Benchmarks end at day’s low; Sensex breaches 35,500 mark

Indian benchmark indices ended the Monday’s session on negative note, with Sensex and Nifty breaching their crucial psychological 35,500 and 10,800 levels, respectively. After a cautious start, the key indices traded lackluster throughout the session, amid reports that foreign investors have pulled out over Rs 14,500 crore from the Indian capital markets in June so far, primarily due to global trade war and hawkish commentary by the US Federal Reserve. The latest outflow has taken the total net withdrawal by foreign portfolio investors (FPIs) from the capital markets (equity and debt) to more than Rs 46,600 crore in this year so far. The market participants remained worried with a private report stating that goods and services tax (GST) has not delivered on the promised formalisation of the economy as yet, while the glitches in the one-nation-one-tax regime has increased the demand for cash.

Further, in the dying hours of the day, the markets extended their fall to close near day’s low point, on the back of heavy selling pressure coupled with weak global cues on worries over a US-China trade war. Adding some pessimism, Reserve Bank of India’s (RBI) data showed that India’s foreign exchange reserves fell by $3.03 billion to $410.070 billion as on June 15. Foreign currency assets, which form a key component of reserves, fell by $3.05 billion from the previous week to $385.333 billion. Traders paid no heed towards Confederation of Indian Industry’s (CII) statement that Indian companies’ overseas investments are likely to go up, with the stable market conditions and the significant impact created by Indian companies on local economies. The street also overlooked Union Minister Suresh Prabhu’s statement that India is trying to resolve trade disputes with several countries and is willing to create a new world trade order as it extends a hand of friendship to all.

On the global front, European markets were trading in red terrain, as investors worried about further tariffs in global trade. Autos were the worst performing sector, as a result of the rising tensions in trade. On Friday, US President Donald Trump threatened to apply new duties on European carmakers. The European Union has said that it would respond with further US tariffs if Trump fulfilled his threat. Asian markets ended mostly in red, amid worries about US-China trade tensions after the Wall Street Journal reported that US President Donald Trump plans to bar Chinese companies from investing in US technology firms and also block additional technology exports to Beijing.

Back home, on the sectoral front, banking stocks ended lower, despite interim finance minister Piyush Goyal’s statement that the banking system is now poised for a better future and support the credit needs of the economy. He also highlighted that the banking system is now strengthened to once again start becoming a powerful engine of growth, financing the infrastructure and other credit needs of the economy. Auto stocks also ended in red terrain after auto tariff threat by US.

Finally, the BSE Sensex fell 219.25 points or 0.61% to 35,470.35, while the CNX Nifty was down by 59.40 points or 0.55% to 10,762.45.

The BSE Sensex touched a high and a low of 35,806.97 and 35,430.11, respectively and there were 7 stocks advancing against 24 stocks declining on the index.
The broader indices ended in red; the BSE Mid cap index fell by 0.80%, while Small cap index was down by 0.89%.

The only gaining sectoral indices on the BSE were IT up by 0.85% and TECK up by 0.58%, while Industrials down by 1.83%, PSU down by 1.73%, Oil & Gas down by 1.55%, Auto down by 1.51% and Energy down by 1.40% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 2.07%, Vedanta up by 0.70%, Kotak Mahindra Bank up by 0.70%, Indusind Bank up by 0.64% and HDFC Bank up by 0.58%. On the flip side, Tata Motors - DVR down by 7.08%, Tata Motors down by 5.94%, ICICI Bank down by 3.79%, Coal India down by 2.28% and Larsen & Toubro down by 2.05% were the top losers.

Meanwhile, union Minister Suresh Prabhu has clarified that India is making an attempt to resolve trade disputes with several international locations and is keen to create a new world trade order as it extends a hand of friendship to all. He expressed hopes that micro, small and medium enterprises (MSMEs) would create more economic opportunities and become the driver of a new India. 

The minister said “We want to make sure that India remains a friend of all countries of the world whether it is South East Asia, whether it is Far East including our good friend Japan, whether it is in the Middle East, whether it is Africa or Latin America, in each of these segments.” He also said “I have personally met almost all the ministers at different levels at different time, of course, Europe and the US.”

Further, Prabhu pointed out that MSMEs take wealth to different corners of the country, through equitable distribution of wealth, unlike large industries. He also said that they play a key role in exports, in promotion of industrialisation and innovation. He noted that there is need to promote SMEs, innovation and startups and that is why government is committed to do this.

The CNX Nifty traded in a range of 10,831.05 and 10,753.05. There were 14 stocks in green as against 35 stocks in red, while 1 stock remained unchanged on the index.

The top gainers on Nifty were Ultratech Cement up by 2.65%, Bajaj Finance up by 2.10%, Infosys up by 1.75%, Bharti Infratel up by 1.66%, and Lupin was up by 1.34%. On the flip side, Tata Motors down by 6.31%, HPCL down by 3.99%, ICICI Bank down by 3.64%, BPCL down by 3.37% and Coal India was down by 2.78% were the top losers.

All European markets were trading in red; UK’s FTSE 100 fell 89.36 points or 1.18% to 7,592.91, France’s CAC decreased 43.48 points or 0.81% to 5,343.90 and Germany’s DAX was down by 176.24 points or 1.42% to 12,403.48.

Asian equity markets ended mostly lower on Monday as trade worries persisted and oil prices gave up some of their hefty gains made on Friday after OPEC pledged to increase production by less than the market feared. Chinese shares ended lower as news of a cut in reserve requirement ratio for some banks was offset by lingering trade war fears. Further, Japanese shares ended lower as the yen firmed up in reaction to reports suggesting that the Trump administration plans to put curbs on Chinese investment in US technology firms.