Nifty ends below 10,800

The benchmark indices ended significantly lower on Thursday, for third consecutive trading session. Weakness in metal, auto and banks shares weighed on the indices. Trading was volatile on account of weekly expiry of options on the National Stock Exchange. The Sensex breached the 37,000 level while the Nifty fell below the 10,800 mark.

The barometer index, the S&P BSE Sensex, fell 587.44 points or 1.59% to 36,472.93, as per the provisional closing data. The Nifty 50 index fell 180.95 points or 1.67 % to 10,737.75 as per the provisional closing data.

The lack of news on the economic stimulus spoiled trading sentiment. Investors also awaited the US Federal Reserve chair's speech at a global central bankers' conclave at Jackson Hole on Friday, for clues on future U.S. interest rate cuts.

The broader market saw intense selling. The S&P BSE Mid-Cap index was down 1.35%. The S&P BSE Small-Cap index was down 2.19%.

The market breadth was weak. On the BSE, 538 shares rose and 1936 shares fell. A total of 123 shares were unchanged.

Chief Economic Advisor (CEA) K Subramanian on Thursday said the Indian economy does not need a fiscal stimulus to tackle the ongoing economic slowdown. Speaking at the Hero Mindmine Summit that brings together industry and government to discuss economic policy, Subramanian said policymakers need to be careful while deciding on any fiscal stimulus as a way to boost economic growth. He emphasised that the government is not expected to intervene every time when some sectors go through sunset phases.

Overseas, European stocks were trading lower. Minutes from the Federal Open Market Committee's last meeting, released on Wednesday, 21 August 2019, showed that the central bankers generally favored an approach "that avoided any appearance of following a preset course." Traders will now look forward to the key Jackson Hole conference and the speech from Federal Reserve Chairman Jerome Powell on Friday, 23 August 2019, for interest-rate direction from the world's largest economy.

Most Asian indices ended lower with Hong Kong's Hang Seng index flashing a long-term bear market signal. Japanese manufacturing activity shrank for a fourth straight month in August, a preliminary business survey showed on Thursday. The Jibun Bank Flash Japan Manufacturing Purchasing Managers' Index (PMI) rose to a seasonally adjusted 49.5 from a final 49.4 in the previous month, but stayed below the 50 threshold that separates contraction from expansion for a fourth month.

Wall Street's main indexes rose on Wednesday as upbeat earnings from retailers pointed to strength in US consumer demand, and held gains after minutes from last month's Federal Reserve meeting showed policymakers had debated a more aggressive interest rate cut.

Back home, HDFC fell 2.72% to Rs 2010.05. HDFC Bank fell 2.11% to Rs 2179. Reliance Industries fell 2.11% to Rs 1244. ICICI Bank fell 3.26% to Rs 398.75.

Britannia Industries (up 2.04%), Tech Mahindra (up 1.52%), Dr. Reddy's Laboratories (up 1.49%), Tata Consultancy Services (up 1.15%) and Hindustan Unilever (up 1.27%) advanced.

Vedanta (down 7.82%), Indiabulls Housing Finance (down 5.61%), Bajaj Finserv (down 5.49%), Bajaj Finance (down 4.83%) and Zee Entertainment Enterprises (down 4.62%) declined.

Infosys shed 0.76%. The IT major announced that it has expanded its partnership with Google Cloud to become a Google Cloud Managed Service Provider (MSP). This will include consulting, assessment, migration, optimization and support services for enterprises looking to optimize their workloads on the Google Cloud Platform (GCP). The announcement was made after market hours yesterday, 21 August 2019.

Oberoi Realty dropped 5.55%. With reference to media reports, Oberoi Realty informed that Income Tax authorities have initiated search and seizure operations at the premises of the company (IT Activity) from 20 August 2019. The IT Activity is currently ongoing and the company has not received any communication from the Income Tax authorities regarding the aim or intent of the IT Activity. The announcement was made after market hours yesterday, 21 August 2019.

Larsen & Toubro (L&T) fell 1.36%. The firm said that the consortium of L&T Hydrocarbon Engineering (LTHE) and EMAS AMC (a Subsea7 company) has been awarded a large project by Saudi Aramco. This project consists of twenty eight offshore jackets in Zuluf, Marjan, Safaniya & Ribyan offshore fields of Saudi Arabia.

