Sensex, Nifty remain under pressure

Indian equity benchmarks remained under pressure in late afternoon session, with Sensex and Nifty losing more than 300 and 80 points, respectively. Telecom, Realty and auto stocks continued to witness heavy sell-off in late noon deals, while Bharti Airtel and Kotak Mahindra Bank were among top industry losers on the BSE. Sentiments continued to hit, with a report that the Reserve Bank of India (RBI) hiked interest rates for the second consecutive time and cited a spike in inflation as one of key risks going ahead and expects it to touch 5% in first quarter of financial year 2019-20 (Q1FY20).  The market participants failed to take support with Finance Minister Piyush Goyal’s statement that GST revenues will go up in the coming months on improved compliance and market demand. Traders even overlooked a private report stating that India's economic growth momentum is likely to pick up further in the April-June period and the country is expected to clock GDP growth of 7.5 per cent in this financial year.

On the global front, European markets were trading in red, ahead of a Bank of England meeting, which is expected to deliver a rate hike despite uncertainty over Brexit. The street also remained cautious as Eurozone manufacturing activity remained subdued at the start of the third quarter, as initially estimated. As per final data from IHS Markit, the factory Purchasing Managers' Index rose to 55.1 in July, in line with flash estimate, from 54.9 in June. Besides, the UK manufacturing sector expanded at the slowest pace in three months in July. The manufacturing Purchasing Managers' Index dropped to 54.0 in July from 54.3 in June. Asian markets were trading in red, on renewed worries about a US-China trade war and on rising bond yields after the Federal Reserve signaled it stayed on course to increase borrowing costs in September and likely again in December.

Back home, on the sectoral front, footwear stocks were trading lower, despite Union Minister Suresh Prabhu’s statement that Commerce and Industry Ministry is working with the footwear and allied sector industries to formulate a comprehensive strategy to promote exports and manufacturing in this labour intensive segment, while stocks related to energy sector remained in focus, as the department of industrial policy and promotion (DIPP) started programme for startups in energy sector, to promote budding entrepreneurs. In scrip specific development, PC Jeweller gained after the company rolled out India’s first ‘Augmented Reality Jewellery Buying Experience’ on a dynamic and real time basis.

The BSE Sensex is currently trading at 37218.74, down by 302.88 points or 0.81% after trading in a range of 37187.51 and 37529.69. There were 14 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.39%, while Small cap index was up by 0.28%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.45%, Metal up by 0.84%, Consumer Durables up by 0.67%, Utilities up by 0.66% and Power up by 0.51%, while Telecom down by 1.45%, Realty down by 1.37%, Auto down by 1.02%, Energy down by 0.79% and Consumer Disc down by 0.64% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid Corporation up by 1.87%, Sun Pharma up by 1.26%, Coal India up by 1.26%, Indusind Bank up by 1.10% and Hindustan Unilever up by 0.92%. On the flip side, Bharti Airtel down by 2.88%, Kotak Mahindra Bank down by 2.35%, Maruti Suzuki down by 1.83%, HDFC down by 1.78% and Mahindra & Mahindra down by 1.76% were the top losers.

Meanwhile, a day after the Reserve Bank of India (RBI) hiked its repo rate by 25 basis points to 6.50%, Engineering Export Promotion Council (EEPC) of India chairman Ravi Sehgal has said that the decision of raising interest rate is a big negative for exporters, as it would impact competitiveness of exporters.

EEPC India chairman noted that the exporters would become less competitive in a tough global market due to the rate hike. He also pointed that rate of borrowing has been increasing which is certainly not a good news for exporters, as it would increase the overall cost of production for exporters, particularly in the engineering sector, due to rising prices of raw material like steel. 

RBI in its third bi-monthly monetary policy review of 2018-19 has hiked repo rate under the liquidity adjustment facility (LAF) by 25 basis points (bps) to 6.50%, to curb inflation and pre-empt a rout of the rupee as the global trade war escalates. Consequently, the reverse repo rate under the LAF stands adjusted to 6.25%, and the marginal standing facility (MSF) rate and the Bank Rate to 6.75%. Further, the RBI has maintained a ‘neutral’ stance in the policy as it aimed to contain inflation while not chocking growth.

The CNX Nifty is currently trading at 11262.15, down by 84.05 points or 0.74% after trading in a range of 11249.95 and 11328.90. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Lupin up by 2.56%, Dr. Reddy’s Lab up by 2.54%, Indiabulls Housing Finance up by 2.25%, HPCL up by 2.14% and BPCL up by 1.73%. On the flip side, Bharti Airtel down by 3.25%, Kotak Mahindra Bank down by 2.27%, Tech Mahindra down by 1.92%, Mahindra & Mahindra down by 1.91% and Maruti Suzuki down by 1.87% were the top losers.

All Asian markets were trading in red; Taiwan Weighted decreased 168.36 points or 1.54% to 10,929.77, KOSPI fell 36.87 points or 1.62% to 2,270.20, Nikkei 225 lost 234.17 points or 1.04% to 22,512.53, Straits Times declined 36.51 points or 1.11% to 3,292.50, Jakarta Composite dipped 21.70 points or 0.36% to 6,011.72, Shanghai Composite plunged 57.30 points or 2.07% to 2,767.23 and Hang Seng was down by 626.18 points or 2.26% to 27,714.56.

European markets were trading in red; UK’s FTSE 100 decreased 56.02 points or 0.74% to 7,596.89, France’s CAC fell 35.60 points or 0.65% to 5,462.77 and Germany’s DAX was down by 210.14 points or 1.68% to 12,526.91.