Post Session: Quick Review

India equity markets fell for the second consecutive day on Tuesday with Nifty ending below 11,100 mark, on the back of selling in PSU banks, metal and auto. Markets witnessed a positive opening, taking support from a report that Finance Minister Nirmala Sitharaman called for a significant reduction in the central bank's policy rates and said the government did not intend to review the budget proposal for overseas sovereign borrowings. The minister also said the increase in surcharge on foreign portfolio investments (FPIs) was not intended to hurt investors. Sentiment was also buoyed as SBI Ecowrap report stated that India has benefited from the US-China trade war by exporting more items to China. Overall exports to the US grew 9.46 per cent to $52.4 billion in 2018-19, for China the growth was 25.6 per cent to $16.7 billion. However, upside remained capped as traders turned cautious with CARE Ratings’ report that India is staring at a rise in food inflation soon, as weak monsoon rainfall hits the country’s food output. It said the retail inflation in the food components for June 2019 has risen to 13-months high and weak progress going ahead could push food inflation higher.

Sharp selling in last leg of trade mainly played spoil sports for domestic bourses and dragged them to their intraday lows, amid a report that even as more and more crippled banks come out of the dud asset tunnel, the heightening growth slowdown and the lingering crisis at non-banking lenders pose fresh challenges to their asset quality. The market also got hit with a report that former Reserve Bank of India (RBI) governor, Bimal Jalan, has warned that the higher income taxes the government introduced in its budget could lead to a flight of funds from the country.

On the global front, Asian markets ended mostly higher, as equity investors prepared for an expected US interest rate cut this week. European market were trading mostly lower, as weak consumer confidence data as well as disappointing earnings updates from Bayer and Lufthansa soured sentiment.

The BSE Sensex ended at 37393.65, down by 292.72 points or 0.78% after trading in a range of 37359.03 and 37950.21. There were 8 stocks advancing against 23 stocks declining on the index. (Provisional)

The broader indices were trading in red; the BSE Mid cap index slipped 1.64%, while Small cap index was down by 2.18%. (Provisional)

The few gaining sectoral indices on the BSE were Telecom up by 0.80%, TECK up by 0.59% and IT was up by 0.56%, while Metal down by 3.27%, PSU down by 2.68%, Basic Materials down by 2.40%, Energy down by 2.22% and Auto was down by 2.12% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Bharti Airtel up by 3.79%, TCS up by 2.12%, HCL Tech up by 0.89%, HDFC Bank up by 0.42% and Hindustan Unilever was up by 0.32%. (Provisional)

On the flip side, Yes Bank down by 9.76%, IndusInd Bank down by 6.73%, Hero MotoCorp down by 5.90%, SBI down by 4.64% and Sun Pharma was down by 4.09% were the top losers. (Provisional)

Meanwhile, amid US-China trade war, State Bank of India (SBI) Ecowrap report stated that India has benefited from the this trade war by exporting more items to US and China. It said the country’s exports to China post the trade war, have grown much faster than that to the US. Overall exports to the US grew 9.46 per cent to $52.4 billion in 2018-19, for China the growth was 25.6 per cent to $16.7 billion. As per the report, looking at the products on which China and USA have imposed tariffs on each other, India has made modest gains in capturing such market.

The textile imports, particularly, of the US has shifted from China towards other countries in South Asia. Instead, cotton imports from the US to China declined for the first half 2019 compared to the same period of the previous year, while imports from other countries, including Brazil, Australia and India have increased. Thus, the report said India has benefited from US-China trade war by exporting more to China like plastic, cotton, inorganic chemicals and fish. Besides, the country has a revealed comparative advantage in some of these commodities.

In order to further boost exports, the report pointed out that easy availability of credit is of paramount importance. It added that certain measures including extension of 'Interest Equalization Scheme' to all categories of exporters and end to end digitization of the export process among others should aid India’s export credit growth.

The CNX Nifty ended at 11087.60, down by 101.60 points or 0.91% after trading in a range of 11072.65 and 11267.45. There were 10 stocks advancing against 40 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bharti Airtel up by 3.45%, TCS up by 2.13%, HCL Tech up by 0.79%, HDFC Bank up by 0.55% and Larsen & Toubro was up by 0.28%. (Provisional)

On the flip side, Yes Bank down by 9.71%, IndusInd Bank down by 7.00%, Indiabulls Housing down by 6.47%, Hero MotoCorp down by 6.01% and SBI was down by 4.73% were the top losers. (Provisional)

European market were trading mostly lower; France’s CAC decreased 32.78 points or 0.59% to 5,568.32, Germany’s DAX was down by 143.04 points or 1.15% to 12,274.43. On the other side, UK’s FTSE 100 was up by 1.79 points or 0.02% to 7,688.40.

Asian markets ended mostly higher on Tuesday as investors looked ahead to a key Federal Reserve meeting and more talks on the US-China trade dispute. Market participants expect the Fed to cut the target range for the federal funds rate by 25 bps at the end of a two-day policy meeting on Wednesday. Japanese shares ended higher as risk appetite buying propelled by a weaker yen against greenback, and after the Bank of Japan (BoJ) kept its ultra-low interest rates unchanged as widely expected and said it would not hesitate to make adjustments if necessary. Further, Seoul shares bounced back after previous day's sharp losses amid a worsening diplomatic and economic spat with Japan. Meanwhile, Malaysian markets are closed today due to a public holiday.