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Markets witness massacre in early deals
Jul-22-2019

Indian equity benchmarks have made a dismal start and are witnessing massacre in early deals with frontline gauges trading below their crucial 38,100 (Sensex) and 11,350 (Nifty) levels. Sentiments remain dampened with the Reserve Bank of India’s (RBI) data showing that after touching record highs, the foreign exchange reserves declined by $1.113 billion to $428.797 billion in the week to July 12 - the first fall after four consecutive weeks of gains - due to a fall in foreign currency assets. Traders shrugged off reports that Asian Development Bank (ADB) has lowered the inflation forecast for India during the current financial year by 0.2 percentage points to 4.1 percent, on the back of gain in rupee and cut in the country's GDP projection. Meanwhile, SEBI has tweaked the formats for limited review and audit report of listed entities in order to align them with the revised auditing standards. This will also be applicable to entities whose accounts are to be consolidated with the listed entity.

Global cues too remained sluggish with most of the Asian markets are trading in red at this point of time, as investors reduced expectations of an aggressive interest rate cut by the Federal Reserve, while heightened Middle East tensions following an Iranian seizure of a British tanker lifted crude oil prices. The US markets ended lower on Friday as geopolitical worries overshadowed the hopes of interest rate cuts by the Federal Reserve.

Back home, aviation stocks remained in focus with the monthly data from regulator DGCA showing that domestic air passenger traffic rose 6.19 percent in June over the year-ago period, with local carriers flying 12.02 million passengers in the month. Banking stocks remained buzzing as Reserve Bank of India Governor Shaktikanta Das asked state-owned banks to follow the new framework for resolution of stressed assets as well as to speed up the recovery process.

The BSE Sensex is currently trading at 38034.93, down by 302.08 points or 0.79% after trading in a range of 37926.54 and 38333.52. There were 14 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index declined 0.91%, while Small cap index was down by 1.50%.

The few gaining sectoral indices on the BSE were Metal up by 0.66%, IT up by 0.29%, TECK up by 0.26% and Auto was up by 0.24%, while Realty down by 1.56%, Bankex down by 1.18%, Power down by 0.92%, FMCG down by 0.91% and Oil & Gas was down by 0.88% were the top losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 3.69%, Tata Motors up by 2.13%, Yes Bank up by 1.92%, Tata Motors - DVR up by 1.90% and Sun Pharma up by 1.36%. On the flip side, HDFC down by 2.78%, HDFC Bank down by 2.65%, Bajaj Finance down by 2.55%, Indusind Bank down by 1.86% and ONGC down by 1.84% were the top losers.

Meanwhile, Asian Development Bank (ADB) in its supplement to Asian Development Outlook (ADO) 2019 has lowered the inflation forecast for India by 0.2 percentage points to 4.1 percent during the current financial year ending in March 2020 (FY20) and 4.4 percent in FY21. It has lowered inflation forecast in light of a smaller-than-expected uptick in food inflation, a strengthening Indian rupee since October 2018, and a lower Gross Domestic Product (GDP) growth forecast of the country.

In its report, ADB said India will be the main driver to lower the inflation for the South Asian region. It added that South Asia's inflation forecast for 2019, was revised down from 4.7 percent to 4.5 percent, mainly reflecting lowered forecasts for India.

According to the ADO supplement, inflation projections for developing Asia were revised up a notch from 2.5 percent to 2.6 percent in both 2019 and 2020, reflecting higher oil prices and several domestic factors. It also said price fluctuations for Brent crude oil continue amid various concerns affecting both supply and demand.

The ADO supplement has lowered India's GDP growth forecast by 0.2 percentage points to 7 percent in 2019-20 from 7.2 percent projected in April, on the back of fiscal shortfall concerns. It also lowered its GDP growth forecast for FY 2020-21 to 7.2 percent from 7.3 percent projected earlier.

The CNX Nifty is currently trading at 11318.70, down by 100.55 points or 0.88% after trading in a range of 11301.25 and 11398.15. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 3.47%, Tata Motors up by 1.91%, Yes Bank up by 1.68%, Bharti Infratel up by 1.58% and Sun Pharma up by 1.39%. On the flip side, Bajaj Finserv down by 3.32%, HDFC down by 3.19%, HDFC Bank down by 3.05%, BPCL down by 2.49% and Bajaj Finance down by 2.44% were the top losers.

Most of the Asian markets are trading in red; Nikkei 225 shed 76.34 points or 0.36% to 21,390.65, Straits Times declined 18.82 points or 0.56% to 3,359.14, Hang Seng dropped 222.81 points or 0.77% to 28,542.59, KOSPI slipped 2.19 points or 0.10% to 2,092.17, Jakarta Composite dropped 25.53 points or 0.40% to 6,431.01 and Shanghai Composite was down by 16.76 points or 0.57% to 2,907.44. On the flip side, Taiwan Weighted was up by 68.16 points or 0.63% to 10,941.35.
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