Repo rate cut by RBI fails to lift Sensex, Nifty

The Reserve Bank of India’s (RBI) repo rate cut decision failed to lift Indian equity benchmarks on Wednesday, as Sensex and Nifty closed sharply in red terrain. After starting a session on cautious note, markets traded volatile, as the National Council of Applied Economic Research (NCAER) in its latest report said that India's GDP growth is likely to be 6.2 per cent during the current fiscal, down from 6.8 per cent in 2018-19, on account of flat growth in agriculture sector. The prospects for agricultural sector in 2019-20 depend largely on the south-west monsoon. It added that the country as a whole has received 7 per cent below normal rainfall by August 5, 2019. It has also experienced temporal variations in rainfall. Traders failed to take any sense of relief with report that the RBI's monetary policy committee (MPC) reduced the repo rate by 35 basis points (bps) to 5.40 percent from 5.75 percent for fourth time in a row, to help revive the economy.

In the second half of the session, indices extended losses to settle near their intraday low points, after the RBI lowered the GDP growth projection for 2019-20 to 6.9 per cent from 7 per cent forecast in the June policy, and underlined the need for addressing growth concerns by boosting aggregate demand. Investors were seen taking a note of Former RBI Governor Bimal Jalan’s statement that the government must borrow only long-term fund from the external market, and the quantum should not exceed 1.5 percent of Gross domestic product (GDP) under any circumstances. Jalan said that he does not have negative view about overseas sovereign borrowing, but he thinks India does not need to borrow from abroad.

On the global front, European markets were trading in green, even though Germany's industrial production declined more than expected in June. The data from Destatis showed that industrial production fell 1.5 percent on a monthly basis in June, reversing a revised 0.1 percent rise in May. Output was forecast to drop moderately by 0.5 percent. Asian markets ended mixed, after Taiwan's consumer price inflation slowed in July after rising in the previous month. The data from the Directorate-General of Budget, Accounting and Statistics showed that the consumer price index rose 0.4 percent year-on-year in July, slower than 0.85 percent in June.

Back home, telecom firms stocks remained in focus, after TRAI asked telecom firms to submit status report over complaints regarding pesky calls, on monthly basis starting September, setting in motion a monitoring system for the new framework that aims to check unwarranted telemarketing calls & messages. Tyre industry stocks also remained in watch, as ICRA said that demand slowdown would curtail tyre industry's revenue growth to 3-4% in FY20 & margins are expected to decline. It mentioned that the credit profile of Indian tyre industry may weaken in current fiscal affected by the ongoing slowdown in the domestic automotive industry, rising raw material prices & higher spend towards debt-funded capacity expansion.

Finally, the BSE Sensex fell 286.35 points or 0.77% to 36,690.50, while the CNX Nifty was down by 92.75 points or 0.85% to 10,855.50.

The BSE Sensex touched a high and a low of 37,104.79 and 36,610.57, respectively and there were 08 stocks advancing against 23 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index lost 0.44%, while Small cap index was down by 0.11%.

The few gaining sectoral indices on the BSE were Healthcare up by 0.51%, IT up by 0.22% and TECK up by 0.21%, while Metal down by 2.67%, Auto down by 2.10%, PSU down by 1.92%, Energy down by 1.52% and Oil & Gas down by 1.49% were the top losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 1.95%, Yes Bank up by 1.70%, Hero MotoCorp up by 1.54%, Sun Pharma up by 0.80% and Indusind Bank up by 0.72%. On the flip side, Mahindra & Mahindra down by 5.62%, Tata Motors - DVR down by 5.50%, Tata Steel down by 4.75%, Tata Motors down by 4.20% and SBI down by 3.75% were the top losers.

Meanwhile, The Parliament has given its nod to the landmark Consumer Protection Bill, 2019, which aims to protect the rights of consumers by establishing authorities for timely and effective administration and settlement of consumers’ dispute. The Bill, already passed by Lok Sabha, was passed in the Upper House by voice vote and will replace the more than three decades old Consumer Protection Act, 1986.

Moving the Bill for consideration and passing in Rajya Sabha, Union Food and Consumer Affairs Minister Ram Vilas Paswan has said that the new legislation seeks to establish a Central Consumer Protection Authority (CCPA) to promote, protect and enforce consumer rights. He also noted that this new bill will provide a better mechanism to dispose consumer complaints in a speedy manner and will help in disposal of large number of pending cases in consumer courts across the nation. He also said that if a product is found faulty, instead of earlier individual examination, the entire batch would be examined. He added that the new bill seeks to take care of product liabilities and service, as well as action against publishers and celebrities of misleading advertisements.

Talking on maximum retail price (MRP), Paswan said many restaurants were overcharging but when it tried to intervene, the matter was challenged in court. He said MRP should be displayed prominently on products apart from date of expiry, date of manufacturing and complaints redressal mechanism. He observed that there is no concept of levying a service charge globally and the government advised restaurants to make it voluntary. He also urged the state governments to pay more attention to consumer awareness programmes like 'Jaago Graahak Jaago'.

The CNX Nifty traded in a range of 10,975.65 and 10,835.90. There were 14 stocks advancing against 35 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Zee Entertainment up by 2.90%, Cipla up by 2.76%, Yes Bank up by 1.99%, Hindustan Unilever up by 1.89% and Hero MotoCorp up by 1.29%. On the flip side, Indiabulls Housing Finance down by 13.40%, Mahindra & Mahindra down by 5.92%, Tata Steel down by 5.88%, Tata Motors down by 4.33% and BPCL down by 4.27% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 61.65 points or 0.86% to 7,233.34, France’s CAC added 68.66 points or 1.31% to 5,303.31 and Germany’s DAX was up by 170.06 points or 1.47% to 11,738.02.

Asian markets ended mixed on Wednesday, with cautious trading due to the escalating US-China trade tensions. Meanwhile, China's central bank took steps Tuesday to stabilize the yuan, which boosted markets after Monday's big sell-off. But today the People's Bank of China once again cut the yuan's daily reference rate, which is a ‘band’ it sets every day to curb how far up or down the yuan's value can move. The rate was set to 6.9996 yuan per one US dollar, the lowest since May 2008. Japanese shares ended lower on worries that a stronger yen will put more pressure on its struggling exporters.