Sensex, Nifty trade deeply in red amid global sell-off

Indian equity benchmarks made gap-down opening on Monday tracking sell-off in the global markets as weak July U.S. jobs report as well as disappointing earnings from the likes of Intel and Amazon ignited worries that the world's largest economy could be falling into a recession under the weight of the Federal Reserve's policy of high interest rates. The unexpected increase in the unemployment rate reached its highest level since hitting 4.5 percent in October 2021. Domestically, Sensex and Nifty are trading deeply in red with cut of over one and half a percent each with BSE mid & small cap indices witnessing bloodbath. Additionally, investors are keeping an eye on data from the private sector and services, as well as quarterly earnings reports today. Foreign fund outflows dented sentiments. On Friday, foreign institutional investors (FIIs) net sold stocks worth Rs 3,310 crore. Some cautiousness came as data from the central bank showed India's foreign exchange reserves halted a three-week gaining streak and stood at $667.39 billion as of July 26, coming off record highs. 

Traders overlooked a report that India’s unemployment rate (UR) dropped by 1.3 percentage points in July from an eight-month high of over nine per cent in the previous month. The UR fell to 7.9 per cent in July from 9.2 per cent in June. On the sectoral front, Tyre industry stocks are in focus with report that Tyre manufacturers are grappling with unprecedented raw material costs as natural rubber prices touched a 10-year high in June 2024. This surge has prompted leading companies like CEAT and JK Tyres to increase prices in an effort to offset the rising costs. In stock specific development, Divis Laboratories fell despite reporting 21 percent year-on-year growth in Q1 net profit.

The BSE Sensex is currently trading at 79571.03, down by 1410.92 points or 1.74% after trading in a range of 78580.46 and 79780.61. There were 4 stocks advancing against 26 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 2.09%, while Small cap index was down by 2.21%.

The top losing sectoral indices on the BSE were Realty down by 3.89%, Metal down by 2.93%, Auto down by 2.64%, Utilities down by 2.50% and Capital Goods down by 2.45%, while there was no loser on the BSE sectora front.

The top gainers on the Sensex were Sun Pharma up by 1.19%, Hindustan Unilever up by 0.86%, Nestle up by 0.40% and Asian Paints up by 0.13%. On the flip side, Tata Motors down by 3.93%, Maruti Suzuki down by 3.56%, JSW Steel down by 2.95%, Tata Steel down by 2.84% and Power Grid down by 2.71% were the top losers.

Meanwhile, cleaning air over taxation system, Revenue Secretary Sanjay Malhotra has said the government remains committed to fairness, simplicity and equity in the tax system. He said the government’s ongoing efforts are to simplify tax laws, improve tax compliance, and support economic growth through prudent fiscal policies and the Union budget was in that direction. Union Finance Minister Nirmala Sitharaman had said a comprehensive review would be done on direct taxes over the next six months aiming at making direct taxes simpler to reduce disputes.

Malhotra said ‘Tax growth had reached 14 per cent, outpacing GDP growth due to better compliance and collection efficiency’. He commended both tax administrators and taxpayers for their efforts and asked for continued cooperation to further enhance tax compliance and administration. He assured taxpayers that the government aims to simplify and make it easier to understand and make the process as hassle-free as possible. He emphasized that the administration seeks to build trust with taxpayers and aims to minimise harassment and inconvenience for honest taxpayers. He further said ‘For those found dishonest, the law would be applied rigorously’. 

Clarifying about the removal of indexation for long-term capital gains, he stated that it should not hurt the masses as the capital gains tax was increased marginally for the “high-income group” only. He also touched on the broader economic goals reflected in the budget, focusing on growth, employment, and development across various sectors. He underscored the importance of fiscally responsible spending to avoid burdening future generations. He also addressed specific sectors, such as the leather, textile, diamond, and marine sectors, which have seen reductions in customs duties to enhance competitiveness. He highlighted the government’s support for industries through measures like the removal of angel tax and reduction of corporate tax rates of foreign companies to attract both domestic and international investment.

The CNX Nifty is currently trading at 24296.05, down by 421.65 points or 1.71% after trading in a range of 24192.50 and 24350.05. There were 7 stocks advancing against 43 stocks declining on the index.

The top gainers on Nifty were Sun Pharma up by 1.15%, Hindustan Unilever up by 0.93%, Asian Paints up by 0.41%, Nestle up by 0.33% and Tata Consumer Products up by 0.32%. On the flip side, Hindalco down by 3.66%, Tata Motors down by 3.57%, Maruti Suzuki down by 3.47%, ONGC down by 3.36% and JSW Steel down by 2.91% were the top losers.

Asian markets are trading mostly in red; Nikkei 225 slipped 2839.35 points or 7.91% to 33,070.35, Taiwan Weighted lost 1610.73 points or 7.44% to 20,027.36, KOSPI dropped 185.37 points or 6.93% to 2,490.82, Jakarta Composite plunged 134.35 points or 1.84% to 7,173.77, Straits Times fell 104.26 points or 3.08% to 3,277.19 and Hang Seng declined 36.55 points or 0.22% to 16,908.96 and Shanghai Composite was up by 1.99 points or 0.07% to 2,907.33.