Post Session: Quick Review

Frontline equity indices resumed their southbound journey and ended with cut of over  half a percent, as sentiments turned bearish on Monday tracking sluggish global cues. Traders were reacting over uncertainty in the US Fed’s two-day policy review starting July 30 and intensified selling by foreign portfolio investors. Markets made a small positive start, but soon lost traction and continue to trade on negative note as traders remained cautious with the latest depositories data showing that reversing their five-month buying trend, overseas investors have pressed the exit button in July and pulled out a net Rs 3,758 crore from the Indian capital markets on account of multiple headwinds, including the super-rich tax announced in Budget 2019-20. Foreign portfolio investors (FPIs) pulled out a net sum of Rs 14,382.59 from equities during July 1-26, but invested Rs 10,624.15 crore in the debt segment, taking the total net outflow to Rs 3,758.44 crore. Some negativity also crept in with a report stating that midway into earnings season, it is clear that India Inc.’s P&L account remains under pressure. Revenue growth is so sluggish that even a modest increase in costs has not helped companies protect their margins.

Equity benchmarks continued their weak run in the afternoon deals, as sentiment remained weak on account of weak corporate results, while bond yields fell after the Finance Minister's statement that the government did not intend to review its overseas borrowing plan. However, losses further remain capped with Finance Minister Nirmala Sitharaman’s statement that the government of India is working on various fronts to spur the economy starting with improving people’s income or in other words pushing more money into their hands particularly those living in the rural parts of the country in order to boost consumption.

On the global front, Asian markets ended lower, amid fears among investors about how the city's massive protests could hurt the local economy. European markets were trading mostly in red, as investors awaited a widely anticipated rate cut by the Federal Reserve and look for progress in US-China trade talks.

The BSE Sensex ended at 37690.40, down by 192.39 points or 0.51% after trading in a range of 37519.16 and 38043.22. There were 7 stocks advancing against 24 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index slipped 0.74%, while Small cap index was down by 1.06%. (Provisional)

The few gaining sectoral indices on the BSE were IT up by 0.62%, BANKEX up by 0.24%, TECK up by 0.08%, while Auto down by 3.61%, Metal down by 3.01%, Telecom down by 2.96%, Basic Materials down by 2.87%, Consumer Disc down by 1.89% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were ICICI Bank up by 3.06%, HCL Tech up by 1.35%, IndusInd Bank up by 1.15%, TCS up by 1.07% and Infosys was up by 0.59%. (Provisional)

On the flip side, Tata Motors down by 6.45%, Tata Motors - DVR down by 5.79%, Vedanta down by 5.09%, Bajaj Auto down by 4.98% and Maruti Suzuki was down by 4.32% were the top losers. (Provisional)

Meanwhile, expressing confidence over India’s economy swelling to a $5-trillion giant by 2025, Chief economic advisor to the Union finance minister Krishnamurthy Subramanian has said that this high target is ‘definitely achievable’. The statement comes amidst continuously falling growth numbers and the gathering clouds over the global economy with many warning that the world is headed to a far deeper recession than what it went through in 2008 spawned by the sub-prime crisis in the US. It also comes on the heels of plunging corporate sales and profits, and deepening crisis in the shadow banking space.

He also said that there is ambition involved in it. He said this target is definitely achievable, backing his confidence with the theory of motivation which states that if a goal is stretched by just 10-15 per cent on the higher side that creates a sweet spot and that private investment and behavioural economics will drive the economy forward. He added that if the target is too small then there will be no motivation to achieve it, and if it is too high then also people may quit.

Subramanian said the GDP grew to $1 trillion during the first 55 years of Independence. But during the past five years, between 2014 and 2019, it grew from $1.7 trillion to $2.7 trillion. And India is on course to be a $3 trillion economy now. He added that to hit the $5 trillion target, the economy should grow 8 per cent in real terms in each of the next five years. He also said that investment, especially private investments, which has been missing for almost a decade now and unlikely to revive anytime soon with falling demand and liquidity crisis--will be the key to achieve 8 per cent growth.

The CNX Nifty finished at 11190.80, down by 93.50 points or 0.83% after trading in a range of 11152.40 and 11310.95. There were 8 stocks advancing against 42 stocks declining on the index. (Provisional)

The top gainers on Nifty were ICICI Bank up by 3.17%, HCL Tech up by 1.21%, Indusind Bank up by 1.21%, TCS up by 0.95% and Infosys was up by 0.59%. (Provisional)

On the flip side, Indiabulls Housing down by 11.51%, Grasim Industries down by 9.30%, Tata Motors down by 6.35%, Vedanta down by 5.18% and Bharti Infratel was down by 5.18% were the top losers. (Provisional)

European markets were trading in red; France’s CAC decreased 13.72 points or 0.24% to 5,596.33, Germany’s DAX decreased 18.18 points or 0.15% to 12,401.72 and UK’s FTSE 100 was down by 72.27 points or 0.96% to 7,621.33.

Asian markets ended lower on Monday as caution set in ahead of US-China trade talks set to resume this week and the US Federal Reserve's monetary policy announcement due on Wednesday. Upbeat GDP and earnings numbers from the US helped to limit the downside across the region. Chinese shares ended down as data showed profits earned by China's industrial firms contracted in June after a brief gain the previous month, adding to fears of a slowdown. Industrial profits fell 3.1 percent in June from a year earlier to 601.9 billion yuan ($87.5 billion), according to data released by the National Bureau of Statistics (NBS) on Saturday. Besides, Japanese shares ended lower as investors adopted a cautious approach ahead of the Bank of Japan's policy board meeting and the US FOMC meeting. Moreover, Seoul shares fell for a fourth day to hit a two-month low amid growing uncertainties, such as a trade row with Japan and the US-China trade war. Japan will decide on August 2 to remove South Korea from its list of countries that enjoy preferential treatment in trade, potentially affecting some 1,000 industrial items.