Amid volatile trading session, the Indian markets extended their losses in dying hours of trade to end near intraday low levels on Tuesday as a weak rupee along with higher crude oil prices dragged the market down. Today, the start is likely to be in red amid weak global cues. Investors will be eyeing Services PMI data for the month of August to be out later in the day. Traders will be concerned about a report that the National Council of Applied Economic Research’s (NCAER) business confidence index (N-BCI) fell by 12.9% in July over April this year on a quarter-on-quarter basis on account of worsening of business sentiments across various segments. NCAER said the decline in the N-BCI on a year-on-year basis works out to be 15.9%. There will be some cautiousness with a private report that India’s growth rate is expected to moderate this fiscal despite a strong start in the April-June quarter largely owing to tighter financial conditions, limited fiscal headroom and upcoming elections. Also, there will be negative reaction on the Reserve Bank of India’s (RBI) data showing that investment by Indian companies in their overseas ventures fell by more than 36% to $1.39 billion in July this year. However, traders may take note of the Confederation of Indian Industry’s (CII) statement that the 8.2% economic growth in the first quarter of 2018-19 is an outcome of key reforms like GST and liberalisation of FDI norms initiated by the government. Meanwhile, finance ministry said that the government will not cut excise duty on petrol and diesel to cushion spiralling prices, which touched fresh highs on Tuesday, as it has limited fiscal space available to take any dent in revenue collections.
The US markets ended lower on Tuesday as investors were anxious about the trade tensions between Washington and its key trading partners. Asian markets were trading in red on Wednesday following the negative cues overnight from Wall Street amid worries about trade wars and the turbulence in emerging market currencies.
Back home, extending previous session’s southward journey, Indian equity benchmarks ended the choppy day of trade with a cut of around half a percent, with frontline gauges breaching their crucial 38,200 (Sensex) and 11,550 (Nifty) levels. Local bourses traded lackluster for most part of the day, as traders remained little concerned with a private report that the Indian stock markets could tumble and the rupee may fall further ahead of the general elections if a contentious KYC circular issued by the stock market regulator is not scrapped soon. Traders reacted negatively to a private report highlighting that a sustained weakness in the rupee may push the Reserve Bank of India to further tighten monetary policy, perhaps as early as next month. However, key gauges managed to cap losses till noon deals as some solace came with Fitch Ratings’ statement that the currency volatility will have only a limited impact on India’s sovereign credit profile as the country benefits from strong external finances. In a report on APAC sovereigns, Fitch said the recent sell-offs in Indian and Indonesian currency markets underline their sensitivity to shifts in global sentiment, and suggest further bouts of pressure are likely as global monetary tightening progresses. But, selling in last leg of trade played spoil sports for Indian markets and dragged key gauges below their respective psychological levels, as Reserve Bank of India’s report stated that export credit provided by banks fell sharply by about 47% to Rs 21,900 crore as of July 20 from a year earlier. This is despite the fact that total lending to the priority sector rose 7.5%. The persistent decline in export credit, especially, to small players in the current year. Adding some woes, ICRA in its latest report stated that India’s apparel exports are likely to remain subdued in the near term, even as the worst appears to be over. With the base effect setting in, ICRA expects India’s apparel exports to grow at a modest pace of 1%-2% Y-o-Y for the rest of FY2019, vis-a-vis a sharp de-growth of 14% Y-o-Y in first four months of FY2019. Finally, the BSE Sensex declined by 154.60 points or 0.40% to 38,157.92, while the CNX Nifty was down by 62.04 points or 0.54% to 11,520.30.
