Benchmarks end lower on global sell-off; rupee hits all-time low

Indian equity benchmarks ended the Monday’s trade in red terrain with frontline gauges settling below their crucial 37,700 (Sensex) and 11,400 (Nifty) levels, amid global sell off. Sentiments remained dampened since beginning as key gauges made a gap-down start 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 69.89 per dollar. Traders remained on sidelines ahead of the macro data of retail inflation for July scheduled to be announced post market hours. Sentiments also got hurt with Fitch Ratings’ latest report that its outlook on the Indian banking sector is likely to remain negative until the banks address their weak core capital positions against mounting bad loans and poor financial performance. Traders took note of GSTN CEO’s statement that the IT backbone of the Goods and Services Tax (GST) was not given enough time to prepare a system to the satisfaction of the GSTN which led to the glitches in the implementation of the new tax regime.

The domestic gauges recovered partially from day’s bottom in early afternoon deals but hovered in negative territory as 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. The traders overlooked CII-ASCON Industry Survey report highlighting that India’s economic growth will improve further in the coming quarters due to recovery in domestic demand as also the investment cycle. The demand and investment will be supported by better consumption patterns on account of favourable monsoon, moderation in inflation and the onset of festive season.

Weak opening in European counters too dampened sentiments as concerns over global trade and the banking crisis in Turkey weighed on sentiment. Besides, the European Central Bank raised concerns over the impact of a weak lira on European banks. The street paid no heed towards a report that UK economic growth doubled in the second quarter driven by stronger growth in both services and construction sectors. Asian markets ended in red on fears that the economic crisis gripping Turkey could spill over into the global economy.

Back home, the street failed to take any sense of relief a report that the Monsoon session of Parliament, which ended on August 10, 2018, was the most productive’ for Lok Sabha since 2000. According to the data report, 20 bills were introduced during the session and 12 were passed. On the sectoral front, stocks related to the Steel sector exhibited 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 lost sheen with Crisil’s latest report that India will not be able to achieve its ambitious target of generating 100GW solar power by 2022.

Finally, the BSE Sensex shed 224.33 points or 0.59% to 37,644.90, while the CNX Nifty was down by 73.75 points or 0.65% to 11,355.75.

The BSE Sensex touched a high and a low of 37,799.54 and 37,559.26, respectively and there were 11 stocks advancing against 20 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index lost 0.70%, while Small cap index was down by 0.78%.

The top gaining sectoral indices on the BSE were IT up by 1.24%, TECK up by 0.77%, Healthcare up by 0.55%, FMCG up by 0.16% and Consumer Durables was up by 0.06%, while Oil & Gas down by 1.93%, PSU down by 1.90%, Energy down by 1.70%, Bankex down by 1.20% and Basic Materials was down by 1.12% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 1.75%, Sun Pharma up by 1.65%, Wipro up by 1.31%, Mahindra & Mahindra up by 0.96% and Coal India up by 0.89%. On the flip side, Vedanta down by 3.40%, SBI down by 3.17%, Yes Bank down by 3.11%, Tata Motors - DVR down by 2.64% and Axis Bank down by 1.68% were the top losers.

Meanwhile, the Union government has paid total Rs 52,077 crore as Goods and Services Tax (GST) compensation to the States/UTs during the period from July, 2017 to May, 2018, for the reported revenue deficit on account of implementation of GST.

As per the Ministry of Finance, States/UTs have been paid GST Compensation of Rs 48178 crore for the period of July 2017 to March, 2018 and Rs 3899 crore for the period of April-May, 2018. It also listed the States/UTs which has received GST Compensation during April- May, 2018 such as Bihar (received Rs 325 crore), Chhattisgarh (Rs 257 crore), Goa (Rs 28 crore), Gujarat (Rs 174 crore), Himachal Pradesh (Rs 225  Crore) , J & K (Rs 147 crore), Jharkhand (Rs 76 crore), Karnataka (Rs 792 crore), Kerala(Rs 67 crore), Madhya Pradesh (Rs 130 crore), Odisha (Rs 282 crore), Puducherry (Rs 79 crore), Punjab (Rs 944 crore), Rajasthan (Rs 106 crore), Tripura (Rs 2 crore) and Uttarakhand (received Rs 265 crore).

As per provisions in Section 7 of the GST (Compensation to States) Act, 2017 loss of revenue to the States on account of implementation of Goods and Services Tax shall be payable during transition period and compensation payable to a State shall be provisionally calculated and released at the end of every two months during transition period of 5 years.

The CNX Nifty traded in a range of 11,406.30 and 11,340.30. There were 19 stocks in green as against 31 stocks in red on the index.

The top gainers on Nifty were GAIL India up by 3.32%, Tech Mahindra up by 2.64%, Sun Pharma up by 1.95%, Grasim Industries up by 1.87% and HCL Technologies up by 1.75%. On the flip side, BPCL down by 5.75%, HPCL down by 4.77%, Yes Bank down by 3.62%, Vedanta down by 3.40% and Indian Oil Corporation down by 3.37% were the top losers.

European markets were trading mostly in red; UK’s FTSE 100 shed by 39.81 points or 0.52% to 7,627.20 and France’s CAC dipped 17.55 points or 0.33% to 5,397.13 and Germany’s DAX was down by 86.22 points or 0.70% to 12,338.13.

Asian equity markets ended in red on Monday as turmoil in Turkey and the lira's free-fall triggered fears of contagion. Tensions between the US and Turkey have been on the rise due to Turkish detention of US pastor Andrew Brunson and Trump's move to double metals tariffs on Turkey. Japanese shares ended lower, tracking weak cues from the US and Europe and a firmer yen on concerns that the financial crisis in Turkey will have a spillover effect on the world economy. Further, Chinese shares ended down, but managed to recoup most of their earlier losses aided by gains in shares of technology firms.