Bears tighten grip on Dalal Street

Bears have tighten their grip on Dalal Street in late afternoon session, with Sensex and Nifty losing around 800 and 250 points, respectively. In line with the larger peers, the broader indices were also lingering under pressure with heavy losses of over 2%. Traders failed to take relief with Secretary in the Department for Promotion of Industry and Internal Trade (DPIIT) Ramesh Abhishek’s statement that the initiatives announced by the government for start-ups in the Union Budget would significantly improve the flow of funds and encourage budding entrepreneurs.

On the global front, European markets were trading in red, as Euro area investor confidence weakened in July to its lowest level over four-and-a-half years, damping expectations of a rebound due to some de-escalation of trade tensions. The survey data from the behavioural economics institute Sentix showed that the Sentix economic index for Eurozone fell to -5.8 from -3.3 in June, marking its lowest level since November 2014. Asian markets were also trading in red.

Back home, stocks related to banking sector were trading lower, even though S&P Global Ratings said that the proposed Rs 70,000 crore capital infusion into public sector banks (PSBs) will provide a timely booster to these lenders.

The BSE Sensex is currently trading at 38712.75, down by 800.64 points or 2.03% after trading in a range of 38605.48 and 39476.38. There were 2 stocks advancing against 29 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 2.10%, while Small cap index was down by 2.55%.

The top losing sectoral indices on the BSE were Capital Goods down by 3.92%, PSU down by 3.90%, Realty down by 3.40%, Industrials down by 3.23% and Auto down by 3.17%, while there were no gaining sectoral indices on the BSE.

The top gainers on the Sensex were Yes Bank up by 5.73% and HCL Tech. up by 2.23%. On the flip side, Bajaj Finance down by 8.42%, ONGC down by 5.98%, Maruti Suzuki down by 5.35%, Hero MotoCorp down by 5.24% and Larsen & Toubro down by 4.57% were the top losers.

Meanwhile, few days after Union Budget announcement, credit rating agency, S&P Global Ratings has hailed the government’s decision of Rs 70,000 crore capital infusion into public sector banks (PSBs), noting that the move, announced in the Budget, is likely to be credit positive for the banking sector and the economy.

As per rating agency, the capital infusion will help PSBs make necessary haircuts on their weak corporate loans and shore up their capital adequacy. Some banks are also expected to come out of the central bank's prompt corrective action and resume lending and clean up their balance sheets, with this capital infusion plan.

But, S&P Global Ratings expressed need for substantial reforms towards PSBs to improve risk management, service quality, efficiency, and diversity of product offerings, pointing that ‘while the government has infused large amounts of capital into PSBs in the past few years, the progress on reforms has been rather lackluster.’

The CNX Nifty is currently trading at 11564.90, down by 246.25 points or 2.08% after trading in a range of 11523.30 and 11771.90. There were 3 stocks advancing against 47 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 5.50%, HCL Tech. up by 2.24% and Bharti Infratel up by 0.52%. On the flip side, Bajaj Finserv down by 9.71%, Bajaj Finance down by 8.31%, ONGC down by 5.88%, Maruti Suzuki down by 5.19% and Hero MotoCorp down by 5.17% were the top losers.

Asian markets were trading in red; Nikkei 225 slipped 212.03 points or 0.98% to 21,534.35, Taiwan Weighted dropped 34.51 points or 0.32% to 10,751.22, Shanghai Composite declined 69.15 points or 2.3% to 2,941.91, KOSPI fell 46.42 points or 2.2% to 2,064.17, Straits Times trembled 44.81 points or 1.33% to 3,322.00, Jakarta Composite lost 34.10 points or 0.54% to 6,339.38 and Hang Seng decreased 542.69 points or 1.89% to 28,232.14.

All European markets were trading in red; FTSE lost 3.34 points or 0.04% to 7,549.80, CAC fell 10.09 points or 0.18% to 5,583.63 and DAX was down by 21.31 points or 0.17% to 12,547.22.