Markets witness deep cut on Tuesday amid weak economic data

Indian equity benchmarks witnessed sharp deep on Tuesday, on the back of weak economic data of core sector, GDP and manufacturing PMI. The start of the day was negative, as 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. Adding more worries, the growth of eight core infrastructure industries slowed down to 2.1% in July 2019 as compared to 7.3% in the same month a year ago, on the back of contraction in coal, crude oil and natural gas production. Traders also remain worried, after the finance ministry indicated that Goods and Services Tax (GST) collections slipped below Rs 1 lakh crore mark to Rs 98,202 crore in the month of August 2019.

Weakness persisted over the street during whole day, as India's manufacturing activity eased in the month of August to 15-month low, on the back of subdued sales to domestic and international clients. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) slipped to 51.4 in August from 52.5 in July, its lowest mark since May 2018. Domestic sentiments remained sluggish, 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. Besides, the government's fiscal deficit touched Rs 5.47 lakh crore in the first four months (April-July) of the financial year 2019-20 (FY20), which is 77.8% of the Budget Estimate (BE).

On the global front, European markets were trading in red, as UK construction sector contracted for the fourth consecutive month in August as new work declined the most in over ten years, leading business optimism to plummet to over a decade-low. The data from IHS Markit's purchasing managers' survey showed that the IHS Markit/CIPS UK Construction Total Activity Index fell to 45 from 45.3 in July. Asian markets ended in red, after South Korea's manufacturing sector continued to remain in negative territory in August. The survey data from IHS Markit showed that the manufacturing Purchasing Managers' Index rose to 49.0 in August from 47.3 in July. Although this was the first increase in the reading since April, the score signaled contraction in the sector.

Back home, automobile industry stocks ended lower, on the back of weak sales data for the month of August. Bajaj Auto registered a fall of 11% in total sales to 390,026 units in August 2019 against 437,092 units in August 2018, while SML Isuzu reported 9% fall in August 2019 sales. The company sold 677 vehicles in August 2019 against 744 vehicles in August 2018. Total Sales from April to August 2019 stood at 5816 units. Further, stocks related to the metal industry remained in watch, after Fitch Solutions Macro Research said it has revised downwards its 2019 global steel price forecast as global prices continue to be hammered by poor sentiment amid ongoing US-China trade tensions and increasing downside risks to the global economy.

Finally, the BSE Sensex lost 769.88 points or 2.06% to 36,562.91, while the CNX Nifty was down by 225.35 points or 2.04% to 10,797.90.

The BSE Sensex touched a high and a low of 37,188.38 and 36,466.01, respectively and there were 02 stocks advancing against 29 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 1.65%, while Small cap index was down by 1.32%.

The top losing sectoral indices on the BSE were Metal down by 3.23%, Energy down by 2.98%, Consumer Durables down by 2.78%, Basic Materials down by 2.72% and Telecom down by 2.55%, while there were no gaining sectoral indices on the BSE.

The only gainers on the Sensex were Tech Mahindra up by 1.24% and HCL Tech. up by 0.75%. On the flip side, ICICI Bank down by 4.45%, Tata Motors - DVR down by 4.30%, Tata Steel down by 3.93%, Vedanta down by 3.70% and HDFC down by 3.67% were the top losers.

Meanwhile, the Controller General of Accounts (CGA) in its latest data has showed that the government's fiscal deficit or gap between expenditure and revenue touched Rs 5.47 lakh crore in the first four months (April-July) of the financial year 2019-20 (FY20), which is 77.8% of the Budget Estimate (BE). In absolute terms, the fiscal deficit was Rs 5,47,605 crore at July-end. The fiscal deficit stood at 86.5% of 2018-19 BE in the year-ago period. The government estimates the fiscal deficit to be at Rs 7.03 lakh crore during 2019-20. It aims to restrict the deficit at 3.4% of the Gross Domestic Product in the current fiscal, same as the last fiscal.

The data showed that revenue receipts of the government during April-July, 2019-20 remained unchanged at 19.5% of the BE compared to the corresponding period last year. In absolute terms, revenue receipts stood at Rs 3.82 lakh crore at July-end 2019. During the entire year, the revenue receipts has been pegged at Rs 19.62 lakh crore.

On the expenditure front, the capital expenditure was 31.8% of the BE. This compares with 37.1% in the year-ago period. Total expenditure during April-July period stood at Rs 9.47 lakh crore or 34% of the BE. It was 36.4% of BE in the corresponding period last fiscal.  The government has pegged its total expenditure during the fiscal ending March 2020 at Rs 27.86 lakh crore. The CGA further said the fiscal deficit figure in monthly accounts during a financial year is not necessarily an indicator of fiscal deficit for the year.

The CNX Nifty traded in a range of 10,967.50 and 10,772.70. There were 02 stocks advancing against 48 stocks declining on the index.

The only gainers on Nifty were Tech Mahindra up by 1.35% and HCL Tech. up by 0.51%. On the flip side, Tata Steel down by 4.52%, Ultratech Cement down by 4.37%, ICICI Bank down by 4.35%, Titan down by 4.23% and IOC down by 4.12% were the top losers.

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.