Markets fall in early deals; Nifty below 11,100 mark

After a long weekend, Indian equity benchmarks made a cautious start and are trading lower with cut of around half a percent each in early deals on Tuesday. Traders are looking ahead to the macroeconomic data including CPI inflation and balance of trade for the month of July to be release later in the day. Investors remained concerned with 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. As per the data, manufacturing sector grew 1.2% in June 2019, much lower than 6.9% a year ago. Some cautiousness also came in with report that continuing with their selling spree, foreign investors pulled out a net amount of Rs 9,197 crore in just seven trading sessions in August due to unconducive domestic and global factors. According to latest depositories data, foreign portfolio investors (FPIs) withdrew a net amount of Rs 11,134.60 from equities while pumping in Rs 1,937.54 into the debt segment during August 1-9, taking the total net withdrawal to Rs 9,197.06 crore. Market participants overlooked 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.

On the global front, all the Asian markets were trading in red following the weak cues overnight from Wall Street amid worries about a prolonged US-China trade war and the political unrest in Hong Kong. The Argentine peso's sharp fall against the US dollar after Argentine President Mauricio Macri's loss in primary elections also dampened investors’ sentiment. Back home, on the sectoral front, 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. In scrip specific development, Reliance Industries (RIL) jumped over 8% on signing a non-binding Letter of Intent (LOI) regarding a proposed investment in the Oil to Chemicals (O2C) division comprising the Refining, Petrochemicals and fuels marketing businesses of RIL. Saudi Aramco to acquire 20% stake in O2C division of the company and it is based upon an Enterprise Value of $75 billion. This would be one of the largest foreign investments ever made in India. Also, RIL is likely to get around Rs 7,000 crore from British energy giant BP for selling a 49% stake in its fuel retailing network.

The BSE Sensex is currently trading at 37393.81, down by 188.10 points or 0.50% after trading in a range of 37321.28 and 37755.16. There were 9 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined by 0.58%, while Small cap index was down by 0.20%.

The top gaining sectoral indices on the BSE were Energy up by 5.95%, Oil & Gas up by 2.53%, Metal up by 0.41%, Consumer Durables up by 0.15% and Realty was up by 0.01%, while Telecom down by 2.96%, Power down by 2.27%, Utilities down by 1.78%, TECK down by 1.67% and IT was down by 1.52% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 8.33%, Tata Motors up by 1.72%, Tata Motors - DVR up by 1.72%, ONGC up by 1.07% and Tata Steel up by 1.06%. On the flip side, NTPC down by 6.22%, Bharti Airtel down by 4.30%, Mahindra & Mahindra down by 2.65%, HDFC down by 2.53% and Tech Mahindra down by 2.35% were the top losers.

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 is currently trading at 11060.10, down by 49.55 points or 0.45% after trading in a range of 11041.40 and 11145.90. There were 18 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 11.65%, Reliance Industries up by 8.34%, BPCL up by 2.90%, Zee Entertainment up by 1.84% and Tata Motors up by 1.80%. On the flip side, NTPC down by 6.38%, Bharti Airtel down by 4.27%, Britannia Industries down by 3.06%, Mahindra & Mahindra down by 2.51% and HDFC down by 2.47% were the top losers.

All the Asian counters are trading in red; Nikkei 225 declined 250.43 points or 1.21% to 20,434.39, Straits Times shed 24.47 points or 0.77% to 3,144.47, Hang Seng slipped 479.07 points or 1.86% to 25,345.65, Taiwan Weighted tumbled 88.65 points or 0.85% to 10,383.71, KOSPI decreased 13.65 points or 0.70% to 1,928.64, Jakarta Composite slipped 29.61 points or 0.47% to 6,220.99 and Shanghai Composite was down by 20.92 points or 0.74% to 2,794.07.