Sensex, Nifty continue bearish trend; Metals lead losses

Indian benchmark indices continued their bearish trend in late afternoon session, following continuous selling in metal, banking and industrials stocks. Findings of a monthly survey released today kept mood downbeat, which showed that services PMI for July fell to its lowest level in nearly four years following implementation of GST. The seasonally adjusted Nikkei Services Business Activity Index fell to 45.9 in July from 53.1 in June. Some concerns also came with the private report stating that more than 31 percent of the chief financial officers (CFOs) from various companies feel implementation of GST is challenging and manufacturing is the most affected sector. Investors shrugged off the finance ministry’s statement that the RBI’s decision to cut key policy rate by 0.25 percent is an important step to achieve sustained growth consistent with moderate inflation and India’s potential.

On the global front, European markets were trading in red, as investors monitored further earnings reports and reacted to the Dow Jones industrial average breaking the 22,000 barrier for the first time in its 121-year history. Asian markets were also trading in red. Back home, in scrip specific development, Transformers & Rectifiers (India) surged after the company received an approval for issuance of equity shares, and/or equity linked securities and/or securities convertible into equity shares through Qualified Institutional Placement (QIP) or preferential allotment for an amount not exceeding Rs 250 crore.

The BSE Sensex is currently trading at 32307.73, down by 169.01 points or 0.52% after trading in a range of 32282.46 and 32502.55. There were 11 stocks advancing against 20 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was up by 0.07%, while Small cap index was down by 0.47%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.93%, Energy up by 1.64%, Telecom up by 0.79%, Consumer Durables up by 0.32% and Utilities up by 0.30%, while Metal down by 1.56%, Bankex down by 1.39%, Industrials down by 0.51%, Auto down by 0.50% and Basic Materials down by 0.50% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 1.94%, Hindustan Unilever up by 1.46%, TCS up by 1.08%, Bajaj Auto up by 1.08% and Bharti Airtel up by 1.06%. On the flip side, Coal India down by 3.30%, Lupin down by 2.97%, Tata Motors - DVR down by 2.31%, ICICI Bank down by 2.16% and SBI down by 2.03% were the top losers.

Meanwhile, showing similar trend to the contraction in manufacturing sector, activity in India's dominant service sector too contracted in the month of July to its lowest level since September 2013, on the back of the implementation of the goods and services tax (GST).  The seasonally adjusted Nikkei Services Business Activity Index fell to 45.9 in July from 53.1 in June. The Nikkei India Composite PMI Output Index which measures both manufacturing and services also plunged to 46.0 in July from 52.7 in June.

The report also signaled the first downturn in output and new work since January which had an adverse effect on the labour market, with employment contracting over the month. Similarly, factory orders decreased in July and at the quickest pace since February 2009. The report further said that outstanding business in the service economy rose to the greatest extent in five months.

On the price front, services charges rose at the sharpest rate in almost four and a half years during July, while manufacturers offered discounts in order to stimulate demand. As per survey report, even though the higher tax rates and salaries awarded to staff resulted in another monthly increase in input costs, the rate of inflation softened since June, remaining well below its long-run average and the factory charges were also dropped first time in 17 months. However, Indian service providers exhibited optimism towards the 12-month outlook for activity, with hopes of a better understanding around the new tax regime boosting confidence.

The CNX Nifty is currently trading at 10036.25, down by 45.25 points or 0.45% after trading in a range of 10023.15 and 10081.15. There were 21 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Indian Oil Corporation up by 5.71%, Reliance Industries up by 1.89%, Bharti Infratel up by 1.60%, ACC up by 1.59% and Ambuja Cement up by 1.50%. On the flip side, Coal India down by 3.57%, Lupin down by 3.38%, Bank of Baroda down by 2.82%, Hindalco down by 2.63% and Tata Motors - DVR down by 2.38% were the top losers.

Asian markets were trading mostly in red; Hang Seng decreased 76.37 points or 0.28% to 27,531.01, Nikkei 225 decreased 50.78 points or 0.25% to 20,029.26, Taiwan Weighted decreased 49.39 points or 0.47% to 10,469.88, KOSPI Index decreased 40.78 points or 1.68% to 2,386.85, Jakarta Composite decreased 36.45 points or 0.63% to 5,787.80 and Shanghai Composite decreased 12.13 points or 0.37% to 3,272.93. On the flip side, FTSE Bursa Malaysia KLCI increased 0.18 points or 0.01% to 1,770.79.

European markets were trading in red; Germany’s DAX decreased 62.5 points or 0.51% to 12,118.98, France’s CAC decreased 16.94 points or 0.33% to 5,090.31 and UK’s FTSE 100 decreased 13.59 points or 0.18% to 7,397.84.