average of 4.0x.

Key downside risks include volatility in raw material prices, an inability to pass on price hikes and a decline in demand for DI pipes.

Brokerage: Choice Broking

Hikal | Rating - Buy | Target - Rs 250-260 | Return - 20-25%

Hikal Limited is headquartered in Mumbai, and operates in crop protection and pharmaceuticals space. It is an associate of Kalyani Investment Company Limited, which owns 31 percent shares in the company. The company has strong Japanese presence.

With strong product profile including pending new launches for both proprietary as well as contract manufacturing molecules, entrenched relationship with leading pharmaceutical (pharmaceutical segment) and agro-chemical (crop protection segment) companies in the world, and strong market position for the Gabapentin business.

We believe going forward, the margins are expected to remain stable supported by new as well as pipeline products coupled with moderate CAPEX plans supporting liquidity profile.

At CMP of Rs 208, Hikal is trading at a P/E multiple of 21.6(x) compared to the industry peer of 36.5(x). The company has an upside potential of 20 percent to 25 percent in the next 12 to 18 months. We arrive at a target price in range of Rs 250 to Rs 260. Thus we assign a Buy rating on the stock.

GIC Housing Finance | Rating - Buy | Target - Rs 500 | Return - 36%

GIC Housing Finance, incorporated in December 1989, is one of the old housing finance companies in India. Loan book of the company has been growing at significant at around 20 percent over the past few quarters, NIM was maintained at around 3.8 percent.

While competitive lending rate and rising yield can put pressure on margins, the company is moving into a ambit of strong growth and profitability which would provide support to sustain NIM atcomfortable level.

Gross non-performing assets at 3.3 percent by Q3FY18 was on higher side compared to peers, efforts related to R&U of NPAs and reducing

exposure to loan against property portfolio are the key GICHF’s initiatives towards improving assets quality going forward.

Given the strong presence in low income segment of housing, GICHF is also expected to remain one the major beneficiary of rising opportunities in affordable housing. Current fundamental strength of the business indicates a rerating of valuation multiple.

Management has planned to double the loan book by the next three years through focusing more on branch expansion model and in-house loan origination model rather than emphasizing of DSA model. Further, around 40 percent correction in stock price from recent higher level indicates a strong entry point for investment over the medium to long term period.

At recommended potential price of Rs 500, GICHF’s share is available at P/ABV of 2.5(x) to FY19 adjusted BVPS of Rs 199.7.

Brokerage: ICICIDirect

Transport Corporation | Rating - Buy | Target - Rs 340 | Return - 31%

TCI Seaways, a business division of Transport Corporation of India (TCI), has acquired a ship with dead-weight tonnage (DWT) of 26262 (holding capacity of 766 containers). Total investment for the same was Rs 48.8 crore that would be funded partly from internal accruals & partly from additional borrowings. The ship is expected to serve the west-south coast of India.

Post addition of the ship, TCI Seaways would manage six ships (three on eastern coast and three on western coasts) with total capacity of 63622 DWT and a fleet of 5500 containers. As incremental capacity is nearly 70 percent of existing capacity, revenues from seaways division would realise a sharp surge over FY19.

We increase our revenue forecasts for seaways division by 15-25 percent in FY18-20 with revenue of Rs 347 crore (versus earlier Rs 278 crore) by FY20. FY20 implied EPS for seaways division was at Rs 8.5 versus Rs 6.9 earlier. Given synergies derived from shipping business, TCI would further strengthen its competitive positioning offering its clientele cost effective multi-modal logistics solutions.

We believe that with multi-modal capabilities TCI is poised to leverage benefits from GST-era thereby delivering sustainable growth rates.

We maintain SOTP based valuation ascribe a multiple of 10x FY20E EPS for freight, supply chain at 23x FY20E P/E and shipping 10x FY20E P/E, respectively, to arrive at a revised target price of Rs 340 (versus Rs 330 earlier). We believe low valuations compared to its peers will re-rate the stock.

Brokerage: IIFL

IRB InvIT | Rating - Buy | Target - Rs 94 | Return - 25%

The sharp correction in IRB InvIT unit prices presents an attractive opportunity to lock in healthy 12.53 percent pre-tax internal rate of return (IRR) (at CMP of Rs 75.25) at a reasonable 8 percent toll revenue growth assumption. This jumps to 13.6 percent at 9 percent revenue growth and to 15.3 percent at 10 percent.

