Dalal Street witness bloodbath in early deals on negative global cues

Indian equity benchmarks witnessed massacre on Dalal Street in morning deals with frontline gauges tumbling below their crucial 37,600 (Sensex) and 11,350 (Nifty) levels on negative global cues. Sentiments remained dampened following a slump in the Turkish lira, as US President Donald Trump doubled steel and aluminum tariffs on Turkey, raising concerns the country may plunge into a financial crisis. Sentiments also remained dampened after Rupee hit its record low of 69.53 per dollar in early deals. Traders remained on sidelines ahead of the macro data of retail inflation for July scheduled to be announced post market hours. Investors shrugged off report that India’s industrial output recorded a five-month high growth of 7% in June as against 3.9% in May, as production of consumer durables and capital goods picked up pace ahead of festival season. Market participants paid no heed towards report that foreign investors have pumped in over Rs 8,500 crore into the Indian capital markets in the last eight trading sessions on improvement in crude oil prices, stabilising rupee and better corporate earnings.

Global cues remained subdued with all the Asian markets trading in red at this point of time, as a renewed rout in the Turkish lira drove demand for safe harbours, including the US dollar, Swiss franc and yen. The US markets ended lower on Friday, amid concerns over the ongoing slide of the Turkish liraand fears the country’s economic and political crisis could spread to Europe and elsewhere.

Back home, stocks related to the Steel sector exhibiting mixed trend on Joint Plant Committee’s (JPC) latest report showing that India’s crude steel output grew 6% to 8.73 million tonne (MT) during July 2018, as compared to 8.22 MT crude steel produced during the same month a year ago. Power sector stocks were on the losing side with Crisil’s latest report that India will not be able to achieve its ambitious target of generating 100GW solar power by 2022.

The BSE Sensex is currently trading at 37,559.77, down by 309.46 points or 0.82% after trading in a range of 37559.26 and 37693.19. There were 6 stocks advancing against 25 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index dropped 0.61%, while Small cap index was down by 1.03%.

The few gaining sectoral indices on the BSE were Healthcare up by 0.60%, IT up by 0.35% and TECK was up by 0.11%, while Basic Materials down by 1.34%, Energy down by 1.32%, Power down by 1.21%, PSU down by 1.20% and Bankex was down by1.15% were the top losing indices on BSE.

The top gainers on the Sensex were Coal India up by 2.50%, Sun Pharma up by 1.81%, Mahindra & Mahindra up by 0.85%, Wipro up by 0.81% and ITC was up by 0.16%. On the flip side, Vedanta down by 3.69%, SBI down by 2.87%, Tata Motors - DVR down by 2.43%, Tata Motors down by 1.80% and Reliance Industries was down by 1.69% were the top losers.

Meanwhile, after declining to a seven-month low in May, India’s industrial production measured by Index of Industrial Production (IIP) picked up space and accelerated to 7% in the month of June 2018, on the back of strong growth in manufacturing and capital goods sector. This was the highest level achieved by the index in the last five months. The IIP had shown a marginal decline of 0.3% in June 2017. Besides, factory output growth was revised upwards for May at 3.9% from the previous estimate of 3.2%.

As per the data released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation, IIP with base 2011-12 for the month of June 2018, stood at 127.7, which was 7.0% higher as compared to the level in the month of June 2017. The cumulative growth for the period April-June 2018 over the corresponding period of the previous year stands at 5.2%.

On the sectoral basis, the manufacturing sector, which constitutes 77.63% of the index, grew by 6.9% in June, as against a decline of 0.7% in the year-ago month. Power generation segment saw a rise of 8.5% during the month as compared to 2.1% growth a year ago. The mining sector output recorded a notable growth of 6.6% in June as against 0.1% in June 2017. The Indices of Industrial Production for the Mining, Manufacturing and Electricity sectors for the month of June 2018 stand at 105.0, 128.6 and 159.9 respectively. The cumulative growth in these three sectors during April-June 2018 over the corresponding period of 2017 has been 5.4%, 5.2% and 4.9% respectively.

Consumer goods grew at a 21-month high of 13.1% in June, as compared to a decline of 3.5% in the year-ago month, while capital goods recorded a positive growth rate at 9.6% during the month as compared to a decline of 6.1% in the same month last year. However, consumer non-durables continued their dismal performance, growing at 0.5% in June, reflecting poor rural demand conditions. As per Use-based classification, the growth rates in June 2018 over June 2017 were 9.3% in Primary goods, 2.4% in Intermediate goods and 8.5% in Infrastructure/ Construction Goods.

In terms of industries, 19 out of the 23 industry groups in the manufacturing sector have shown positive growth during the month of June 2018 as compared to the corresponding month of the previous year. The industry group ‘Manufacture of computer, electronic and optical products’ has shown the highest positive growth of 44.1% followed by 20.5% in ‘Manufacture of motor vehicles, trailers and semi-trailers’ and 15.6% in ‘Manufacture of other transport equipment’. On the other hand, the industry group ‘Other manufacturing’ has shown the highest negative growth of (-) 40.2% followed by (-) 31.7% in ‘Manufacture of tobacco products’ and (-) 0.8% in ‘Manufacture of textiles’.

The CNX Nifty is currently trading at 11,348.15, down by 81.35 points or 0.71% after trading in a range of 11340.30 and 11369.80. There were 14 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 3.10%, Coal India up by 2.66%, GAIL India up by 2.60%, Sun Pharma up by 1.56% and HCL Tech was up by 1.23%. On the flip side, Vedanta down by 3.55%, Indiabulls Housing down by 2.82%, SBI down by 2.63%, HPCL down by 1.83% and BPCL was down by 1.77% were the top losers.

Asian markets are trading in red; Straits Times declined 39.71 points or 1.22% to 3,245.07, Taiwan Weighted lost 244.60 points or 2.28% to 10,739.08, KOSPI dropped 39.03 points or 1.74% to 2,243.76, Nikkei 225 tumbled 434.86 points or 1.99% to 21,863.22, Shanghai Composite fell 48.41 points or 1.76% to 2,746.90, Hang Seng decreased 519.30 points or 1.86% to 27,847.32 and Jakarta Composite was down by 180.71 points or 3.06% to 5,896.46.