Markets trade with cut of around 2% each; Sensex falls below 36,600 mark

Indian equity markets made gap-down opening and are trading in red territory with cut of around 2 percent each in early deals on Monday amid continued selling by foreign investors. Barring IT and TECK, all the sectoral indices are trading in red on the BSE. Foreign investors have withdrawn a net amount of Rs 2,881 crore from the Indian capital markets in the first two sessions of August on account of domestic as well as global headwinds.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. Traders were also cautious amid report that Prime Minister Narendra Modi will be holding a crucial Cabinet meeting at his residence this morning as tension continues to simmer in Jammu and Kashmir over a looming uncertainty. As per the report, the government has imposed restrictions under Section 144 of the CrPC in Srinagar district that came into effect on August 04 midnight. Besides, investors were eyeing Services PMI data for the month of July to be out later in the day. Traders are also looking ahead to the Reserve Bank of India’s (RBI) monetary policy meeting starting later in the day. Market participants failed to take any sense of relief 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.

Global cues also remained subdued with all the Asian markets trading in red at this point of time amid worsening trade tensions between the US and China. Hong Kong's Hang Seng Index slumped amid a citywide strike that saw protesters blocked roads, cross-harbour tunnels and disrupted public transportation services to force the government to give in to demands. Back home, on the sectoral front, 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. Meanwhile, Spandana Sphoorty Financial will launch its initial public offering for subscription on August 5. The company is planning to raise Rs 400 crore by issuing fresh equity shares to increase the capital base and for general corporate purpose.

The BSE Sensex is currently trading at 36513.79, down by 604.43 points or 1.63% after trading in a range of 36511.32 and 36844.05. There were 3 stocks advancing against 28 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 2.14%, while Small cap index was down by 2.09%.

The only gaining sectoral indices on the BSE were IT up by 0.80% and TECK was up by 0.54%, while Metal down by 3.72%, PSU down by 3.32%, Energy down by 2.85%, Power down by 2.76% and Utilities was down by 2.70% were the top losing indices on BSE.

The few gainers on the Sensex were TCS up by 1.63%, Infosys up by 1.02% and HDFC up by 0.09%. On the flip side, Yes Bank down by 8.83%, Tata Motors - DVR down by 6.10%, Tata Motors down by 5.47%, Vedanta down by 5.03% and SBI down by 4.68% were the top losers.

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 is currently trading at 10810.70, down by 186.65 points or 1.70% after trading in a range of 10809.45 and 10895.80. There were 2 stocks advancing against 48 stocks declining on the index.

The only gainers on Nifty were TCS up by 1.94% and Infosys up by 1.06%. On the flip side, Yes Bank down by 8.21%, Tata Motors down by 5.66%, SBI down by 5.19%, JSW Steel down by 4.97% and Vedanta down by 4.83% were the top losers.

All the Asian counters were trading in red; Nikkei 225 declined 483.53 points or 2.29% to 20,603.63, Straits Times shed 60.06 points or 1.84% to 3,201.05, Hang Seng slipped 777.86 points or 2.89% to 26,140.72, Taiwan Weighted tumbled 107.12 points or 1.02% to 10,441.92, KOSPI decreased 40.00 points or 2.00% to 1,958.13, Jakarta Composite slipped 99.67 points or 1.57% to 6,240.51 and Shanghai Composite was down by 23.37 points or 0.81% to 2,844.47.