Bears take full control on Dalal Street

Bears took full control on Dalal Street on Monday, as both the larger peers, the Sensex and the Nifty, closing lower by around 800 and 250 points, respectively. The markets made a negative start of the day, amid reports that foreign institutional investors (FIIs) sold shares worth Rs 89 crore on a net basis in the cash market, while domestic institutional investors (DIIs) bought shares worth Rs 276 crore. Anxiety remained among the market participants, as India Meteorological Department (IMD) data report showed that monsoon has covered almost the entire country, but three-fourths of MeT department’s sub-meteorological divisions still fall under the ‘deficient’ rainfall category.

In the second half of the session, bears tighten their grip, on account of weak cues from European markets. Domestic sentiments remained pessimistic with Moody's report that there are risks of India missing 3.3 percent fiscal deficit target for the current financial year if tax revenue falls short of the projection. The Budget 2019-20 lowered fiscal deficit projection for the current financial year to 3.3 percent from 3.4 percent targeted in the Interim Budget 2019-20 in February. The street overlooked Secretary in the 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 ended in red, after a measure of the public assessment of the Japanese economy fell for the second straight month in June. The survey data from the Cabinet Office showed that the current conditions index of the Economy Watchers Survey fell to 44.0 in June from 44.1 in May.

Back home, stocks related to banking sector ended 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. Further, NBFCs stocks remained in focus, as Finance Minister Nirmala Sitharaman said the NBFC crisis seems to have bottomed out and the government along with the RBI will closely monitor the situation to ensure that the sector comes out of the wood.

Finally, the BSE Sensex lost 792.82 points or 2.01% to 38,720.57, while the CNX Nifty was down by 252.55 points or 2.14% to 11,558.60.

The BSE Sensex touched a high and a low of 39,476.38 and 38,605.48, respectively and there were 03 stocks advancing against 28 stocks declining on the index.
The broader indices ended in red; the BSE Mid cap index lost 1.99%, while Small cap index was down by 2.46%.

The top losing sectoral indices on the BSE were PSU down by 3.99%, Capital Goods down by 3.78%, Realty down by 3.50%, Auto down by 3.14% and Power down by 3.10%, while there were no gaining sectoral indices on the BSE.

The few gainers on the Sensex were Yes Bank up by 5.56%, HCL Tech up by 1.94% and TCS up by 0.67%. On the flip side, Bajaj Finance down by 8.18%, ONGC down by 5.43%, Hero MotoCorp down by 5.31%, Maruti Suzuki down by 5.21% and NTPC down by 4.98% were the top losers.

Meanwhile, Nasscom Executive Council member Kunal Bahl has said that the various startup friendly initiatives announced by the government as part of Budget will help facilitate funding and lessen the regulatory and tax compliance burden on these fledgling enterprises. To spur startup growth in India, the government has proposed a slew of incentives, including a special arrangement for resolution of pending assessments of income tax cases.

Bahl has noted that doing away with the scrutiny of valuation of documentation on angel tax is an excellent step that will help facilitate funding. With this Budget, he believed that startups can expect lesser regulatory requirement, besides reducing their tax compliance burden. In addition, he said it will also encourage newer startups, especially from tier II and III areas, and in parallel infuse considerable foreign investments in India.

Nasscom Executive Council member has pointed out that the startup ecosystem in India has long been reeling from three challenges -- high credit cost, lack of adequate and timely funding. He said Nasscom has always been advocating the needs for startups and emerging entrepreneurs in the country and will continue our support to the government in fulfilling the collective dream of enabling India to become a more vibrant startup hub.

The CNX Nifty traded in a range of 11,771.90 and 11,523.30. There were 05 stocks advancing against 45 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 5.90%, HCL Tech up by 1.83%, Bharti Infratel up by 0.59%, TCS up by 0.37% and JSW Steel up by 0.17%. On the flip side, Bajaj Finserv down by 10.12%, Bajaj Finance down by 7.77%, ONGC down by 5.57%, NTPC down by 5.35% and Hero MotoCorp down by 5.26% were the top losers.
European markets were trading in red; UK’s FTSE 100 decreased 11.19 points or 0.15% to 7,541.95, France’s CAC decreased 9.17 points or 0.16% to 5,584.55 and Germany’s DAX was decreased 10.08 points or 0.08% to 12,558.45.

Asian markets ended lower on Monday as strong US jobs data tempered expectations for a near-term interest rate cut by the Federal Reserve. The latest jobs report showed that US nonfarm payrolls jumped 224,000 in June, beating forecasts for 160,000. Geopolitical tensions also dented sentiment after Iran said it will break a limit set on uranium enrichment under its 2015 nuclear accord with major world powers. Chinese shares ended lower despite US-China trade talks resume with phone calls. As officials try to resolve a year-long trade war, Chinese Vice President Wang Qishan warned against ‘protectionism in the name of national security’, and called major powers to make more contributions to global peace and stability. Meanwhile, China's foreign exchange reserves increased marginally in June, data from the People's Bank of China showed. Foreign exchange reserves rose by $18.2 billion to $3.119 trillion at the end of June from $3.101 trillion at the end of May. Further, Japanese shares closed down as Fed rate cuts hopes faded and weak machinery orders data fanned concerns about domestic demand.