Bourses end volatile session on flat note

Paring almost all of their losses, key Indian equity benchmarks ended Tuesday’s trading session on flat note. After a weak start, markets remained lackluster, impacted by CARE Ratings’ report stating that economic slowdown has begun to dent the credit profile of India Inc. There has been a deterioration in the credit quality of entities rated in the first quarter of the current financial year, showing effect of the prevailing slowdown in the Indian economy. The street also got cautious with a private report that India’s decision to raise duties on gasoline and diesel is unlikely to threaten the inflation outlook, keeping alive expectations of more interest rate cuts from the central bank.

But, in noon deals, key indices staged a sharp recovery to end near their neutral lines. Losses got trimmed, with the Reserve Bank of India (RBI) Governor Shaktikanta Das’ statement the financial system is hugely surplus with liquidity and this would facilitate the better transmission of rate cuts implemented by the RBI. Market participants took some support with Minister of State for Finance, Anurag Singh Thakur’s statement that the government has infused over Rs 3.15 lakh crore into public sector banks (PSBs) in the 11 years through 2018-19 (FY09 to FY19). He also said as per RBI guidelines, banks in India are required to maintain a minimum capital to risk-weighted assets ratio (CRAR) of 9 per cent.

On the global front, European markets were trading in red, as UK retail sales logged its worst June on record. The data from the British Retail Consortium showed that like-for-like sales decreased 1.6 percent year-on-year in June. Total sales were down 1.3 percent. Asian markets ended in red, after Malaysia central bank retained its key interest rate as policymakers assessed the current stance supportive of economic activity. The Monetary Policy Committee of Bank Negara Malaysia decided to leave the overnight policy rate at 3.00 percent.

Back home, most of the metal stocks ended higher, after India initiated a probe into alleged dumping of flat rolled products of stainless steel from 15 countries including China, the US and Japan following complaints by domestic players. Further, telecom stocks remained in focus, amid reports that the regulator TRAI has stuck to its recommendation on base price and valuation of the spectrum, including for 5G radiowaves, making it clear to the telecom department that it has considered all relevant factors while giving views on prices.

Finally, the BSE Sensex gained 10.25 points or 0.03% to 38,730.82, while the CNX Nifty was down by 2.70 points or 0.02% to 11,555.90.

The BSE Sensex touched a high and a low of 38,814.23 and 38,435.87, respectively and there were 15 stocks advancing against 15 stocks declining, while 1 stock remain unchanged on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.63%, while Small cap index was up by 0.05%.

The top gaining sectoral indices on the BSE were Realty up by 2.81%, Healthcare up by 1.81%, Energy up by 1.77%, Capital Goods up by 1.65% and Oil & Gas up by 1.11%, while Consumer Durables down by 6.76%, Consumer Disc down by 1.01%, IT down by 0.98%, FMCG down by 0.96% and TECK down by 0.77% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Finance up by 5.52%, Sun Pharma up by 5.28%, Hero MotoCorp up by 3.14%, Larsen & Toubro up by 2.44% and Reliance Industries up by 2.20%. On the flip side, TCS down by 2.05%, Yes Bank down by 1.88%, HCL Tech. down by 1.65%, ITC down by 1.53% and Asian Paints down by 1.44% were the top losers.

Meanwhile, with an efforts to reduce dependence on the domestic market for bridging fiscal deficit, the Reserve Bank of India's (RBI's) Governor Shaktikanta Das has said the central bank will discuss the issuance of overseas sovereign bonds with the government. The RBI issues bonds on behalf of the government as part of the resource mobilisation exercise to fund gap between revenue and expenditure.

The RBI Governor further hailed the government's move to slash fiscal deficit target, saying that it will help improve investment by the private sector as crowding out impact will be less.

Besides, Das noted that there is fiscal glide path which the government is maintaining in the last five years. He said that the government started with a fiscal deficit number of 4.5 per cent and now, it has gone down to 3.3 per cent. So, overall, it will be good for microeconomic situation.

The CNX Nifty traded in a range of 11,582.55 and 11,461.00. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were IOC up by 5.73%, Bajaj Finance up by 5.59%, Sun Pharma up by 5.51%, Hero MotoCorp up by 3.16% and Bajaj Finserv up by 2.88%. On the flip side, Titan down by 12.25%, UPL down by 3.55%, TCS down by 2.55%, GAIL India down by 2.45% and HCL Tech. down by 1.93% were the top losers.

European markets were trading in red; UK’s FTSE 100 lost 27.34 points or 0.36% to 7,521.93, France’s CAC decreased 40.03 points or 0.72% to 5,549.16 and Germany’s DAX was down by 165.02 points or 1.32% to 12,378.49.

Asian markets ended mostly lower on Tuesday as sentiment turned cautious ahead of Fed Chairman Jay Powell's two-day testimony to Congress on Wednesday and Thursday, with markets waiting to see whether the language will be dovish enough after the release of a stronger-than-expected jobs report. Powell is due to testify before the House Financial Services Committee on Wednesday and before the Senate Banking Committee on Thursday. Chinese shares ended down as investors fretted about a lack of clarity in US-China trade talks following last week's G20 summit in Japan. Seoul shares retreated on economic concerns as a Japanese minister ruled out a withdrawal of restrictions on Japanese high-tech exports to South Korea, saying the curbs did not violate World Trade Organization rules. Though, Japanese markets eked out small gains even as technology shares slumped after Rosenblatt Securities downgraded its rating on Apple's stock to ‘Sell’ from ‘Neutral’.