Historically, NHAI’s 12 NH stretches have seen 6.9 percent CAGR for commercial tonnage over FY12-17 and recent TOT tendering recommended aroud 4.5 percent average traffic growth for 30 years.

In terms of right metric to follow, given that underlying assets have finite life, are linked to economic growth and have no return of capital on closure, IRR is the more relevant metric than annual yields.

We see minimal risk of expensive acquisition given every transaction needs approval by voting (with sponsor not voting in related party transactions). Key risk from hardening interest rates has played out in our view.

Brokerage: Reliance Securities

Majesco | Rating - Buy | Target - Rs 730 | Return - 50%

The company reported strong Q3FY18 results, with revenue rising 4.7 percent QoQ in USD terms, led by strong order book growth seen in FY18 YTD; cloud revenue rose 5.1 percent QoQ, aided by investments made, while License revenue grew by a massive 127 percent QoQ led by new deal wins.

Good revenue growth drove a 345bps QoQ rise in EBITDA margin to 4.5 percent.

Industry fundamentals and the key IBM partnership will enable Majesco to boost revenue growth going forward.

Cloud offering - ‘Trump Card’: 60-70 percent of the deal pipeline in the past few months has been for cloud services.

Of the addressable market of USD 25 billion for Majesco, around USD 15-16 billion relates to the L&A market, while USD 9.25 billion relates to the US P&C market.

We currently have a target price of Rs 730 on the stock.

Brokerage: Dolat Capital

Inox Leisure | Rating - Accumulate | Target - Rs 300 | Return - 16%

We continue to prefer Inox in the exhibition segment due to traction in the advertising and food & beverages segment which will drive profitability. Inox has underperformed in the last three months and share price has declined 12 percent; valuations at 11.5x/9.3x based in

FY19/FY20 EV/EBITDA appear fair.

We upgrade FY19/FY20 EBITDA estimates by 1/4 percent factoring lower distributor share and positive impact of capital subsidy which will further enhance profitability.

We maintain underweight stance on the exhibition segment due to the following concerns – 1) converging growth in ATP; 2) weak Hindi Box Office revenue growth in FY19 which will have a negative impact on footfalls; 3) threat from VoD and consumption of small/medium movies on digital platform; and 4) limited screen addition due to scalability issues.

As per conversation with movie distributors and based on the current content pipeline, Hindi Box Office collection is estimated to report flat growth YoY in first half of FY19; we may revisit stance on the exhibition segment in second half of FY19 based on the content pipeline visibility for Hindi movies; we believe faster execution of screen addition as per guidance in second half of FY19 and a better performance in Hollywood Box Office collection may drive upgrades for the stock in medium term.

We maintain Accumulate rating with a Mar’19 target price of Rs 300 (Rs 290 earlier) based on 10.5x EV/EBITDA one year forward.

Brokerage: CESC Research

Gabriel’s India | Rating - Buy | Target - Rs 188 | Return - 36%

We believe GIL will continue to gain share of business from its key customers as most of its key customers are outperforming the industry.

Aftermarket and exports are expected to recover after a slowdown. We are positive on the growth and profitability prospects of the company.

GIL registered robust growth in Q3FY18 led by around 20 percent growth in two wheelers & 3 Wheelers, 12 percent in Passenger vehicle and nearly 49 percent in commercial vehicle (including Railways business).

We expect auto industry to grow at a healthy pace due to by higher rural income and recovery in export and aftermarket sales. In FY19, passenger vehicle industry is likely to grow by 9-10 percent, 2-wheelers: 10-11 percent and commercial vehicle 11-12 percent.

We maintain a Buy rating on the stock with revised target price of Rs per share, valuing at a P/E x of 20X on FY20EPS.

Risk: Increase in raw material cost; unfavourable currency movement; a slowdown in the automobile industry and slowdown in export markets.

Brokerage: Axis Direct

Central Depository Services | Rating - Buy | Target - Rs 370 | Return - 24%

CDSL is a story of two halves – an existing granular revenue stream and a growing optionality from digitisation. A deeper look at CDSL’s revenue reveals even the sub heads (transaction income, IPO corporate charges) emanate from diverse set of small fees that CDSL charges.

Along with that, the metaphorical ‘quiver’ includes unchartered streams (academic records, warehouse receipts, GST Suvidha etc) which lend immense scalability to CDSL’s business model.

