Post Session: Quick Review

Breaking a two-day winning run, Indian equity benchmarks ended Tuesday’s trade on a pessimistic note with losses of over one and half percent, as traders remained on sidelines ahead of Consumer Price Index-based (CPI) inflation data for July later in the day. Markets suffered sharp losses in last leg of trade and breached their crucial 10,950 (Nifty) and 37,000 (Sensex) levels. Markets made a cautious start and traded lower with cut of around half a percent each, as traders remain concerned about government data showing that India's factory output growth, measured by the Index of Industrial Production (IIP), slowed down for second straight month to 2.0% in June 2019 as compared to 7% in June 2018 and it is also lower than 3.1% in May 2019. The slowdown was mainly due to poor performance of the manufacturing and mining sectors and a contraction in the capital goods and consumer durables sectors. However, key indices gave up some of their losses, taking support from a report that the government is working on a set of measures to remove friction points in the economy with a view to ensuring easy availability of funds to productive sectors and stimulate overall growth.

Though, markets failed to trim all of their losses, amid a selloff in global markets. Key indices also suffered due a sinking rupee which slipped 45 paise to quote at 71.23 against the US dollar so far in intra-day trade. Selling got intensified during final hours of trade, as sentiments on the street weakened further with private report stating that the Reserve Bank of India is unlikely to vote in favour of overseas sovereign bonds at its meeting with the government. The central bank is concerned that signals by overseas bonds could disrupt local bonds, which are controlled by the RBI.

On the global front, Asian markets ended lower on Tuesday, as fears about a drawn out Sino-U.S. trade war, protests in Hong Kong and a crash in Argentina's peso currency drove investors to safe harbours like bonds, gold, and the Japanese yen. European markets were trading in red, as Germany's investor confidence dropped sharply in August to its lowest level since the end of 2011. Back home, auto stocks fell sharply, after data released by the Society of Indian Automobile Manufacturers (SIAM) indicated that declining for the ninth consecutive month, domestic passenger vehicle (PV) sales dropped 30.98 percent to 2,00,790 units in July, from 2,90,931 units in the same period a year ago. Power stocks were in focus with report that average spot power price is likely to be around Rs 3.40 per unit in August on account of higher supplies especially from hydro and wind energy segments.

The BSE Sensex ended at 36945.44, down by 636.47 points or 1.69% after trading in a range of 36934.03 and 37755.16. There were 2 stocks advancing against 29 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell 2.21%, while Small cap index was down by 1.34%.(Provisional)

The only gaining sectoral indices on the BSE were Energy up by 5.93% and Oil & Gas up by 1.03%, while Telecom down by 4.74%, Auto down by 3.96%, Capital Goods down by 3.21%, TECK down by 2.88% and Power down by 2.76% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Reliance Industries up by 9.72% and Sun Pharma up by 4.35%. (Provisional)

On the flip side, Yes Bank down by 10.54%, Mahindra & Mahindra down by 6.17%, Bajaj Finance down by 5.65%, Bharti Airtel down by 5.59% and NTPC down by 5.41% were the top losers. (Provisional)

Meanwhile, expressing optimism over India’s economic condition, Finance Minister Nirmala Sitharaman has assured industry leaders that the Reserve Bank of India (RBI) and the government are on the same page as regards to efforts that are required to boost the economy. She added that there was an atmosphere of certainty and cordiality between the RBI and the government. She said that even with some moderation, India is still the fastest-growing large economy and with the government and the RBI working together in synergy in a cordial relationship, the ecosystem will help incentivize investments.

High-frequency indicators like auto sale and core sector growth numbers are pointing towards a slowdown in the economy. Besides, the problems in the NBFC sector are adding to the woes. Sitharaman said the government is looking at the financial sector woes and will address them. She indicated steps would be taken in the coming weeks to deal with the issue. She also assured the industry that the government would have a re-look at the penal provisions concerning mandatory investment towards corporate social responsibility (CSR) by the companies.

The Finance Minister further said that soon she would be visiting different parts of the country to meet industry representatives to find out specifically where tax harassment is taking place. She added that tax authorities would be issued directions then and there to redress the grievances. She also said a technology-based platform was being set up so that she herself could look into incidents of tax harassment.

The CNX Nifty ended at 10910.70, down by 198.95 points or 1.79% after trading in a range of 10901.60 and 11145.90. There were 4 stocks advancing against 45 stocks declining on the index. (Provisional)

The top gainers on Nifty were Indiabulls Housing Finance up by 14.54%, Reliance Industries up by 9.38%, Sun Pharma up by 4.75% and GAIL India up by 1.33%.(Provisional)

On the flip side, Yes Bank down by 10.96%, Bajaj Finance down by 6.10%, Mahindra & Mahindra down by 5.88%, UPL down by 5.75% and Bajaj Finserv down by 5.60% were the top losers. (Provisional)

European markets were trading in red; UK’s FTSE 100 decreased 36.92 points or 0.51% to 7,189.80, France’s CAC fell 30.29 points or 0.57% to 5,280.02 and Germany’s DAX was down by 111.67 points or 0.96% to 11,568.01.

Asian markets ended lower on Tuesday as increasingly violent protests in Hong Kong resulted in the cancellation of hundreds of flights in and out of the financial hub, with the overall unrest showing no clear signs of ending. Market sentiments weakened further with uncertainties surrounding the US-China trade war and Argentine President Mauricio Macri's loss in primary elections sent investors scrambling for safe-haven assets such as the yen, gold and bonds. Japanese shares hit a one-week low as traders returned to their desks after a long holiday weekend. Moreover, Chinese shares ended lower after data showed banks extended fewer-than-expected new yuan loans in July. Reports showing Chinese banks extended 1.06 trillion yuan ($150.06 billion) in new yuan loans in July, down from June and falling short of expectations. Meanwhile, investors awaited key reports on retail sales, industrial production and the jobless rate due on Wednesday for further direction.