Post Session: Quick Review

Extending their losing streak for third straight session, Indian equity benchmarks ended Wednesday’s trade on a pessimistic note, dented by weak global cues and sharp rupee depreciation. Sensex and Nifty slipped below their crucial 38,050 and 11,500 levels, respectively. Domestic indices made a cautious start and traded slightly in red, as traders remain 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%. Some cautiousness also crept in 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. Key indices extended their fall to trade at day’s low point in the second half of the day, as sentiments on the street weakened further on report that India's services sector activity fell in August from July's 21-month peak as new business orders declined, following which firms raised their staffing levels at a modest pace amid rising input cost inflation. The Nikkei/IHS Markit Services Purchasing Managers’ Index declined to 51.5 in August from a 21-month high of 54.2 in July.

However, the markets managed to pare most of their early losses in dying hour of trade, due to some buying witnessed in Metal and Healthcare stocks. Traders also found some solace with Commerce and Industry Minister Suresh Prabhu’s statement that the proposed new industrial policy, to be released soon, would help link domestic industry with the global supply chain. But, markets failed to trim all their losses, as sentiments remained pessimistic with SBI’s report that the rupee may fall further against the US dollar, prompting the Reserve Bank to adopt ‘orthodox’ monetary policy like hike in interest rate to check depreciation of the domestic currency. Market participants also remained worried with Reserve Bank India’s report that investment by Indian companies in their overseas ventures fell by more than 36% to $1.39 billion in July this year as compared to India companies had invested $2.17 billion in their overseas subsidiaries and joint ventures in the form of loan, equity and issuance of guarantee in July 2017.

On the global front, Asian markets end in red on Wednesday, while European markets were trading in red in early deals, as renewed concerns over international trade conflicts hampered investors' appetite for riskier assets. Back home, textile sector remained in focus after ICRA said that apparel exports are likely to remain subdued with the base effect setting in and due to uncertain government policies. India’s apparel exports are expected to fall 4 per cent this fiscal even as they are expected to register a modest growth of 2 percent in the remaining eight months of the financial year.

The BSE Sensex ended at 38048.32, down by 109.60 points or 0.29% after trading in a range of 37774.42 and 38250.61. There were 18 stocks advancing against 13 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.52%, while Small cap index was down by 0.44%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 1.23%, Healthcare up by 0.75%, Auto up by 0.62%, Basic Materials up by 0.36% and Power up by 0.26%, while Telecom down by 1.88%, Consumer Durables down by 1.85%, FMCG down by 1.08%, Capital Goods down by 0.88% and Energy down by 0.80% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Motors up by 3.03%, Yes Bank up by 2.96%, Vedanta up by 2.36%, Wipro up by 1.53% and Tata Motors - DVR up by 1.44%. (Provisional)

On the flip side, Hindustan Unilever down by 2.36%, Kotak Mahindra Bank down by 1.50%, Hero MotoCorp down by 1.34%, Reliance Industries down by 1.24% and Larsen & Toubro down by 0.88% were the top losers. (Provisional)

Meanwhile, the industry body, Confederation of Indian Industry (CII) has stated that India’s economic growth of 8.2% in the first quarter of 2018-19 is an outcome of key reforms initiated by the government like Goods and Services Tax (GST) and liberalisation of Foreign Direct Investment (FDI) norms. It also said that India can garner a Gross Domestic Product (GDP) growth of 7.3-7.7% for the ongoing financial year with the help of increase in private investment and enhanced government spending.

CII President Rakesh Bharti Mittal said that the country could see strong demand contributing to higher GDP growth this fiscal with good monsoons so far. He noted that GST, reforms in Ease of Doing Business, FDI, labour, agriculture, and many other initiatives aimed at improving the overall investment climate and productivity have begun to show impact. He added ‘These have collectively contributed to the robust GDP figures that we saw for June quarter 2018-19. At 8.2% it is a significant improvement over the 5.6% registered a year back.’

As per the CII President, the reforms have also led to increased demand leading to better capacity utilisation and higher growth of the industry, which again is reflected in manufacturing growth at an impressive 13% plus in the first quarter. However, he said that a few external challenges remain, in the form of oil prices and hardening interest rates in the US, but domestic strengths are robust enough to ensure that India would ride over any bumps on the road. CII claimed that the results of a poll conducted among its National Council CEOs are the most positive in a long time.

The CNX Nifty ended at 11470.85, down by 49.45 points or 0.43% after trading in a range of 11393.85 and 11542.65. There were 27 stocks advancing against 23 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tata Motors up by 3.13%, Yes Bank up by 2.96%, Vedanta up by 2.05%, Hindalco up by 2.00% and Wipro up by 1.95%. (Provisional)

On the flip side, Bharti Infratel down by 4.44%, Hindustan Unilever down by 2.50%, Zee Entertainment down by 2.32%, Titan Co down by 1.84% and Lupin down by 1.42% were the top losers. (Provisional)

European markets were trading in red; UK’s FTSE 100 decreased 40.35 points or 0.54% to 7,417.51, France’s CAC dropped 72.46 points or 1.37% to 5,270.24 and Germany’s DAX shed 124.52 points or 1.03% to 12,085.69.

Extending previous session losses, Asian markets ended in red terrain on Wednesday, as investors continued to fret about trade tensions and the turbulence in emerging markets, with South Africa slipping into a recession for the first time since 2009. A cautious undertone prevailed after a threat by the United States to impose tariffs on another $200 billion worth of Chinese imports as soon as a public-comment period ends on Thursday. Chinese shares ended lower, as investors dumped banking, property and resources shares amid fresh signs of anaemic growth, and ahead of a likely escalation of the Sino-US trade war. Activity in China's services sector continued to expand in August, albeit at a slower rate, the latest survey from Caixin revealed with a 10-month low PMI score of 51.5.That missed expectations for 52.6 and was down sharply from 52.8 in July. Further, Japanese shares ended lower as trade worries persisted and tourism-linked shares succumbed to selling pressure after a powerful typhoon slammed into western Japan, cutting power, overturning cars and killing at least eight people. Meanwhile, the services sector in Japan continued to expand in August, and at a faster rate, the latest survey from Nikkei revealed with a PMI score of 51.5, up from 51.3 in July.