Tuesday turns out to be yet another disappointing day for Dalal Street

Tuesday turned out to be yet another disappointing day for Indian equity markets, as both the larger peers, Sensex and Nifty, saw huge losses of 289 and 103 points, respectively. After a firm start, markets remained in green terrain for the most part of the session, aided with State Bank of India’s (SBI) Ecowrap report stating that India has benefited from US-China trade war by exporting more items to US and China. Adding some comfort, 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.

However, during noon deals, volatility hit the markets which had dragged the indices to near day’s low points. Sentiments got hit, amid Moody’s report that even as more and more crippled banks come out of the dud asset tunnel, the heightening growth slowdown & the lingering crisis at non-banking lenders pose fresh challenges to their asset quality. Some worries also came 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 & weak progress going ahead could push food inflation higher.

On the global front, European markets were trading in red as Eurozone economic confidence weakened to the lowest since March 2016. The survey results from European Commission showed that the economic confidence index fell to 102.7 in July from 103.3 in June. This was the lowest since March 2016, when the reading was 102.3. Asian market ended in green after the Bank of Japan (BoJ) maintained its ultra-loose monetary policy, as widely expected, and lowered its inflation forecast. The Policy Board of the BoJ voted 7-2 to maintain interest rate at -0.1 percent on current accounts that financial institutions maintain at the bank.

Back home, airlines stocks remained in focus, as Preliminary traffic figures for the month of June released by the Association of Asia Pacific Airlines (AAPA) showed that international air passenger demand continued to grow at a moderate pace, driven by widespread availability of affordable air fares and resilient growth in regional economies. Besides, telecom industry stocks also remained in focus, after the Department of Telecommunications (DoT) issued guidelines for 5G trials across all available spectrum bands and is likely to allocate up to 400 MHz of radio waves for the purpose.

Finally, the BSE Sensex fell 289.13 points or 0.77% to 37,397.24, while the CNX Nifty was down by 103.80 points or 0.93% to 11,085.40.

The BSE Sensex touched a high and a low of 37,950.21 and 37,359.03, respectively and there were 09 stocks advancing against 22 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index declined 1.58%, while Small cap index was down by 2.13%.

The only gaining sectoral indices on the BSE were Telecom up by 0.87%, TECK up by 0.69% and IT up by 0.67%, while Metal down by 3.25%, PSU down by 2.50%, Energy down by 2.42%, Basic Materials down by 2.32% and Oil & Gas down by 2.14% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 3.19%, TCS up by 2.32%, HCL Tech. up by 0.83%, ITC up by 0.49% and HDFC Bank up by 0.39%. On the flip side, Yes Bank down by 9.13%, Indusind Bank down by 6.66%, Hero MotoCorp down by 6.01%, Sun Pharma down by 4.79% and SBI down by 4.70% were the top losers.

Meanwhile, Crisil, a global analytical company providing ratings, research, and risk and policy advisory services, in its latest report has said that the Indian readymade garment (RMG) makers may witness revenue growth of 10% in this calendar year (CY2019). The growth will be mainly driven by healthy domestic demand and 10% growth in exports. The agency is expecting revenue growth of RMG makers to accelerate 300 basis points (bps) to 10% in CY2019, compared with 7% in CY2018, riding on robust domestic demand and a spurt in exports.

It further mentioned that higher revenue growth will provide the benefit of operating leverage and will help improve profitability. It added that profitability of exporters is also aided by favourable exchange rate and restoration of incentives, resulting in better cash generation, which will improve the credit profiles of RMG firms this fiscal.

It highlighted that credit profiles had moderated in the previous two fiscals on account of depreciation in the rupee against the dollar and a reduction in export incentives. Domestic sales logged an annual growth rate of 9.6% in the five years through CY2018 to Rs 4.83 lakh crore, which was 80% of the sector's revenue.  That pace is set to increase to 10-10.5% this year for two reasons, increasing penetration of both organised retail and brands in tier II and III cities, and rising growth of value apparel retail segment.

The CNX Nifty traded in a range of 11,267.45 and 11,072.65. There were 10 stocks advancing against 39 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Bharti Airtel up by 3.99%, TCS up by 2.17%, HCL Tech up by 0.74%, Wipro up by 0.71% and HDFC Bank up by 0.47%. On the flip side, Yes Bank down by 9.45%, Indusind Bank down by 7.16%, Indiabulls Housing Finance down by 6.57%, Hero MotoCorp down by 5.69% and Sun Pharma down by 4.80% were the top losers.

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.