Indian equity markets ended lower for the second straight session on Monday as the Indian rupee hit life-time lows and the Turkish currency crisis dealt a blow to investors’ sentiment globally. Today, the markets are likely to make a positive start on good macro-economic data. The Central Statistics Office’s (CSO) data showed that India’s Retail inflation fell to nine-month low of 4.17% in July on account of slowdown in prices of vegetables and fruits. Its previous low was in October 2017 at 3.58%. Retail inflation, measured by Consumer Price Index (CPI) had hit a five-month high of 5% in June. Besides, traders will be eyeing another macro data of wholesale price inflation for July scheduled to be release later in the day. Also, there will be some support with a private report that India’s foreign reserves are in a comfortable range and another 5-8% fall in reserves will not jeopardise the situation. However, there will be some cautiousness with the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry’s data showing that India’ fuel demand rose 7.3% in July, driven by sharp rise in petrol and diesel consumption. Fuel consumption in July totaled 17.05 million tonnes as compared to 15.88 million tonnes in the same month last year. There will be some buzz in the aviation related stocks with ASSOCHAM’s statement that the aviation sector which was showing an immense promise till about a year ago, is facing head winds with most of the airlines battling a survival issue, hit by rising fuel costs and other expenses even as a cut - throat competition is making the aviation firms bleed. There will be lots of important earnings announcements too, to keep the markets in action.
The US markets ended lower on Monday as the ongoing turmoil in Turkey dampened investors’ appetite for riskier assets. Asian markets were trading mixed in early trade on Tuesday as the contagion from the economic crisis in Turkey remained relatively contained in developed markets overnight.
Back home, 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. 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.