Tasty Dairy Specialities fell 3.85%. The company said that it has received the credit rating for its fund based and non fund based bank facilities. It added that CRISIL has reaffirmed its 'CRlSIL BBB-/Stable' rating on the long-term bank facilities of the company.

DLF slumped 16.67%. As per reports, the Supreme Court has issued a notice to the company based on a petition that highlighted how DLF had suppressed key information regarding judicial proceedings against its largest chunk of land-bank in Haryana. The reports added that a notice has also been issued to SEBI, which too is party to the case. The petition seeks an investigation by SEBI on the suppression of material information, as the regime under SEBI Act is strictly disclosure based, with the sole intent of protecting the interest of the investors in the securities market.

Dilip Buildcon fell 15.50%. The infrastructure construction firm said that its board will meet on Monday, 26 August 2019 to consider the proposal for divestment of wholly owned subsidiaries (WOS) of the company to one or more potential investors in a structured manner over a period of time in different tranches.

LIC Housing Finance slumped 10.05% after multiple block deals were stuck in the counter today. Earlier some media reports indicated that some marque investors are likely to sell about 6.7% shares of LIC Housing Finance on Thursday. The transaction was likely in the price range of Rs 425.15 to 449.50 per share. As on 30 June 2019, Fidelity Investment Trust held 3.41% stake in LIC Housing Finance. Bank Muscat India Fund held 2.278% stake and Government Pension Fund Global held 1.831% stake in the company.

Coffee Day Enterprises hit 5% upper circuit at Rs 76.40. The company clarified with respect to an article titled 'ITC considering to pick stake in Coffee Day' that the reports is factually incorrect and the firm in unaware of the news.

Meanwhile, ITC clarified that the company on an ongoing basis receives enquiries from market participants which are suitably evaluated. One such enquiry was also received from an intermediary on Cafe Coffee Day. However, no progress has been made on the matter. Shares of the cigarette major fell 0.62%.

Redington (India) rose 1.75%. The company informed that ICICI Prudential Life Insurance Company had reduced its stake in the company from 7.369% to 5.323%, selling 87.52 lakh shares in the open market on 20 August 2019.

Yes Bank slumped 12.16% to Rs 57.45, extending fall for third straight day triggered by a disclosure regarding irregularities and unauthorised transactions at CG Power and Industrial Solution. As on 30 June 2019, Yes Bank held 12.79% stake in CG Power. The scrip hit its 52-week low at Rs 60.10 today.

Shares of Yes bank have fallen 25.10% in three trading sessions from its close of Rs 76.70 on Monday, 19 August 2019.

CG Power and Industrial Solutions hit a lower circuit for the third straight day. The stock was down 9.75% at Rs 10.65. CG Power announced before trading hours on Tuesday, that an internal probe of the company had uncovered several irregularities in the financial statements of the company.

Following the disclosure, the company's shares hit a lower circuit limit of 20% to end at Rs 14.75 on Tuesday. The stock plunged 42.12 % in three trading sessions from its close of Rs 18.40 on Monday, 19 August 2019.

Bharat Electronics rose 1.58%. A global brokerage house has initiated coverage with overweight call and target price of Rs 116 per share. The brokerage cited the company's strengths which include strong execution record and wide product range as reasons for the overweight call.

Granules India fell 3.44%. The drug company announced that US FDA has completed inspection of the facility of Granules Pharmaceuticals Inc., a wholly-owned foreign subsidiary of the company located in Chantilly, Virginia, USA on 21 August 2019 with two minor observations. This is a pre-approval inspection for seven products filed from this facility. The company added that its subsidiary will respond to these observations within the stipulated time period.

MSTC fell 2.17%. As per reports, Uttar Pradesh government has extended the agreement with for e-tendering cum e-auction of minor minerals blocks (sand and morrum) and insipu rocks blocks for another one year. It signed two selling agency agreements with Chhattisgarh State Power Generation and Jindal Power, with a combined projected volume of business estimated to be Rs 115 crore.

Future Enterprises lost 2.85% after the company clarified a news item dated 21 August 2019. The company said that post investigation, the Directorate of Revenue Intelligence (ORI), has issued show cause notice in the matter. The company's legal department is preparing its response to the said show cause notice. The company is confident that there is no violation of any regulation for imports of garments under SAFTA Rules.

