Benchmarks end lower on political logjam; Nifty breaches 8,500 mark

Tuesday turned out to be a disappointing session for the Indian equity indices which got pounded by around a percentage point as investors remained worried on continuing logjam over the GST Bill. After a cautious start, the domestic bourses never looked in recovery mood and ended the trade near intraday lows, breaching their crucial support levels of 27,900 (Sensex) and 8,500 (Nifty). Selling was both brutal and wide-based, barring IT and TECk, none of sectoral indices on BSE could manage a green close. Counters which featured in the list of worst performers included metal, realty and banking.

Sentiments remained dampened as the Rajya Sabha once again failed to take up the GST Bill as the Congress and the Left parties blocked the proceedings demanding External Affairs Minister Sushma Swaraj's resignation over Lalit Gate. Sentiments was also hit with Moody's report which stated that India’s sovereign credit profile is more exposed to the negative effects of a drought than most other Baa rated sovereigns because of relatively high share of agriculture in overall employment, weak rural infrastructure and irrigation, inefficient food distribution, large proportion of Indian household spending that goes towards food, and share of food subsidy costs in the government's fiscal deficits.

Selling got intensified after European counters have made a weak start and were trading in red in early deals, dragged down by exporters like carmakers, miners and luxury-goods after China’s central bank devalued yuan, ending a de-facto peg to the dollar that had been in place since March. All the Asian markets ended in red on Tuesday, as investors weighed the implications of the surprise move, which seemed to end months of officially sanctioned yuan strength.

Back home, depreciation in Indian rupee weighed down the sentiments. The rupee fell to the lowest against the dollar in two weeks on Tuesday after China devalued the yuan by nearly 2 per cent. Sentiments also remained dampened on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 14.43 crore yesterday, as per provisional data released by the stock exchanges. Around five per cent fall in SBI’s share too played the spoil sport for the markets, as its net non-performing assets surged to 2.24 per cent from 2.12 per cent during the previous quarter. However, its Q1 net interest income improved by 3.6 per cent to Rs 13,732 from Rs 13,252 crore during the same period last financial year and the company posted better than expected 10% rise in net profit to Rs 3692 crore in the first quarter ending June 2015. Metal and tyre stocks remained under pressure after the yuan devaluation, the People’s Bank of China (PBoC), the country’s central bank cut the yuan’s reference rate by a massive 1.9%-the most on record. Iron imports are likely to decline, while dumping of cheap Chinese tyres look poised to increase with yuan devaluation.

The NSE’s 50-share broadly followed index Nifty declined by over sixty points to end below the psychological 8,500 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex declined by over two hundred and thirty points to end below its crucial 27,900 mark. Broader markets too struggled to get any traction during the trade and ended the session with a cut of around half a percent. The market breadth remained in favor of decliners, as there were 990 shares on the gaining side against 1,900 shares on the losing side while 99 shares remain unchanged.

Finally, the BSE Sensex plunged by 235.63 points or 0.84% to 27866.09, while the CNX Nifty declined by 63.25 points or 0.74% to 8462.35.

The BSE Sensex touched a high and a low 28205.12 and 27825.83, respectively. The BSE Mid cap index was down by 0.46%, while Small cap index was down by 1.13%.

The top gaining sectoral indices on the BSE were IT up by 1.38% and TECK up by 0.91%, while Metal down by 3.52%, PSU down by 2.12%, Realty down by 1.69%, Bankex down by 1.53% and Auto down by 1.32% were the losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.07%, TCS up by 1.25%, Cipla up by 0.62%, Wipro up by 0.46% and Maruti Suzuki up by 0.10%. On the flip side, Tata Steel down by 5.46%, SBI down by 4.87%, Hindalco down by 4.22%, Tata Motors down by 4.16% and Coal India down by 3.85% were the top losers.

Meanwhile, with the complete washout of the Monsoon session of the parliament in sight, the government will be making its last bid to make the session fruitful and will be bringing in the much-awaited bill on Goods and Services Tax (GST) for passage in the Rajya Sabha, though there will be big doubts of opposition Congress allowing the passage of the Constitution Amendment Bill.

Finance Minister Arun Jaitley will move the Constitution (One Hundred and Twenty-second Amendment) Bill, 2014, incorporating recommendations made by a House Select Committee. The report of the Rajya Sabha Select Committee was tabled in Parliament last month, which had suggested to compensate the states fully for five years for any revenue loss for GST roll out. The panel has given its report endorsing majority of the provisions, while suggesting changes in compensation to states and definition of supply for the purpose of states levying additional one per cent tax.

The GST Constitution Amendment Bill is waiting nod of Rajya Sabha, where the ruling NDA does not have a majority and is relying on the support of regional parties for its passage, as it requires two-third majority to pass a constitution amendment bill.The current monsoon session of Parliament ends on August 13.

The Goods and Services Tax that seeks to replace all indirect taxes, with a uniform levy has already been approved by the Lok Sabha and was in last session referred to a Rajya Sabha Select Committee.

The CNX Nifty touched a high and low 8556.25 and 8441.30 respectively.

The top gainers on Nifty were Infosys up by 2.67%, Tech Mahindra up by 2.06%, Bosch up by 2.03%, Zee Entertainment up by 1.56% and TCS up by 1.12%. On the flip side, Tata Steel down by 5.30%, SBI down by 5.25%, Tata Motors down by 4.63%, Hindalco down by 4.22% and Coal India down by 3.74% were the top losers.

European Markets were trading in the red; France’s CAC was down by 1.17%, Germany’s DAX was down by 1.54% and UK's FTSE was down by 0.78%.

The Asian markets closed in red on Tuesday as investors mulled the impact of a sharp devaluation of the yuan announced by China’s central bank. China has devalued its currency to boost flagging exports in a move that risks deepening the global currency war. After recent data showing falling exports and a stalling manufacturing sector, the central bank stated that it was allowing the yuan to weaken by nearly 2% in the hope of making China’s exports cheaper and pushing down borrowing costs. Chinese banks extended a surprisingly robust 1.48 trillion yuan ($238.4 billion) in new loans in July but the numbers may have been distorted by Beijing’s massive rescue package for the slumping stock market and other policy measures. New bank lending has been weak for much of this year despite interest rates cuts and looser lending restrictions. New yuan loans in July trumped the previous month’s lending of 1.28 trillion yuan while broad money supply expanded an annual 13.3%, faster than June’s 11.7%.  Chinese banks bad loan ratio has increased by 1.5% at the end of June, 0.11% higher than March with the value of outstanding non- performance loans went up by $17.6 billion. Japan’s Economy Watchers Current Index rose to a seasonally adjusted 51.6, from 51.0 in the preceding month. Japanese Household Confidence rose to a seasonally adjusted annual rate of 40.3.