Post Session: Quick Review

Indian equity benchmarks sank in a sea of red on Tuesday, with heavy losses of over two percent, on the back of sustained selling across sectors, tracking sell-off in the global market. Key gauges traded on feeble note since the beginning, following a set of subdued macroeconomic data. India's GDP growth slipped to an over six-year low of 5 per cent in the June quarter of 2019-20, hit by a sharp deceleration in manufacturing output and subdued farm sector activity. Market sentiment also took a hit with the government data showing that growth of eight core industries -- coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity -- dropped to 2.1 per cent in July, mainly due to contraction in coal, crude oil and natural gas production. The eight core sector industries had expanded by 7.3 per cent in July last year.  Sentiments remained weak as country's manufacturing sector activity declined to its 15-month low in August, owing to slower increases in sales, output and employment.

Selling got intensified during final hours of trade, as sentiment further got impacted amid market regulator SEBI's annual report stating that as macroeconomic headwinds weighed on investor sentiments through the year, foreign portfolio investors pulled out Rs 38,930 crore in 2018-19. Traders also reacted negatively to industry body Ficci’s statement that India's economic growth dropping to an over six-year low of 5 percent in April-June 2019 is indicating a ‘significant deceleration’ in both investment and consumer demand. Adding to the pain was a weakening rupee, which fell by 90 paise to 72.32 per US dollar when the market came to a close.

On the global front, Asian equity ended mostly in red on Tuesday, amid uncertainty over the next steps in US-China trade tensions. European markets were trading in red, as uncertainty over Britain's chaotic exit from the European Union weighed on sentiment. Back home, majority of sugar stocks ended in red after rating agency ICRA said it will be challenging to achieve 6 million tonne of sugar exports in 2019-20 marketing year starting October, amid subdued global prices. Also, most of the auto stocks were trading in the red on report that India’s automakers reported their monthly sales numbers, which showed that sales of four- and two-wheelers almost halved in August, compared to the equivalent month last year.

The BSE Sensex ended at 36491.33, down by 841.46 points or 2.25% after trading in a range of 36466.01 and 37188.38. 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 1.74%, while Small cap index was down by 1.48%. (Provisional)

The top losing sectoral indices on the BSE were Metal down by 3.44%, Energy down by 3.21%, Consumer Durables down by 3.02%, Basic Materials down by 2.93% and Bankex down by 2.59%, while there were no gainers on the BSE sectoral front. (Provisional)

The only gainers on the Sensex were Tech Mahindra up by 1.10% and HCL Technologies up by 0.36%. (Provisional)

On the flip side, Tata Motors - DVR down by 4.67%, ICICI Bank down by 4.61%, Tata Steel down by 4.42%, Indusind Bank down by 3.90% and Tata Motors down by 3.90% were the top losers. (Provisional)

Meanwhile, in order to boost economic growth from a five-year low, the government has unveiled a mega plan to merge 10 public sector banks (PSBs) into four as part of plans to create fewer and stronger global-sized lenders. Finance Minister Nirmala Sitharaman has announced four new set of mergers -- Punjab National Bank, Oriental Bank of Commerce and United Bank of India will combine to form the nation's second-largest lender; Canara Bank and Syndicate Bank will merge; Union Bank of India will amalgamate with Andhra Bank and Corporation Bank; and Indian Bank will merge with Allahabad Bank.

The exercise will bring down the number of nationalised public sector banks to 12 from 27 in 2017. This will make bank balance sheet stronger with greater capacity to lend. Oriental Bank of Commerce and United Bank merger will merge into Punjab National Bank to create a bank with Rs 17.95 trillion business and 11,437 branches.  The merger of Syndicate Bank with Canara Bank will create the fourth largest public sector bank with Rs 15.20 trillion business and a branch network of 10,324. Andhra Bank and Corporation Bank's merger with Union Bank of India will create India's fifth largest public sector bank with Rs 14.59 trillion business and 9,609 branches.

Besides, the finance minister also unveiled governance reforms in public sector banks, saying their boards will be given autonomy and enabled to do succession planning. Also, she said bank boards will be given flexibility to fix sitting fee of independent directors, adding that non-official directors will perform role analogous to independent directors. Post consolidation, boards will be given flexibility to introduce chief general manager level as per business needs. They will also recruit chief risk officer at market-linked compensation to attract best talent.

The CNX Nifty ended at 10775.85, down by 247.40 points or 2.24% after trading in a range of 10772.70 and 10967.50. There were 3 stocks advancing against 47 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tech Mahindra up by 1.30%, HCL Technologies up by 0.24% and BPCL up by 0.04%. (Provisional)

On the flip side, ICICI Bank down by 4.46%, Ultratech Cement down by 4.37%, Tata Steel down by 4.32%, Titan Company down by 4.28% and Indian Oil Corporation down by 4.21% were the top losers. (Provisional)

European markets were trading in red; UK’s FTSE 100 decreased 20.21 points or 0.28% to 7,261.73, France’s CAC fell 32.88 points or 0.6% to 5,460.16 and Germany’s DAX dropped 56.05 points or 0.47% to 11,897.73.

Asian markets ended mostly lower on Tuesday amid escalating US-China trade dispute after the countries slapped fresh tariffs on each other's exports over the weekend. Uncertainty surrounding the much-awaited trade talks between the US and China as well as the prospect of more Brexit-related market turmoil too kept investors anxious. After a new round of tariffs took effect over the weekend, investors waited to see if Chinese and American officials will begin the next round of trade talks this month to resolve the trade war. South Korean shares slipped as investors digested inflation and GDP data. Annual inflation dipped to a record low in August and the Bank of Korea revised down the economic growth for the April-June period to 1% sequentially from a 1.1% gain reported earlier, strengthening the case for another central bank rate cut as early as next month. Meanwhile, Chinese shares ended higher, helped by tech firms as investors cheered Beijing’s push for tech independence amid the bruising trade war with US.