NMDC fell 8.58%. The company said today that it filed revision petition on 19 August 2019, before Mines Tribunal challenging the order letter of Govt. of Karnataka withdrawing the extension of Mining Lease of Donimalai Iron Ore Mine for a period of 20 years with effect from November 2018 to November 2038. The company added that Mines Tribunal (Central Government) has issued a stay order against decision of Karnataka Government.

Dewan Housing Finance Corporation fell 11.62%. Reports suggest that lenders of the troubled NBFC are eyeing a 51 percent stake in the company by converting a part of debt into equity.

Telecom shares were under pressure with the sector barometer, the BSE Telecom index, sliding 0.89%.

Telecom major Bharti Airtel fell 0.47%. Vodafone Idea slumped 5.20%. MTNL, Tata Teleservices (Maharashtra) and Reliance Communications fell by 4.63% to 13.81%

Tata Motors lost 3.87%, extending yesterday's 9.29% slump triggered by China's Geely Automobile Holdings announcing on Wednesday that its first-half net profit declined 40% amid a sustained downturn in the world's biggest auto market, and it forecast an uncertain outlook for vehicle demand for the rest of the year. The group is China's highest profile car maker globally, due to its investments in Volvo and Daimler. China is a big market for Tata Motors.

Equity market regulator Securities and Exchange Board of India (Sebi) on Wednesday eased the regulatory and compliance framework for foreign portfolio investors (FPI) by broad-basing their classification, simplifying their registration requirements and permitting them to carry out off-market transfer of securities. Further, FPIs would now be classified into two categories instead of three. Sebi also relaxed rules on share buybacks for listed firms that own non-banking financial companies and housing finance company subsidiaries. FPI regulations have been re-drafted based on the recommendation of a committee headed by former RBI deputy governor H.R. Khan. The requirements for issuance and subscription of offshore derivative instruments have also been rationalised. Offshore funds floated by mutual funds would be allowed to invest in the country after registration as FPIs. Further, Sebi said that various issues need to be examined before deciding on mandating 35% minimum public shareholding in listed companies as proposed in the Union Budget.

Meanwhile, the Reserve Bank of India (RBI) on Wednesday released the minutes of the monetary policy committee meeting held during 5-7 August 2019. RBI Governor Shaktikanta Das said that the weakening of domestic growth impulses and unsettled global macroeconomic environment saw the need to bolster dwindling domestic demand and support investment activity.

Hence, the Monetary Policy Committee (MPC) decided to reduce the policy repo rate under the liquidity adjustment facility (LAF) by 35 basis points (bps) to 5.40%. The MPC also decided to maintain the accommodative stance of monetary policy. Four of the six members of the MPC voted to reduce the policy rate by 35 bps.

Economic activity has shown signs of further weakening since the last MPC meeting in June 2019. Several high frequency indicators have either slowed down or contracted in recent months. Headline CPI inflation has evolved broadly along the projected lines; CPI inflation excluding food and fuel continued to soften, while food inflation has edged up. Global economic activity has been losing pace, weighed down by intensifying trade tensions and geo-political uncertainty. GDP numbers for Q2:2019 in respect of some major advanced and emerging market economies have been subdued. Central banks in both advanced and emerging market economies have been increasingly resorting to more accommodative stances of monetary policy, Das stated.

Inflation expectations of households in the July 2019 round of the Reserve Bank's survey moderated further by 20 basis points for the 1-year ahead horizon, though they remained unchanged for the 3-month ahead horizon. Cumulatively, inflation expectations of households have declined significantly by 180 basis points for the 3-month horizon and 190 basis points for the 1-year horizon in last five survey rounds, he added.

MPC member Dr. Chetan Ghate did not want a 35 bps cut as banks had not yet passed on earlier cuts. He voted for a more modest 25 bps cut. It should also be highlighted that there has been inadequate monetary transmission given the quantum of past rate cuts: the weighted average lending rate (WALR) on fresh rupee loans in the banking system has come down by only 29 bps despite the MPC cutting rates by 75 bps in the February-June window. By a large cut (35 bps) I feel we will be burning through monetary policy space without much to show for it. While the real economy needs some support, we should wait for more transmission to happen, Ghate stated.

On the political front, the Central Bureau of Investigation (CBI) on Wednesday arrested former finance minister P Chidambaram. Chidambaram was arrested in the INX Media case, in which he has been accused of wrongdoing, money laundering and misusing the post of finance minister. Chidambaram reportedly spent the night at the CBI lockup after he evaded arrest for 24 hours.

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