Benchmarks end near intraday lows on last hour selloff

Selling in last hour of trade dragged benchmarks near intraday low levels, to settle below their crucial 37,700 (Sensex) and 11,400 (Nifty) marks. Markets started the session on a pessimistic note, as cautiousness crept in with report that India’s trade deficit soared to a near five-year high of $18 billion. The commerce ministry data showed that the country’s exports rose by 14.32% to $25.77 billion in July mainly on account of better performance of gems and jewellery sector as well as petroleum products, while imports during July were valued at $43.79 billion, a growth of 28.81% compared to $33.99 billion in the year ago period. Traders also remained concerned on India Ratings’ report that if the steep decline in the household savings rate -- which has fallen to 16.3% from 23.6% between fiscals 2012 and 2017 -- continues, it may pose a serious challenge to overall growth and the macroeconomic stability.

However, market witnessed a decent recovery and pared all of their losses to enter into green terrain as traders took some encouragement with FICCI’s latest Economic Outlook Survey stated that the Indian economy is expected to grow at 7.4% in the current fiscal, higher than the previous year. Some support also came with Prime Minister Narendra Modi’s statement that structural reforms of four years by his government have transformed the Indian economy from being among world’s fragile five to an elephant that has started to run and made it a destination of multi-trillion dollar investment. But, recovery proved short-lived and markets once again came back in red terrain and selling in metal and basic materials dragged markets near intraday low levels. Traders remain concerned on report that India’s crude oil import bill is likely to jump by about $26 billion in 2018-19 as rupee dropping to a record low has made buying of oil from overseas costlier. Meanwhile, Union Minister Arun Jaitley said that India has comfortable foreign exchange reserves to deal with any undue volatility in the currency market and developments are being closely monitored.

On the global front, European markets were trading in green in early deals following news that China has accepted an invitation from the United States to talk trade in late August. Corporate earnings also boosted sentiment across the continent. However, all the Asian markets ended in red terrain, following the negative cues from Wall Street amid worries about Turkey’s financial crisis and an economic showdown in China.

Back home, telecom stocks edged lower despite report that the Telecom Commission, apex decision-making body at the telecom department, is likely to meet on August 31 to discuss Trai’s recommendation on spectrum allocation. However, Pharma stocks ended higher despite report stating that Indian drug makers are staring at diminishing margins as raw material imports from China has increased while drug prices have stagnated. The cost of raw materials sourced from China has risen after Chinese government started cracking down on facilities that violate the country’s pollution control norms. Shares of midcap information technology (IT) companies rallied by up to 15% on the BSE after they reported a good set of numbers for the quarter ended June 2018 (Q1FY18).

Finally, the BSE Sensex shed 188.44 points or 0.50% to 37,663.56, while the CNX Nifty was down by 50.05 points or 0.44% to 11,385.05.

The BSE Sensex touched a high and a low of 37,891.92 and 37,634.13, respectively and there were 13 stocks advancing against 18 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index lost 0.48%, while Small cap index was down by 0.20%.

The top gaining sectoral indices on the BSE were Healthcare up by 0.96%, IT up by 0.58%, Utilities up by 0.39%, TECK up by 0.38% and Auto was up by 0.30%, while Metal down by 2.18%, Basic Materials down by 1.05%, Capital Goods down by 1.05%, Consumer Durables down by 0.96% and Energy was down by 0.86% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 2.98%, Bharti Airtel up by 1.51%, Infosys up by 1.17%, Tata Motors up by 0.99% and Axis Bank up by 0.90%. On the flip side, Kotak Mahindra Bank down by 3.62%, Vedanta down by 3.05%, HDFC down by 2.61%, Tata Steel down by 1.87% and Larsen & Toubro down by 1.64% were the top losers.

Meanwhile, staying in positive territory for the fourth consecutive month, India’s merchandise exports grew by 14.32% to $25.77 billion in July 2018, on the back of better performance of gems and jewellery sector as well as petroleum products. However, the overall trade deficit widened to $18.02 billion during the month under review as against $11.45 billion in July 2017, the highest in nearly 5 years. The trade deficit during April- July 2017-18, was $62.96 billion as against $51.50 billion in the same period last year.

