Post Session: Quick Review

Indian equity benchmarks pared their losses to a larger extent but remained in the red zone to end with cut of over a percent, on the back of a global sell-off as well as domestic factors such as the Kashmir issue. Markets opened with heavy losses, as Foreign investors have withdrawn a net amount of Rs 2,881 crore from the Indian capital markets in the first two sessions of August on account of domestic as well as global headwinds. According to latest depositories data, FPIs pulled out a net sum of Rs 2,632.58 crore from equities and Rs 248.52 crore from the debt segment during August 1-2, taking the cumulative net outflow to Rs 2,881.10 crore. Investors’ sentiments were also pessimistic as the Federation of Automobile Dealers Associations (FADA) feared that the job cuts may continue across automobile dealerships with more showrooms being shut in the near future and sought immediate government intervention such as reduction of GST to provide relief to the auto industry.

However, in late afternoon trade, the markets managed to trim most of their initial losses, as traders found some solace with a monthly survey showed the country’s services sector activity in July returned to growth territory driven by new business orders that rose at fastest pace since October 2016, following which job creation picked up. The IHS Markit India Services Business Activity Index rose to 53.8 in July from 49.6 in June, pointed to the quickest increase in output in one year. Some relief also came in with former RBI Governor Bimal Jalan’s statement that the current slowdown in the Indian economy is cyclical and growth will pick up in one or two years.

On the global front, Asian markets ended lower on Monday, while European markets were trading in red after China allowed its yuan to sink to an 11-year low, fueling concern Beijing might use its currency as a weapon in a tariff war with President Donald Trump. Back home, select banking stocks were in focus amid report that the RBI has slapped penalties on nine commercial banks, including State bank of India, Punjab National Bank and Bank of Baroda, for a host of violations, including delay on the reporting of fraud in the account of Kingfisher Airlines in case of two lenders.

The BSE Sensex ended at 36706.72, down by 411.50 points or 1.11% after trading in a range of 36416.79 and 36844.05. There were 9 stocks advancing against 22 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell 1.16%, while Small cap index was down by 1.71%.(Provisional)

The few gaining sectoral indices on the BSE were Telecom up by 2.24%, TECK up by 0.80% and IT up by 0.70%, while Energy down by 2.77%, Utilities down by 2.69%, Power down by 2.50%, Consumer Durables down by 2.11% and Bankex down by 2.07% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Bharti Airtel up by 4.85%, Tech Mahindra up by 2.06%, TCS up by 1.89%, HDFC up by 1.46% and Indusind Bank up by 1.19%. (Provisional)

On the flip side, Yes Bank down by 8.32%, Tata Motors - DVR down by 5.86%, Tata Motors down by 5.13%, Power Grid down by 4.28% and Reliance Industries down by 3.48% were the top losers. (Provisional)

Meanwhile, expressing optimism over India’s economic growth, former RBI Governor Bimal Jalan has said that the current slowdown in the country’s economy is cyclical and growth will pick up in one or two years. He also said the government has already announced many reforms, and it is now a question of implementation, particularly in terms of investment.

Jalan also pointed out that the situation currently is very different from 1991 when the country faced a severe economic crisis on the external front. He highlighted ‘India is in a very strong position currently, unlike in 1991. If you look at India inflation rate, it’s quite low. If you at look at country reserves, it’s quite high.’

Talking about overseas sovereign borrowings, he said it should be long term. However, Jalan further said unemployment might be the very important problem for the Indian economy. Earlier, he had warned that the higher income taxes the government introduced in its budget could lead to a flight of funds from the country.

The CNX Nifty ended at 10866.65, down by 130.70 points or 1.19% after trading in a range of 10782.60 and 10895.80. There were 11 stocks advancing against 39 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bharti Airtel up by 4.79%, Tech Mahindra up by 1.94%, TCS up by 1.90%, Coal India up by 1.65% and HDFC up by 1.42%. (Provisional)

On the flip side, Yes Bank down by 8.44%, UPL down by 5.87%, Tata Motors down by 5.16%, Power Grid down by 4.25% and Grasim Industries down by 3.86% were the top losers. (Provisional)

European markets were trading in red; UK’s FTSE 100 decreased 130.31 points or 1.76% to 7,276.75, France’s CAC fell 93.55 points or 1.75% to 5,265.45 and Germany’s DAX was down by 155.38 points or 1.31% to 11,717.06.

Asian markets ended lower on Monday due to heavy selling pressure after the yuan's depreciation sparked fears of a currency war. China's central bank allowed its yuan to fall below the politically sensitive level of seven to the US dollar, fueling speculation that Beijing was allowing currency depreciation to counter US President Donald Trump's latest tariff threat. Chinese shares ended lower ahead of July trade and inflation data due this week. Further, Japanese shares closed sharply lower to hit a two-month low as investors grew nervous about a prolonged US-China trade war, with a rapidly strengthening yen dragging down exporters like Sony, Nissan, Panasonic and Daikin Industries.