Granularity of revenue streams is a key attribute as even the largest revenue contributor, ie. annual issuer charges, contributes only 32 percent. CDSL revenue pool is hence de-risked and well diversified.

Understanding revenue growth is key to CDSL due to (1) a fixed cost business (for most revenue streams) locking in EBITDA margin at over 60 percent, (2) virtually no capex resulting in a minimal depreciation charge, and (3) debt-free status.

Hence improvements in revenue growth would flow down to PAT and generate FcFF (free cash flow to the firm).

Globally, most countries have only one depository though some like India have a maximum of 2 depositories. Apart from CDSL, only one other depository (Peru – Cavali) is listed. Need to access capital markets does not arise as business generates high cash and has minimal capex requirements

We like CDSL due its diverse revenue streams, largely fixed cost model and most of the capital employed being cash and investments, thus generating high (ex-cash) RoCE. Initiate with Buy (Target price Rs 370, 24 percent upside).

MORE WILL UPDATE SOON!!

Trump orders huge tariffs on China, raises trade war worries

China threatened retaliation, and Wall Street cringed, recording one of the biggest drops of Trump's presidency. But he declared the US would emerge "much stronger, much richer."

  

Primed for economic combat, President Donald Trump set in motion tariffs on as much as $60 billion in Chinese imports to the US on Thursday and accused the Chinese of high-tech thievery, picking a fight that could push the global heavyweights into a trade war.

China threatened retaliation, and Wall Street cringed, recording one of the biggest drops of Trump's presidency. But he declared the US would emerge "much stronger, much richer."

It was the boldest example to date of Trump's "America first" agenda, the culmination of his longstanding view that weak U.S. trade policies and enforcement have hollowed out the nation's workforce and ballooned the federal deficit. Two weeks ago, with fanfare, he announced major penalty tariffs on steel and aluminum imports that he said threatened national security.

However, even as Trump was talking tough at the White House, his administration moved to soften the sting of the metal tariffs, telling Congress on Thursday that the European Union, Australia, South Korea and other nations would join Canada and Mexico in gaining an initial exemption. And that raised questions about whether his actions will match his rhetoric.

The ministry urged the U.S. "to resolve the concerns of the Chinese side as soon as possible," and appealed for dialogue "to avoid damage to overall Chinese-U.S. cooperation.

At home, investors on Wall Street showed their rising concern about retaliation and business-stifling cost increases for companies and consumers. The Dow Jones industrials plunged 724 points.

Trump himself, joined by supportive business executives, complained bitterly about the nation's trade deficit and accused China of stealing America's prized technology.

"Any way you look at it, it is the largest deficit of any country in the history of our world. It's out of control," Trump said of the U.S-China imbalance. The US reported a $375 billion deficit with China last year, which Trump has blamed for the loss of American jobs and closing of plants.

The president said the tariffs could cover "about $60 billion" in trade with China, but senior White House officials said the US Trade Representative had identified 1,300 product lines worth about USD50 billion as potential targets.

That list will include aerospace, information and communication technology, and machinery, according to a USTR fact sheet. But further details were scant.

The order signed by Trump directed the trade representative to publish a list of proposed tariffs for public comment within 15 days. Trump also asked Treasury Secretary Steven Mnuchin to come up with a list of restrictions on Chinese investment and said the administration was preparing a case before the World Trade Organization.

Despite Trump's confident words, business groups and Republican lawmakers are worried his tariffs could undercut actions they have welcomed in his first year.

The vast majority of our members are very concerned that these trade actions will at a minimum undermine the strong business confidence that has been created by the tax and regulatory process," said Josh Bolten, president and CEO of the Business Roundtable. "And if it's taken to an extreme, it will reverse that progress.

Dozens of industry groups sent a letter last weekend to Trump warning that "the imposition of sweeping tariffs would trigger a chain reaction of negative consequences for the U.S. economy, provoking retaliation, stifling U.S. agriculture, goods, and services exports, and raising costs for businesses and consumers.

Kansas Sen. Pat Roberts, Republican chairman of the Senate Agriculture Committee, suggested lawmakers may need to consider what he called a "Trump Tariff Payment" to compensate farmers if their crops face retaliation.

But some labor unions and Democrats said Trump was justified in delivering a swift blow to China after years of a lax response from the U.S.