As per the data released by the Commerce Ministry, exports increased by 14.32% to $25.77 billion in July 2018, as compared to $22.54 billion in the same month a year ago. In Rupee terms, it was up by 21.84% to Rs 1,77,041.47 crore in July 2018, from Rs 1,45,308.10 crore in July 2017. Cumulative value of exports for the period April- July 2018-19 was $108.24 billion as against $94.76 billion, registering a positive growth of 14.23% over the same period last year. In Rupee terms, it was up by 19.49% to Rs 7,29,823.08 crore from Rs 6,10,780.14 crore.

Non-petroleum and Non Gems & Jewellery exports in July 2018 were valued at $18.68 billion as against $16.98 billion in July 2017, an increase of 9.98%. Non-petroleum and Non Gems and Jewellery exports during April- July 2018-19 were valued at $78.54 billion as compared to $69.70 billion for the corresponding period in 2016-17, an increase of 12.69%.

Imports during July 2018, increased by 28.81% to $43.79 billion as compared to $33.99 billion in July 2017, while in rupee terms it was up by 37.28% to Rs 3,00,784.72 crore from Rs 2,19,108.89 crore in July 2017.  Cumulative value of imports for the period April- July 2018-19 was $171.20 billion as against $146.26 billion, registering a positive growth of 17.05% over the same period last year. In rupee terms, it was Rs 11,54,881.70 crore, up by 22.50% from Rs 9,42,740.00 crore in the same period last year.

Oil imports during July 2018 were valued at $12.35 billion which was 57.41% higher than oil imports valued at $7.84 billion in July 2017. Oil imports during April- July 2018-19 were valued at $46.98 billion which was 51.45% higher than the oil imports of $31.02 billion in the corresponding period last year. Non-oil imports during July 2018 were estimated at $31.44 billion which was 20.23% higher than non-oil imports of $26.15 billion in July 2017. Non-oil imports during April- July 2018-19 were valued at $124.21 billion which was 7.79% higher than the level of such imports valued at $115.23 billion in April- July, 2017-18.

The CNX Nifty traded in a range of 11,449.85 and 11,366.25. There were 20 stocks in green as against 30 stocks in red on the index.

The top gainers on Nifty were GAIL India up by 3.61%, Dr. Reddy’s Lab up by 3.47%, Sun Pharma up by 3.19%, Lupin up by 1.49% and Infosys up by 1.47%. On the flip side, Kotak Mahindra Bank down by 3.71%, Vedanta down by 2.84%, Zee Entertainment down by 2.59%, HDFC down by 2.54% and Indiabulls Housing Finance down by 2.51% were the top losers.

European markets were trading in green; UK’s FTSE 100 gained 46.17 points or 0.61% to 7,544.04, France’s CAC rose 32.78 points or 0.61% to 5,338.00 and Germany’s DAX was up by 57.67 points or 0.47% to 12,220.68.

All the Asian markets ended in red terrain on Thursday amid worries about Turkey’s financial crisis. However, markets pared most of their losses to end off their day's lows after China said it has accepted an invitation from the U.S. for a new round of trade talks to be held in late August. China's Ministry of Commerce said that a Chinese delegation led by vice commerce minister Wang Shouwen will travel to the U.S. in late August for trade talks to be held with the US under Secretary of Treasury for International Affairs David Malpass. Traders also took some relief with report that in another development, the United States ruled out removing steel tariffs that have contributed to a currency crisis in Turkey even if Ankara frees a U.S. pastor.

Meanwhile, Japanese benchmarks ended lower after a government report showed that Japan posted a merchandise trade deficit of 231.2 billion yen in July. That was shy of expectations for a shortfall of 41.2 billion yen following the downwardly revised 720.8 billion yen surplus in June. Exports were up 3.9 percent from a year earlier while imports surged an annual 14.6 percent. Chinese shares also ended in red for a fourth straight session on concerns about slowing growth.