Selloff on D-Street pushed Nifty below 11,000; 16 stocks fell 10-60% in a week

The market direction in the coming week will be dominated by global cues as well as macro data, suggest experts.

By Kshitij Anand @kshanand, MoneyControl

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Kshitij Anand @kshanand, MoneyControl

Indian market witnessed a selloff in the last two trading session of the week which pushed benchmark indices below crucial support levels largely on weak global cues.

The S&P BSE Sensex closed the week below 37,000 while Nifty50 failed to hold on to 11,000 for the week ended February 8.

On weekly basis, Sensex rose 0.2 percent while the Nifty50 recorded gains of about 0.46 percent but as many as 16 stocks in the BSE500 index plunged 10-60 percent in the same period.

Stocks which saw a double-digit cut include names like Reliance Power, Reliance Infrastructure, Reliance Communications, Reliance Capital, Suzlon Energy, Jaiprakash Associates, Adani Power, SREI Infra, IDBI Bank, Centrum Capital, Indiabulls Ventures, Indiabulls Integrated Services, Tata Chemicals, Indiabulls Real Estate, and Mahindra Logistics.

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The big carnage was seen in the small & mid-cap space which fell over 2 percent respectively for the week ended February 8. More than 300 stocks on the BSE hit a fresh 52-week low while on the NSE the number was slightly over 200.

As many as 21 stocks on the BSE hit a fresh all-time low in the week gone by which include names like Reliance Power, Reliance Communication, Suzlon, Inox, ICICI Securities, Cochin Shipyard, Coal India, Shankara Building etc. among others.

ADAG stocks saw their worst decline as most of the stocks hit their lifetime low during the week gone by. Anil Ambani-led Reliance Group on February 8 accused L&T and Edelweiss entities of “illegal” and “motivated” actions in invoking the pledged shares and selling them in the open market causing a steep fall in its share value.

Both L&T Finance and Edelweiss Group refuted the allegations made by the Reliance Group in separate media statements.

“Post Rcom bankruptcy, ADAG group may face credibility crisis as no lender may come forward to lend money to this group. Hence, stocks may under pressure for some more time and investors should avoid them in their own interest atleast for a couple of months till dust gets settled,” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in.

The market direction in the coming week will be dominated by global cues as well as macro data, suggest experts.

“Volatility likely to continue amid growing concerns over the trade fight between the US and China, also Markets to closely track domestic macroeconomic data like IIP, CPI & WPI scheduled in the coming week,” Hemang Jani, Head – Advisory, Sharekhan by BNP Paribas said.

“We continue to maintain a positive view on the consumption sector and expect the coming election to act as a positive catalyst for volume growth. Any major decline in the market should be used to buy into quality names such as (HUL, Reliance Industries and Titan) which remain some of our preferred picks,” he said.

Technical View:

Following the Doji formation on February 7, the Nifty witnessed a sharp reversal on February 8. In terms of the candlestick patterns, the price action over the last three sessions has resulted in the Evening Star formation.

The pattern got formed post the completion of an Ending Diagonal pattern. This increases the bearish significance of the candlestick pattern, suggest experts.

“The Fibonacci retracements reveal that the benchmark index has reversed from the 61.8% retracement of the September – October decline. Hence the Nifty seems to have topped out at the recent high of 11,118,” Gaurav Ratnaparkhi, Senior Technical Analyst, Sharekhan by BNP Paribas.

On the way down, the Nifty has broken the key support zone of 10,980-11,000 on a closing basis. Thus the traders can add to the position on the short side. From short term perspective, 10,583-10,534 shall now be the key target area to watch out for with potential to head significantly lower, he added.

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Finland’s basic income trial boosts happiness but not employment

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Anne Kauranen, The Thomson Reuters.

Reuters – Finland’s basic income trial boosts happiness but not employment.

By Anne Kauranen

HELSINKI (Reuters) – Finland’s basic income scheme did not spur its unemployed recipients to work more to supplement their earnings as hoped but it did help their wellbeing, researchers said on Friday as the government announced the trial’s initial findings.

The two-year trial, which ended a month ago, saw 2,000 Finns, chosen randomly from among the unemployed, become the first Europeans to be paid a regular monthly income by the state that was not reduced if they found work.

Finland, which will hold parliamentary elections in April, is exploring alternatives to its current social security model.

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The project is being watched closely by other governments who see a basic income as a way of encouraging the unemployed to take up often low-paid or temporary work without fear of losing their benefits. That could help reduce dependence on the state and cut welfare costs, especially as greater automation sees humans replaced in the workforce.

Finland’s minister of health and social affairs Pirkko Mattila said the impact on employment of the monthly pay cheque of 560 euros ($635) “seems to have been minor on the grounds of the first trial year”.

But those in the trial reported they were happier and healthier than the control group.

“The basic income recipients of the test group reported better wellbeing in every way in comparison with the comparison group,” chief researcher Olli Kangas said.

Sini Marttinen, 36, said that knowing her basic income was guaranteed had given her enough confidence to open a restaurant with two friends during the trial period.

“I think the effect was a lot psychological,” the former IT consultant told Reuters. She had been unemployed for nearly a year before “winning the lottery”, as she described the trial.

“You kind of got this idea you have two years, you have the security of 560 euros per month… It gave me the security to start my own business,” she said.

The basic income was only 50 euros a month more than her jobless benefit had been, “but in an instant you lose the bureaucracy, the reporting”, Marttinen said.

Mira Jaskari, 36, who briefly found a job during the trial delivering newspapers but lost it due to poor health, said losing the basic income had left her feeling more insecure about money.

OVERHAUL

The centre-right government’s original plan was to expand the basic income scheme after two years as it tries to combat unemployment which has been persistently high for years but reached a 10-year low of 6.6 percent in December.

It took a different tack last year, however, by imposing benefits sanctions on unemployed people who refused work.

The basic income has been controversial in Finland, with leaders of the main political parties wary of offering “money for nothing”. Prime Minister Juha Sipila said in December that he saw it as a means of simplifying Finland’s “screamingly complex” social security system.

On Thursday, Sipila’s Centre Party proposed a welfare model in which only the poor could claim the basic income, with sanctions if they reject a job offer.

Conservative finance minister Petteri Orpo has meanwhile said he favours a scheme like Britain’s Universal Credit, which consolidates six different types of state benefits into one.

Italy is due to introduce a “citizens’ wage” in April in a major overhaul of the welfare state, which will offer income support to the unemployed and poor. [nL8N1ZH66W]

One issue with the Finnish pilot is that it did not include any tax claw-back once participants found work and reached a certain income level, which the researchers had said would make the results more realistic. The Organisation for Economic Co-operation and Development has warned that basic income schemes would need to be paid for with higher taxes.

Participants were generally positive, however, with Tuomas Muraja, a 45-year-old journalist and author, saying the basic income had allowed him to concentrate on writing instead of filling out forms or attending jobseekers’ courses.

He published two books during the two-year trial period but said its closure meant it had again become difficult for him to accept small freelance commissions. “I … can earn only 300 euros per month without losing any benefits,” he said.

“If people are paid money freely that makes them creative, productive and welfare brings welfare,” Muraja told Reuters about his experience of the scheme.

“If you feel free, you feel safer and then you can do whatever you want. That is my assessment.”

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