Post Session: Quick Review

Indian equity benchmarks ended Wednesday’s trade on a lower note, on the back of sustained selling activities by market-participants. After making a cautious start, markets traded with marginal gains, tracking mostly positive trade in Asian equities. Traders also took some support with Vice-chairman of Niti Aayog Rajiv Kumar’s statement that the target of achieving an economy of $5 trillion within 2024-25 is eminently doable and the private sector would have to take the lead. He added that there are several initiatives mentioned in the budget which point out to the willingness of the government to work along with the private sector. However, key indices erased gains and came under pressure in late morning trade as anxiety spread among market participants with Moody’s Investors Service’s statement that weak growth prospects for India will complicate the government's fiscal consolidation efforts, weighing on the sovereign's credit quality. Traders were also concerned with Crisil in its earnings preview stating that India Inc will see the slowest quarterly revenue growth in two years, which will more than halve to 6 percent from 14-15 percent, due to a deceleration in consumption and lower realisations. The street overlooked the latest finance ministry data report which showed that deposits in bank accounts opened under Jan Dhan scheme, launched about five years ago by the Modi-government, have crossed the Rs 1 lakh crore mark.

On the global front, Asian markets ended mostly higher on Wednesday, while European markets were trading in red, as investors awaited comments from U.S. Federal Reserve Chairman Jerome Powell for possible clues on the central bank’s next move on interest rates. Back home, auto stocks ended lower, impacted with data released by the Society of Indian Automobile Manufacturers (SIAM) that domestic passenger vehicle (PV) sales declined by 17.54 per cent to 2,25,732 units in June from 2,73,748 units in the year-ago period. Power stocks too ended lower with private report that imposition of auction ceiling prices and delays in commissioning of awarded projects have lowered near-term growth outlook of wind power sector in India.

The BSE Sensex ended at 38544.57, down by 186.25 points or 0.48% after trading in a range of 38474.66 and 38854.85. There were 7 stocks advancing against 24 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell 0.75%, while Small cap index was down by 0.75%. (Provisional)

The top losing sectoral indices on the BSE were Capital Goods down by 1.63%, Industrials down by 1.50%, Realty down by 1.33%, Metal down by 1.33% and Auto down by 1.03%, while there were no gainers on the BSE sectoral front. (Provisional)

The top gainers on the Sensex were Yes Bank up by 1.92%, Sun Pharma up by 1.03%, ICICI Bank up by 0.78%, Kotak Mahindra Bank up by 0.42% and Infosys up by 0.35%. (Provisional)

On the flip side, Bajaj Finance down by 4.72%, Tata Steel down by 2.71%, Tata Motors down by 2.15%, Axis Bank down by 2.09% and Larsen & Toubro down by 1.70% were the top losers. (Provisional)

Meanwhile, expressing cautiousness over India’s sovereign's credit, Moody's Investors Service in its latest report has said that weak growth prospects for the country (Baa2 stable) will complicate the government's fiscal consolidation efforts, weighing on the sovereign's credit quality. The 2019-20 Budget presented in Parliament on July 05, had projected to contain fiscal deficit at 3.3 per cent of Gross Domestic Product (GDP), lower than 3.4 per cent estimated in the interim Budget. It also projected a more gradual decline in government debt.

Moody's said delivering on fiscal consolidation and raising incomes will be extremely challenging for India's authorities, particularly since growth is likely to remain weak over the coming year.  However, it highlighted that budget announcements are credit positive for public sector banks, non-bank finance companies (NBFCs), infrastructure sector, property developers, some domestic producers and securitisation transactions.

As per the report, the Rs 70,000 crore capital infusion into public sector banks and a temporary credit guarantee facility to alleviate tight liquidity for NBFCs are measures that are credit positive for the relevant entities and should encourage the flow of credit to the economy and support growth. It added that the hike in customs duties on certain imported products will increase the competitiveness of domestic producers, while new incentives for the purchase of affordable homes will be credit positive for Indian property developers.

The CNX Nifty ended at 11493.35, down by 62.55 points or 0.54% after trading in a range of 11475.65 and 11593.70. There were 13 stocks advancing against 37 stocks declining on the index. (Provisional)

The top gainers on Nifty were Yes Bank up by 1.97%, Coal India up by 1.59%, Sun Pharma up by 1.13%, ICICI Bank up by 0.82% and Zee Entertainment up by 0.51%. (Provisional)

On the flip side, Bajaj Finance down by 4.66%, Indiabulls Housing Finance down by 4.23%, Bajaj Finserv down by 2.85%, JSW Steel down by 2.76% and Tata Steel down by 2.69% were the top losers. (Provisional)

European markets were trading in red; UK’s FTSE 100 decreased 17.03 points or 0.23% to 7,519.44, France’s CAC dropped 7.36 points or 0.13% to 5,564.74 and Germany’s DAX shed 59.10 points or 0.48% to 12,377.45.

Asian markets ended mostly higher on Wednesday in cautious trade as investors awaited Federal Reserve Chairman Jerome Powell's congressional testimony later in the day for clues about whether the US central bank will meet dovish expectations in light of strong US jobs data released last week. Powell is due to testify before the House Financial Services Committee later today and before the Senate Banking Committee on Thursday. Seoul shares ended higher as chipmakers climbed amid bets on production cuts in the wake of curbs on the export of key materials from Japan. South Korea's president said that Japan's export curbs on key materials used by South Korean technology firms could be prolonged and his government would increase spending to reduce reliance on Japanese components. Though, Chinese shares ended lower as flat producer price inflation fuelled concerns about domestic growth, and a flood of initial public offerings targeting Shanghai's new tech board diverted funds from the rest of the market.