Market breadth turns negative

Key equity indices trimmed losses after hitting fresh intraday low in mid-morning trade. The Nifty is holding on to its crucial 11500 level. At 11:25 IST, the barometer index, the S&P BSE Sensex, was down 82.96 points or 0.21% at 38,647.24. The Nifty 50 index was down 24.95 points or 0.22% at 11,530.05.

The S&P BSE Mid-Cap index was down 0.34%. The S&P BSE Small-Cap index was down 0.09%.

The market breadth, indicating the overall health of the market, turned negative from positive. On the BSE, 903 shares rose and 1062 shares fell. A total of 107 shares were unchanged.

Telecom stocks were mixed. Bharti Airtel (down 1.42%), Mahanagar Telephone Nigam (down 0.62%), Vodafone Idea (down 0.53%) declined. Tata Teleservices (Maharashtra) (up 4.82%) and Reliance Communication (up 2.99%) gained.

Most auto stocks witnessed selling. Mahindra and Mahindra (down 1.64%), TVS Motor Company (down 1.37%), Bajaj Auto (down 0.87%), Hero MotoCorp (down 0.11%) and Maruti Suzuki India (down 0.02%) declined. Eicher Motors (up 0.61%), Escorts (up 0.4%) and Ashok Leyland (up 0.24%) edged higher.

A foreign brokerage expects auto companies' Q1 to be one of the weakest quarters in recent times. For its coverage universe (ex-JLR), the brokerage forecast 5% YoY revenue decline and EBITDA/PAT is likely to decline 23%/34% YoY. Margin is likely to come off by 250 bps YoY on lower operating leverage, the brokerage explained. However, lower commodity prices will support margin by 50-100 bps in Q1 & Q2.

Metal stocks faced selling pressure. Jindal Steel & Power (down 2.94%), Steel Authority of India (down 2.45%), Vedanta (down 1.61%), Hindustan Zinc (down 1.54%), Tata Steel (down 1.43%), Hindalco Industries (down 1.87%), Hindustan Copper (down 1.17%) and National Aluminium Company (down 1.15%) declined. NMDC (up 4.67%) advanced.

GTPL Hathway was up 7.53%. The company will announce its Q1 results today, 10 July 2019.

Himachal Futuristic Communication was up 0.5% to Rs 19.75. The company announced that it has received a purchase order from BSNL worth Rs 186.90 for Defence Communication Network, towards procurement, installation, testing and maintenance of equipment for the optical transmission backbone network on turnkey basis for armed forces. The project shall be completed within 10 months. The company will also be announcing its June quarter ending results today, 10 July 2019

On macro front, weak growth prospects for India will complicate the government's fiscal consolidation efforts, weighing on the sovereign's credit quality, Moody's Investors Service said July 9. The 2019-20 Budget presented in Parliament last week projected to contain fiscal deficit at 3.3% of GDP, lower than 3.4% estimated in the interim Budget.

Overseas, Asian stocks were mixed as investors await comments from U.S. Federal Reserve Chairman Jerome Powell for possible clues on the central bank's next move on interest rates.

Investors are waiting for two-day testimony before Congress by Fed Chairman Jerome Powell due to start Wednesday. Also due on Wednesday is the central bank's June policy meeting minutes. Markets are hoping the central bank's chief will shed some light on a meeting of the central bank's interest-rate setting committee, slated for July 30-31, with investors clinging to hopes for a rate cut.

On the economic data front, the National Federation of Independent Business released its small business optimism index, which fell to 103.3 in June, from 105 in May.

U.S. stocks ended mixed on Tuesday after a late-day rally boosted the S&P 500 and Nasdaq Composite but left the Dow Jones Industrial Average to suffer its third straight loss.

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