"Chinese cheating has cost American jobs and I applaud the administration for standing firm in its commitment to crack down on China's continued violations," said Sen. Sherrod Brown of Ohio.

Thursday's announcement marked the end of a seven-month investigation into the hardball tactics China has used to challenge U.S. supremacy in technology, including, the U.S. says, dispatching hackers to steal commercial secrets and demanding that U.S. companies hand over trade secrets in exchange for access to the Chinese market.

Business groups mostly agree that something needs to be done about China's aggressive push in technology, but they worry that China will retaliate by targeting U.S. exports of aircraft, soybeans and other products and start a tit-for-tat trade war of escalating sanctions between the world's two biggest economies.

"China has been trying to cool things down for weeks. They have offered concessions," said Mary Lovely, a Syracuse University economist and senior fellow at the Peterson Institute for International Economics. "I fear they will take a hard line now that their efforts have been rebuffed. ... China cannot appear subservient to the U.S."

The move against China comes just as the United States prepares to impose tariffs of 25 percent on imported steel and 10 percent on aluminum — sanctions that are meant to hit China for flooding the world with cheap steel and aluminum.

Trump campaigned on promises to bring down America's massive trade deficit — $566 billion last year — by rewriting trade agreements and cracking down on what he called abusive practices by U.S. trading partners. The president said Thursday, "It's probably one of the reasons I was elected, maybe one of the main reasons."

But he has been slow to turn rhetoric to action. In January, he did impose tariffs on imported solar panels and washing machines. Then he unveiled the steel and aluminum tariffs, saying reliance on imported metals jeopardizes U.S. national security.

To target China, Trump dusted off a Cold War weapon for trade disputes: Section 301 of the U.S. Trade Act of 1974, which lets the president unilaterally impose tariffs. It was meant for a world in which large swaths of global commerce were not covered by trade agreements. With the arrival in 1995 of the World Trade Organization, Section 301 fell largely into disuse.

Trump and Chinese President Xi Jinping enjoyed an amiable summit nearly a year ago at Trump's Mar-a-Lago resort in Florida. But America's longstanding complaints continued to simmer.

Chinese Premier Li Keqiang this week urged Washington to act "rationally" and promised to open China up to more foreign products and investment.

MORE WILL UPDATE SOON!!

Market Update: Nifty, Sensex plunge 1.3% as 281 stocks hit new 52-week low; Hindalco, Yes Bank top losers

The market breadth was in favour of the declines with 96 stocks advancing while 1518 declined and 390 remained unchanged. On the other hand, in the BSE, 183 stocks advanced and 1802 declined and 66 remained unchanged.

   

The Indian equity market woke up to a nightmarish Friday morning with the Nifty plunging  140 points, trading below the 10,000 mark while the Sensex tanked over 400 points or 1.3 percent. The hammering came after US President Donald Trump imposed tariff as much as USD 60 billion on Chinese imports in the US.

Nifty PSU banking index was down 3 percent dragged by State Bank of India which shed 2 percent followed by Andhra Bank, Syndicate Bank, IDBI Bank, Bank of Baroda and Allahabad Bank.

CNX metal index was also lower by over 3 percent with stocks like Jindal Steel & power, Steel Authority of India and Welspun Corp plunging over 5 percent each. Nalco, Hindalco Industries and Bhushan Steel were the other top losers.

The top Nifty losers included Hindalco Industries which fell 4 percent followed by Yes Bank which was down 3.8 percent. Tata Steel, ICICI Bank and Vedanta were the other losers.

The most active Nifty stocks included ICICI Bank which fell 3 percent while Tata Steel shed 3.5 percent. Infosys, Maruti Suzuki and Yes Bank were the other active stocks.

271 stocks hit new 52-week low including names like Adani Power, Ambuja Cements, Bharat Electronics, Bharat Heavy Electricals, Bosch, Eros International, GSK Pharma, HCC, HDIL, Mcleod Russel, State Bank of India, PFC, Tata Motors and Union Bank of India among others.

Oil India Limited and Manappuram were few of the top Sensex gainers while Union Bank of India, Inox Wind, MMTC and Reliance Communications were the top losers.

The market breadth was in favour of the declines with 96 stocks advancing while 1518 declined and 390 remained unchanged. On the other hand, in the BSE, 183 stocks advanced and 1802 declined and 66 remained unchanged.

MORE WILL UPDATE SOON!!