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Markets extend losing streak for third straight session
Jul-22-2019

Extending southward journey for third straight session, Indian equity benchmarks ended the Monday’s trade with a cut of over half a percent. Markets started the session on pessimistic note, as 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. Markets traded in tight band throughout the day as continuous selling by foreign investors post the presentation of the Budget on July 5 and corporate results for April - June 2019 quarter that failed to enthuse investors, dented the overall market sentiment. Some cautiousness also crept in with report that the Ministry of Statistics and Programme Implementation indicated as many as 345 infrastructure projects, each worth Rs 150 crore or more, have shown cost overruns to the tune of over Rs 3.28 lakh crore owing to delays and other reasons.

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. The market participants overlooked NITI Aayog Vice Chairman Rajiv Kumar’s statement that India will achieve Gross domestic product (GDP) growth of 8 percent plus from fiscal year 2020-2021 onwards as structural reforms such as the Goods and Services Tax (GST), Insolvency and Bankruptcy Code (IBC) are set to produce the benefits. 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.

On the global front, European markets were trading in green, shrugging off dialed-down expectations for a big US rate cut this month. Asian markets ended mostly in red on Monday, as investors scaled back expectations of an aggressive interest rate cut by the Federal Reserve, while heightened Middle East tensions following Iran’s seizure of a British tanker lifted crude oil prices.

Back home, aviation stocks flied higher 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. Stocks related to power sector remained in focus with the Institute for Energy Economics and Financial Analysis (IEEFA) stating that India, which is aggressively pushing its policy of adding renewable energy to its energy profile, is likely to obtain 63 percent of its installed power capacity from non-fossil fuel sources, including hydro-electricity, by 2029-30. However, banking stocks edged lower amid 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.

Finally, the BSE Sensex lost 305.88 points or 0.80% to 38,031.13, while the CNX Nifty was down by 73.05 points or 0.64% to 11,346.20.

The BSE Sensex touched a high and a low of 38,333.52 and 37,890.32, respectively and there were 17 stocks advancing against 14 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.60%, while Small cap index was down by 1.15%.

The top gaining sectoral indices on the BSE were Energy up by 1.92%, Metal up by 1.89%, Oil & Gas up by 1.07%, Telecom up by 0.61% and Basic Materials was up by 0.60%, while FMCG down by 1.43%, Bankex down by 1.42%, Realty down by 1.33%, Consumer Durables down by 0.62% and Capital Goods was down by 0.38% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 9.49%, Vedanta up by 3.85%, Reliance Industries up by 2.52%, Asian Paints up by 2.49% and Maruti Suzuki up by 2.48%. On the flip side, HDFC down by 5.09%, HDFC Bank down by 3.32%, Kotak Mahindra Bank down by 3.08%, Hindustan Unilever down by 2.67% and Bajaj Finance down by 2.21% were the top losers.

Meanwhile, NITI Aayog Vice Chairman Rajiv Kumar has expressed confidence that India will achieve Gross domestic product (GDP) growth of 8 percent plus from fiscal year 2020-2021 onwards as structural reforms such as the Goods and Services Tax (GST), Insolvency and Bankruptcy Code (IBC) are set to produce the benefits. He stressed that in the next five, the government is focused on accelerating growth from the current about seven percent to more than eight percent that will help to achieve target of making India a $5 trillion economy.

Talking on the issue of job creation, Kumar emphasized that a very large number of jobs have been created in the country in the last five years. He noted that if it was always a jobless growth, then that would have shown up in social strife and social tensions and surely would have meant that this government would not have been re-elected. However, he acknowledged that the nature and quality of jobs is not meeting the aspirations of the country's young people and they want better quality jobs that will engage them fully. He added ‘that has to be ensured by us improving the investment climate for domestic investors as well as foreign direct investors.'

NITI Aayog Vice Chairman further said that the Union Budget, presented earlier this month, has taken big steps forward for facilitating and further improving ease of doing business by liberalising the inflows of foreign direct investment (FDI). Highlighting the potential in the agriculture sector, which has 43 percent of the workforce, he said investment in the agro-processing sectors and improvement in agricultural yields will help exponentially in job creation.

The CNX Nifty traded in a range of 11,398.15 and 11,301.25. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 9.49%, Vedanta up by 4.09%, Hindalco up by 3.42%, Indiabulls Housing Finance up by 3.08% and Zee Entertainment up by 3.00%. On the flip side, Bajaj Finserv down by 5.57%, HDFC down by 5.26%, Kotak Mahindra Bank down by 3.60%, Eicher Motors down by 3.48% and HDFC Bank down by 3.07% were the top losers.

European markets were trading in green; UK’s FTSE 100 gained 22.53 points or 0.30% to 7,531.23, France’s CAC rose 2.24 points or 0.04% to 5,554.58 and Germany’s DAX was up by 15.49 points or 0.13% to 12,275.56.

Asian markets ended mostly lower on Monday as hopes for an aggressive rate reduction by the US central bank faded and tensions between Britain and Iran rose in the Gulf. Japanese shares closed modestly lower as investors scaled back expectations of a 50-bps rate cut at the July 30-31 Fed meeting. Prime Minister Shinzo Abe's ruling bloc won a solid majority in Japan's upper house election on Sunday, helping limit the downside to some extent. Further, Seoul shares ended little changed with a negative bias after the release of weak trade data showing that the country's exports for the first 20 days of this month declined a sharp 13.6 percent from a year earlier. Investors also took a cautious stance ahead of the corporate earnings season. Moreover, Chinese stocks closed lower as Nasdaq-style technology board on the Shanghai Stock Exchange marked its debut.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

2,886.97
-37.23
-1.27

Hang Seng

28,371.26
-394.14
-1.37

Jakarta Composite

6,433.55
-22.99
-0.36

KLSE Composite

1,655.40

-2.79

-0.17

Nikkei 225

21,416.79
-50.20
-0.23

Straits Times

3,357.22
-20.74
-0.61

KOSPI Composite

2,093.34
-1.02
-0.05

Taiwan Weighted

10,944.53
71.34
0.66
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