Post Session: Quick Review

Indian equity benchmarks ended first day of the week in negative terrain with losses of around a percent. Sharp selling activity which took place during final hours of trade dragged the markets lower, with Sensex and Nifty slipping below their crucial 38,300 and 11,600 levels, respectively. Domestic bourses made a good start, on the back of robust GDP growth rate for the April-June quarter of fiscal. India’s economy grew at two-year high of 8.2 per cent in the April-June quarter of 2018-19 on strong performance of manufacturing and agriculture sectors, increasing its lead over China to remain the world’s fastest growing major economy. Traders also took some encouragement with Principal Economic Adviser in the Ministry of Finance, Sanjeev Sanyal’s statement that the growth rate will be affected in next reading, but India would remain world’s fastest-growing major economy, as he countered scepticism over GDP growth rate. Traders also remained optimistic with Controller General of Accounts’ (CGA) report that the direct tax collections grew by a meagre 6.6 per cent during April-July of the current financial year against the Budget target of 14.4 per cent for 2018-19. The growth was in comparison with the corresponding period of the last three years.

However, markets took U-turn and entered into red zone in final hours of trade, as sentiments turned pessimistic with data showing that India’s core sector output grew at a slower pace of 6.6% in July 2018, from 7.6% in June 2018, on the back of sharp decline in crude oil and natural gas production. Sentiments also got spooked with report showing that growth in India's manufacturing sector unexpectedly slowed in August as domestic demand softened. Sentiments on the street weakened further with  former finance minister P Chidambaram expressing scepticism over India's GDP growth prospects, saying it would ‘not be so favourable’ in third and fourth quarters, despite the GDP growing at 8.2% in the current fiscal's first quarter. He said the country's growth rate might decline in the third and fourth quarters and be the same as that reported in the last fiscal.

On the global front, Asian markets ended lower on Monday, while European markets were trading mostly in red in early deals, hit by worries over further escalation of the U.S-China trade war and unstable emerging market currencies. Back home, banking stocks ended lower despite Union Minister Ravi Shankar Prasad’s statement that the operations of the India Post Payments Bank (IPPB) will strengthen the financial inclusion programme in India and make country’s village systems stronger. Besides, auto stocks were in limelight as companies report their sales number. Bajaj Auto has registered a rise of 30% in total sales to 437,092 units in August 2018 against 335,031 units in August 2017.

The BSE Sensex ended at 38284.74, down by 360.33 points or 0.93% after trading in a range of 38270.51 and 38934.35. There were 10 stocks advancing against 21 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index declined 0.59%, while Small cap index was down by 0.21%. (Provisional)

The few gaining sectoral indices on the BSE were Telecom up by 0.52%, Metal up by 0.23% and Consumer Durables up by 0.20%, while FMCG down by 2.38%, Realty down by 1.33%, Power down by 1.29%, Bankex down by 1.22% and Utilities down by 1.21% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Wipro up by 2.01%, Tata Motors - DVR up by 1.41%, Bharti Airtel up by 0.61%, HDFC Bank up by 0.57% and HDFC up by 0.48%. (Provisional)

On the flip side, Hindustan Unilever down by 4.53%, Power Grid down by 2.99%, ICICI Bank down by 2.77%, Axis Bank down by 2.66% and ITC down by 2.44% were the top losers. (Provisional)

Meanwhile, the Controller General of Accounts (CGA) in its latest data has showed that the country’s fiscal deficit in the first four months of current financial year (FY19) came in at Rs 5,40,257 crore or 86.5% of the FY19 Budget target. The country’s fiscal deficit for FY19 is budgeted at 3.3% of the GDP against the actual of 3.5% in FY18. Though this appeared to be inconsistent with the fiscal consolidation plan, the situation was still better than the year-ago period when the deficit had touched 92.4% of the annual target.

Budgetary capital expenditure in April-July 2018, stood at Rs 1,11,337 crore, 17% higher than the year-ago period and 37.1% of the full-year target, indicating the continued heavy reliance on public investments for growth amid scarce evidence of a much-awaited recovery in private investments. The pace of overall spending has been marginally slower so far this year than the year-ago period, on account of revenue spending squeeze. The Centre’s total expenditure was Rs 8.9 lakh crore or 36.4% of the FY19 target, compared to 37.7% of the target in the corresponding period last year.

In first four months (April-July) of the current financial year, India’s Centre’s tax revenue (net of transfers to states) stood at Rs 2.93 lakh crore or 19.8% of the FY19 Budget estimate (BE), as compared to 21% of the corresponding target in the year-ago period.

The CNX Nifty ended at 11569.90, down by 110.60 points or 0.95% after trading in a range of 11567.40 and 11751.80. There were 19 stocks advancing against 31 stocks declining on the index. (Provisional)

The top gainers on Nifty were Dr. Reddys Lab up by 3.53%, Eicher Motors up by 2.75%, Titan Co up by 1.96%, Wipro up by 1.81% and HPCL up by 1.10%. (Provisional)

On the flip side, Bajaj Finance down by 4.78%, Hindustan Unilever down by 4.56%, Power Grid down by 3.70%, Ultratech Cement down by 2.71% and Axis Bank down by 2.70% were the top losers. (Provisional)

European markets were trading mostly in red; France’s CAC decreased 5.45 points or 0.1% to 5,401.40 and Germany’s DAX dipped 38.76 points or 0.31% to 12,325.30, while UK’s FTSE 100 rose 54.93 points or 0.73% to 7,487.35.

Asian equity markets ended lower on Monday as weekend US-Canada trade talks ended with no deal and data showed China's manufacturing sector recorded the weakest growth in 14 months in August. After contentious US-Canada trade talks ended on Friday with no deal to revamp the North American Free Trade Agreement (NAFTA), US President Donald Trump said that Canada ‘will be out’ of the deal unless the revised version is ‘fair’ to America. The talks would resume on Wednesday with the aim of eventually hammering out a trilateral deal. Chinese shares ended slightly lower after a private survey showed that China's manufacturing activity growth slowed in August on weaker new orders. The Caixin Purchasing Managers' Index fell to 50.6 in August from 50.8 in July. The score signaled the weakest improvement since June 2017. Production grew at the fastest pace since the start of the year. However, demand conditions softened, with total new business rising at the slowest pace for 15 months. Further, Japanese shares ended lower as renewed trade tensions helped spur safe-haven demand for the yen. Meanwhile, Japan's manufacturing growth improved slightly in August, final survey figures from IHS Markit showed. The Nikkei flash manufacturing Purchasing Managers' Index rose to 52.5 from 52.3 in July. That was in line with the flash data published on August 23.