Local benchmarks continue sluggish trend; Metal, Realty drag

Indian equity benchmarks extend losses and continued to show a sluggish trend in morning session, with losses of around a percent. Domestic sentiments got hit with National Securities Depository’s (NSDL) report that foreign portfolio investments in Indian equity market saw a major dip in the month of July. FPI pullout from equity stood at a 9-month high of over Rs 12,000 crore in July. Traders remained concerned with the World Bank report showing that India has now taken a backseat to be the seventh largest economy globally with UK and France now ahead of it. As per the data, India grew to $2.73 trillion economy in 2018. In 2017, the country stood at the fifth spot with its size at $2.65 trillion. Investors took note of a report that the overall goods and services tax (GST) collections in July came in at Rs 1.02 lakh crore, a bit higher than Rs 99,939 crore collected in June, but significantly lower than Rs 1.13 lakh crore garnered in April. Traders ignored Indian Meteorological Department’s (IMD) report that rainfall during the season’s second half (August-September) will likely be 100% of LPA with a model error of +/-8%, and for the season as a whole 96% (+/-4%). Monsoon precipitation intensified in July, allowing overall rainfall to be 104% of the benchmark Long Period Average (LPA) for the month and further acceleration in farming activities.

On the global front, Asian markets were trading in red after US-China trade tensions reignited. President Donald Trump said that he intends to slap 10% tariffs on an additional $300 billion of Chinese imports, due to take effect September 01. Back home, banking stock were in focus as a report stated that bank credit and deposits rose by 12.01 percent and 10.59 percent to Rs 96.57 lakh crore and Rs 126.491 lakh crore respectively for the fortnight to July 19.

The BSE Sensex is currently trading at 36653.35, down by 364.97 points or 0.99% after trading in a range of 36607.41 and 36920.11. There were 5 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 1.32%, while Small cap index was down by 1.54%.

The few gaining sectoral indices on the BSE were Telecom up by 1.31%, TECK up by 0.30% and IT up by 0.15%, while Metal down by 2.97%, Realty down by 2.67%, Oil & Gas down by 2.20%, PSU down by 1.79% and Industrials was down by 1.67% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 3.27%, Mahindra & Mahindra up by 1.28%, Asian Paints up by 0.97%, Infosys up by 0.77% and TCS was up by 0.61%. On the flip side, Vedanta down by 4.12%, Tata Steel down by 3.35%, Tata Motors - DVR down by 3.11%, ONGC down by 2.59% and Hero MotoCorp was down by 2.56% were the top losers.

Meanwhile, CRISIL in its latest report has lowered its estimate of India's gross domestic product (GDP) growth by 20 basis points (bps) to 6.9 per cent for the current financial year (FY20) on account of downside risks like weak monsoon and slowing global growth. It mentioned that the slowdown would be pronounced in the first half of the fiscal, while the second half should find support from expected monetary easing, consumption, and statistical low-base effect.

It further stated that that the non-bank (including housing finance companies) crisis, which began late last fiscal, and the stress that ensued, slowed disbursals and further impacted household demand, which had already moderated amid lower incomes, weak sentiment and rising costs (fuel prices and insurance for automobiles). With access to funding becoming a challenge and non-banks caught up in managing liquidity, their growth halved to a multi-year low in the second-half of last fiscal, and remains impacted.

However, it noted that India's GDP had grown at an impressive 8.2 per cent in fiscal 2017, the fastest in a decade. This was followed by disruptions stemming from policy initiatives and reforms, and rising global uncertainty including from trade disputes -- which together triggered a cyclical downturn.

The CNX Nifty is currently trading at 10883.10, down by 96.90 points or 0.88% after trading in a range of 10848.95 and 10935.35. There were 9 stocks advancing against 41 stocks declining on the index.

The top gainers on Nifty were Bharti Airtel up by 3.33%, Mahindra & Mahindra up by 1.49%, Asian Paints up by 0.95%, Ultratech Cement up by 0.72% and Cipla was up by 0.69%. On the flip side, Vedanta down by 3.54%, Tata Steel down by 3.21%, ONGC down by 2.48%, GAIL India down by 2.33% and ICICI Bank was down by 2.27% were the top losers.

All Asian markets were trading in red; Hang Seng decreased 630.56 points or 2.29% to 26,935.14, Nikkei 225 slipped 524.14 points or 2.43% to 21,016.85, Taiwan Weighted dropped 166.60 points or 1.55% to 10,565.15, Jakarta Composite lost 52.19 points or 0.82% to 6,329.35, Shanghai Composite declined 48.96 points or 1.68% to 2,859.81, Straits Times trembled 24.24 points or 0.74% to 3,267.51 and KOSPI was down by 15.29 points or 0.76% to 2,002.05.