Late hour selloff drag markets near intraday lows

Monday turned-out to be a disappointing day of trade for Indian equity benchmarks with frontline gauges ending near intraday low levels, breaching their crucial 36,400 (Sensex) and 10,950 (Nifty) mark. Markets started the session with cautious tone ahead of more corporate earnings this week. Sentiments turned pessimistic and markets extended losses in second half of the trade on the back of high Wholesale Price Index (WPI) data. India's wholesale inflation grew 5.77% in June, a four-and-half year high, driven by some food items and fuel prices. Traders remained cautious with commerce ministry’s report showing that India’s trade deficit widened to its highest level in more than five years in June, driven largely by a surge in oil prices and a weaker rupee. The trade deficit widened to $16.6 billion from $14.62 billion in May, though merchandise exports rose 17.57% year-on-year in June, on account of healthy growth in sectors such as petroleum and chemicals, while imports rose 21.31% to $44.3 billion during the month. Anxiety also prevailed in the markets with Reserve Bank of India’s data that the country’s foreign exchange reserves declined by $248.20 million to $405.81 billion in the week to July 6, despite a rise in the foreign currency assets.

Markets continued southward moment in last leg of trade with foreign investors pulling out nearly Rs 1,200 crore from the debt markets in the first two weeks of the month on higher fuel prices and possibilities of rate hike by the US Federal Reserve. Traders paid no heed towards Economic Affairs Secretary Subhash Chandra Garg’s statement that the Indian economy is at a take off stage and is expected to be the world’s third largest by 2030 with GDP worth $10 trillion. Investors failed to get any support with the Union Minister Arun Jaitley exuding confidence that India will pip Great Britain to become the fifth largest economy in the world next year if economic expansion continues at the projected rate. Finance Minister Piyush Goyal’s statement that the Centre is looking at simplify the companies law to provide relief to businesses, too failed to provide any relief to the market participants.

On the global front, European markets were trading mostly in red in early deals on Monday, as investors focused on earnings and monitored an upcoming meeting between the United States and Russia. Asian markets ended mostly in red, as data showed China’s economy slowed slightly in the second quarter, compounded by the fear of a full-scale Sino-US trade war looming over markets.

Back home, markets took note of a report that although corporate earnings for the June quarter will get a boost from a favourable base, more cash in the system and a weaker currency, higher raw material costs, bigger loan-loss provisions for banks and muted demand for materials in a dull economy could keep profit growth subdued. Stocks related to public sector banks (PSBs) exhibited mixed trend on report that the finance ministry may approach markets regulator SEBI to seek relaxation on the minimum 25% public shareholding norm for some PSBs.

Finally, the BSE Sensex declined 217.86 points or 0.60% to 36,323.77, while the CNX Nifty was down by 82.05 points or 0.74% to 10,936.85.

The BSE Sensex touched a high and a low of 36,658.71 and 36,298.94, respectively and there were 10 stocks advancing against 20 stocks declining, while 1 stock remained unchanged on the index.

The broader indices ended in red; the BSE Mid cap index lost 2.45%, while Small cap index was down by 2.51%.

The only gaining sectoral indices on the BSE were IT up by 0.78% and TECK was up by 0.33%, while Metal down by 3.70%, Healthcare down by 3.26%, Realty down by 3.26%, Basic Materials down by 3.01% and Telecom was down by 2.80% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 1.96%, Infosys up by 1.83%, HDFC up by 0.95%, Wipro up by 0.86% and Hindustan Unilever up by 0.73%. On the flip side, Tata Steel down by 6.96%, Tata Motors - DVR down by 5.02%, Tata Motors down by 4.77%, Sun Pharma down by 4.69% and Bharti Airtel down by 3.31% were the top losers.

Meanwhile, staying in positive territory for the third consecutive month, India’s merchandise exports grew by 17.57% to $27.70 billion in June 2018, on the back of healthy growth in sectors such as petroleum and chemicals. However, the overall trade deficit widened to $16.60 billion during the month under review as against $12.96 billion in June 2017, the highest in nearly 43 months. The trade deficit during April- June 2017-18, was $44.94 billion as against $40.05 billion in the same period last year.

As per the data released by the Commerce Ministry, exports increased by 17.57% to $27.70 billion in June 2018, as compared to $23.56 billion in the same month a year ago. In Rupee terms, it was up by 23.68% to Rs 187800.20 crore in June 2018, from Rs 151844.56 crore in June 2017. Cumulative value of exports for the period April- June 2018-19 was $82.47 billion as against $72.21 billion, registering a positive growth of 14.21% over the same period last year. In Rupee terms, it was up by 18.76% to Rs 552781.61 crore from Rs 465472.04 crore.

Non-petroleum and Non Gems & Jewellery exports in June 2018 were valued at $20.13 billion as against $17.48 billion in June 2017, an increase of 15.13%. Non-petroleum and Non Gems and Jewellery exports during April- June 2018-19 were valued at $59.86 billion as compared to $52.71 billion for the corresponding period in 2016-17, an increase of 13.56%.

Imports during June 2018, increased by 21.31% to $44.30 billion as compared to $36.52 billion in June 2017, while in rupee terms it was up by 27.61% to Rs 300351.83 crore from Rs 235361.85 crore in June 2017.  Cumulative value of imports for the period April- June 2018-19 was $127.41 billion as against $112.26 billion, registering a positive growth of 13.49% over the same period last year. In rupee terms, it was Rs 854096.98 crore, up by 18.03% from Rs 723631.11 crore in the same period last year.

Oil imports during June 2018 were valued at $12.73 billion which was 56.61% higher than oil imports valued at $8.13 billion in June 2017. Oil imports during April- June 2018-19 were valued at $34.64 billion which was 49.44% higher than the oil imports of $23.18 billion in the corresponding period last year.  Non-oil imports during June 2018 were estimated at $31.58 billion which was 11.20% higher than non-oil imports of $28.40 billion in June 2017. Non-oil imports during April- June 2018-19 were valued at $92.77 billion which was 4.14% higher than the level of such imports valued at $89.09 billion in April- June, 2017-18.

The CNX Nifty traded in a range of 11,019.50 and 10,926.25. There were 15 stocks in green as against 35 stocks in red on the index.

The top gainers on Nifty were Tech Mahindra up by 2.58%, NTPC up by 1.44%, Infosys up by 1.41%, Yes Bank up by 1.01% and HUL up by 0.99%. On the flip side, Dr. Reddy’s Lab down by 9.43%, Tata Steel down by 7.12%, Lupin down by 5.73%, Sun Pharma down by 4.62% and Tata Motors down by 4.02% were the top losers.

European markets were trading mostly in red; UK’s FTSE 100 increased 49.25 points or 0.65% to 7,612.62, France’s CAC added 8.45 points or 0.16% to 5,420.75 and Germany’s DAX was up by 17.82 points or 0.14% to 12,558.55.

Asian equity markets ended mostly lower on Monday as a raft of Chinese data proved to be a mixed bag and investors awaited Federal Reserve Chairman Jerome Powell's semi-annual congressional testimonies on Tuesday and Wednesday for directional cues. Chinese shares ended lower after official data showed China's GDP growth slowed to 6.7 percent in the second quarter, its slowest pace since 2016. That matched forecasts but was a tad lower than 6.8 percent in the first quarter of 2018. Retail sales numbers for June exceeded expectations and fixed asset investment grew in line with expectations while industrial output growth came in shy of forecasts. Meanwhile, the Japanese market was closed in observance of Marine Day.