Post Session: Quick Review

Indian markets after surging relentlessly for last six straight sessions, suffered profit taking on Tuesday and the major indices lost around half a percent for the session. The somberness in the global markets pressurized the local indices, as most of the Asian markets showed weak trade, while the sentiments at home were dampened on concern of economic growth. Benchmark indices soon after the opening entered into red and could not recover for even once to the green, there was major attempt towards the noon trade but profit taking at the higher levels dragged the markets lower. Traders were concerned with a private report stating that investments in projects remained elusive in the first quarter of the financial year 2016-17 with stalled projects running into an estimated Rs 11.2 lakh crore. The report further said that most of the stalled projects are in the electricity (31%) and steel (25%) sectors. The mood further got weighed down by report that pace of activity in India's service sector slowed in June. The Nikkei India Services Business Activity Index was 50.3 in June, its second-lowest reading in last one year, mainly on weaker rise in new business leading to a softer expansion in activity. Moreover, future expectations dipped to the lowest since February. The rupee weakness added to the pressure, the rupee weakened against the US dollar amid across-the-board weakness in other Asian currency markets.

On the global front, lacking any US lead as there was holiday, Asian markets ended mostly in red and the Japanese market posted its first loss after six straight days of gains, with exporters hit by a stronger yen. Oil-linked stocks declined as crude prices eased on news of an uptick in Nigerian output.  Though, the Chinese market bucked the trend and posted gains to close above 3,000 for the first time in more than two months amid speculation the central bank will take steps to boost the economy. On the other hand, the European markets made a soft start on concern over the outlook in the wake of the UK’s vote to leave the European Union.

Back home, the trade which remained range bound for most of the session, turned weak after the somber start of the European markets and traders started booking profit considering the rally to have finally faded and safe heaven demand increased. Traders were also concerned with the Moody's Investors Service stating that India's GDP growth over the next two years will be challenged by lackluster global demand and high leverage in some corporate sectors. However, regarding Brexit impact Moody's said that any effects will be limited because exports to the UK and the rest of the European Union account for 0.4% and 1.7% of India's GDP respectively and added, India is not significantly exposed to a potential sharp fall in capital flows to emerging markets. There was some last hour recovery on report that the government will be meeting Congress members to break the impasse on GST, but it was too little and too late and the markets ended in red.On the sectoral front, most of the sectoral indices gave up their early gains to end lower, barring the metals and capital goods. The broader markets too after remaining in green for most part of the day, gave up their gains. The metal stocks witnessed buying interest after the commodity staged a sharp rally in global markets. PSU banking shares too showed some buying interest after the government finalized about Rs 18,000 crore of fund infusion, almost 75% of the Rs 25,000 crore allocated in this year's budget for PSU banks.

On the other hand, fertilizer manufacturers fell sharply, following the government's decision to cut retail prices of non-urea fertilizers. State-run fertilizer manufacturers have cut the price of diammonium phosphate (DAP) by Rs 2,500 per tonne, while price of muriate of potash (MOP) was slashed by Rs 5,000 per tonne with immediate effect, following drop in global prices of raw materials. Private fertilizer manufacturers have also agreed to bring down prices.

The BSE Sensex ended at 27156.93, down by 121.83 points or 0.45% after trading in a range of 27127.30 and 27348.66. There were 11 stocks on gainers side against 19 stocks on losers side on the index. (Provisional)

The broader indices despite their outperformance too ended in red; the BSE Mid cap index was down by 0.17%, while Small cap index down by 0.16%. (Provisional)

The gaining sectoral indices on the BSE were Metal up by 0.30% and Capital Goods up by 0.26%, while Auto down by 1.14%, Realty down by 0.74%, TECK down by 0.73%, Power down by 0.70%, IT down by 0.63% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Coal India up by 1.45%, HDFC up by 0.58%, Tata Steel up by 0.54%, Wipro up by 0.52% and Larsen & Toubro up by 0.50%. On the flip side, Power Grid Corpn. down by 2.42%, GAIL India down by 2.26%, Bharti Airtel down by 2.16%, NTPC down by 1.93% and Hero MotoCorp down by 1.76% were the top losers. (Provisional)

The growth of services activity in India slowed to a seven-month low in June amid softer expansion in new business orders, adding to the clamour for rate cuts by the Reserve Bank. The seasonally adjusted Nikkei Services Business Activity Index, which maps the service sector activity, fell to 50.3 in June from 51 in May, one of the lowest readings in the current 12-month sequence of above-50 readings. A reading above 50 represents expansion, while one below means contraction.

Meanwhile, the seasonally adjusted Nikkei India Composite PMI Output Index, which maps both manufacturing and services sectors rose to a three-month high of 51.1 in June from 50.9 in May, but remained below its long-run average and pointed to a slight pace of expansion.

As per the survey, the new orders received by the Indian service sector grew at the slowest pace in eleven months. In contrast, manufacturing order books increased at the quickest pace since March, outweighing the slowdown in services and therefore contributing to a quicker expansion in private sector new business.

On price front, the input prices in the Indian service sector rose for the ninth consecutive month in June. Cost burdens among manufacturers rose at the slowest pace since March. Purchase prices among manufacturers increased again, but at the weakest pace since March. Prices charged by Indian service providers continued to rise in the latest survey period.

On the jobs front, Indian service providers signalled a slight increase in staffing levels during June. Moreover, future expectations dipped to the lowest since February, highlighting concerns regarding the sustainability of the economic upturn. Although manufacturing was higher in June, variables such as new orders, employment and production stayed below their respective long-run averages.

The CNX Nifty ended at 8329.65, down by 41.05 points or 0.49% after trading in a range of 8319.95 and 8381.45. There were 15 stocks in green against 35 stocks in red on the index. (Provisional)

The top gainers on Nifty were Aurobindo Pharma up by 1.87%, Coal India up by 1.53%, Yes Bank up by 1.20%, Bosch up by 1.13% and BHEL up by 0.91%. On the flip side, GAIL India down by 2.65%, Power Grid Corpn. down by 2.63%, Tata Motors - DVR down by 2.62%, NTPC down by 2.21% and Hindalco down by 2.06% were the top losers. (Provisional)

European markets were showing mixed trend, UK’s FTSE 100 was tad higher by 1.72 points or 0.03% to 6,523.98, Germany’s DAX declined by 132.97 points or 1.37% to 9,576.12, while France’s CAC decreased 56.75 points or 1.34% to 4,178.11.

Asian markets ended mostly lower after five straight days of gains on Tuesday, as commodities dropped and the Japanese yen strengthened on worries about renewed political uncertainty in the UK and the fragile balance sheets of Italian banks. The International Monetary Fund Managing Director Christine Lagarde said that Britain could lose up to 4.5% points of growth by 2019 if it presses ahead with Brexit. She added there was real uncertainty around what conditions there would be for trade deals with the EU after Brexit. Shares of struggling Italian banks tumbled on the Milan stock market Monday after the European Central Bank told Monte dei Paschi di Siena, the country's third-biggest lender, to reduce its debt burden. There were reports of Italy preparing to unilaterally pump billions of euros into its faltering banking system. Shares sagged further as caution before Friday’s US jobs report kept investors from making big bets. Japanese shares snapped a six-day winning streak as the yen's strength hurt exporters and banks followed their European peers lower. Chinese shares bucked the weak trend across Asia after a fresh reading on China's service sector signaled an improvement in activity levels in June and President Xi Jinping called for efforts to propel reforms of state-owned enterprises. Indonesian financial markets are closed all week for the Eid al-Fitr holiday.