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Weakness persist on Dalal Street on Friday
Jul-19-2019

Indian equity markets extended their southward journey for second straight session on Friday, as both the larger peers -- Sensex and Nifty closed with the losses of around 1.50% each. Key indices made a slightly positive start of the day, aided with Finance Minister Nirmala Sitharaman’s statement that the tax proposals in the Finance Bill 2019 are aimed at improving the ease of living and reducing pain of the citizens. Nirmala Sitharaman also said that budget proposals will promote Make in India and digital payment. Adding some relief, NITI Aayog Vice Chairman Rajiv Kumar said that the focus of the second term of the Narendra Modi government is accelerated economic growth led by the private sector and private enterprise.

But, markets soon lost all of their gains to remain negative for the whole day, after the International Monetary Fund’s (IMF) report showed that India's current account (CA) balance deficit grew to $68 billion in 2018-19 from $49 billion the previous year, and it said the deficit was justified by development needs. Market participants remained cautious, as sticking to his analysis that India's economic growth has been overestimated, Arvind Subramanian said he had raised doubts about the GDP numbers in 2015 when he was the chief economic adviser of the Modi government as he found inconsistency between projected growth and other macro indicators.

On the global front, European markets were trading in red, despite the Euro area current account surplus increased in May. The data from the European Central Bank showed that the current account surplus rose to a seasonally adjusted EUR 30 billion in May from EUR 22 billion in April. However, Asian markets ended in green, as the Asian Development Bank maintained its growth projection for developing Asia despite escalating trade conflicts between China and the United States. According to Asian Development Outlook Supplement, the region is set to grow at a pace of 5.7 percent in 2019 before slowing marginally to 5.6 percent in 2020.

Back home, Automobile industry stocks ended lower, after the government asserted that subsidies for promotion of electric mobility in India will be only for commercial vehicles, and automobiles for personal usage will not be included. Stocks related to the banking industry also fell, despite the Reserve Bank of India (RBI) in its latest report showed that bank credit and deposits continued to grow in double digits as they increased by 12.02 percent and 10.32 percent to Rs 96.975 trillion and Rs 126.746 trillion, respectively in the fortnight to July 5. In the year-ago fortnight, advances stood at Rs 86.566 trillion and deposits at Rs 114.883 trillion.

Finally, the BSE Sensex lost 560.45 points or 1.44% to 38,337.01, while the CNX Nifty was down by 177.65 points or 1.53% to 11,419.25.

The BSE Sensex touched a high and a low of 39,058.73 and 38,271.35, respectively and there were 04 stocks advancing against 27 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 1.99%, while Small cap index was down by 1.83%.

The only gaining sectoral indices on the BSE were Power up by 0.36% and Consumer Durables up by 0.22%, while Auto down by 3.24%, Bankex down by 2.14%, Consumer Disc down by 2.11%, Basic Materials down by 1.86% and Healthcare down by 1.79% were the top losing indices on BSE.

The few gainers on the Sensex were NTPC up by 2.20%, Power Grid up by 0.61%, TCS up by 0.55% and ONGC up by 0.42%. On the flip side, Mahindra & Mahindra down by 4.36%, Tata Motors - DVR down by 4.16%, Bajaj Finance down by 4.16%, Tata Motors down by 3.73% and Hero MotoCorp down by 3.71% were the top losers.

Meanwhile, Civil Aviation Minister Hardeep Singh Puri has indicated that collection from excise duty on Air Turbine Fuel (ATF) increased by 31 percent to Rs 2,540 crore in 2018-19 as compared to Rs 1,938 crore earned in the 2017-19. He also noted that the government has collected Rs 1,520 crore in excise duty on ATF in 2016-17.

The minister highlighted that the Centre has collected Rs 229 crore and Rs 162 crore in customs duty on ATF in 2018-19 and 2017-18 respectively. A basic customs duty of five percent is levied on import on ATF.

Puri further stated that the decision to include ATF in the ambit of the Goods and Services Tax (GST) rests with the GST council only. He also said that no decision has been taken in this regard. He noted that article 279A(5) of the Constitution provides that GST council shall recommend the date on which GST shall be levied on petroleum crude, high speed diesel, motor spirit, natural gas and ATF. 

The CNX Nifty traded in a range of 11,640.35 and 11,399.30. There were 07 stocks advancing against 43 stocks declining on the index.

The top gainers on Nifty were NTPC up by 2.20%, Titan Company up by 1.01%, Coal India up by 0.82%, TCS up by 0.68% and Power Grid up by 0.51%. On the flip side, Mahindra & Mahindra down by 4.39%, Bajaj Finance down by 4.20%, Bajaj Finserv down by 3.87%, Eicher Motors down by 3.84% and IndusInd Bank down by 3.56% were the top losers.

European markets were trading in red; UK’s FTSE 100 lost 13.44 points or 0.18% to 7,479.65, France’s CAC fell 13.30 points or 0.24% to 5,537.25, Germany’s DAX was down by 8.42 points or 0.07% to 12,219.43.

Asian markets ended higher on Friday, as investors cheered dovish comments by a top Fed official as well as better-than-expected fourth-quarter earnings results from Microsoft Corp. Japanese shares ended up after steep losses in the previous session as the appreciation of the yen took a breather. Further, Seoul shares rallied to snap a two-day losing streak on hopes for a Fed rate cut during a policy meeting slated for later this month. New York Fed President John Williams said that policymakers need to add stimulus early to deal with too-low inflation when interest rates are near zero and cannot wait for economic disaster to unfold, in a speech read as a strong argument in favour of quick action. The comments by Williams made it a virtual certainty the Fed would opt to cut interest rates by 25 basis points (bps) at its July 30-31 policy meeting and also fuelled expectations of an even deeper 50 bps reduction.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

2,924.20
23.02
0.79

Hang Seng

28,765.40
303.74
1.07

Jakarta Composite

6,456.54
53.25
0.83

KLSE Composite

1,658.19

9.26

0.56

Nikkei 225

21,466.99
420.75
2.00

Straits Times

3,377.96
16.91
0.50

KOSPI Composite

2,094.36
27.81
1.35

Taiwan Weighted

10,873.19
73.91
0.68
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