Sensex, Nifty decline further; breadth weak

The benchmark indices further extended losses in afternoon trade. At 13:28 IST, the barometer index, the S&P BSE Sensex, was down 513.92 points or 1.38% at 36,818.87. The Nifty 50 index was down 150.75 points or 1.37% at 10,872.50.

The S&P BSE Mid-Cap index was down 0.87%. The S&P BSE Small-Cap index was down 0.74%.

The market breadth favored the sellers. On the BSE, 801 shares rose and 1408 shares fell. A total of 162 shares were unchanged.

India's gross domestic product (GDP) growth moderated to 25-quarters low of 5% in Q1 of 2019-20 from 5.8% growth recorded in the previous quarter and 8% improvement in the corresponding quarter last year. Quarterly Gross Value Added (GVA) growth also eased to 4.9% in Q1 of 2019-20 from 5.7% in Q4 of 2018-19 and 7.7% in Q1 of 2018-19. The data was announced after market hours on Friday, 30 August 2019.

Growth of eight core industries dropped to 2.1% in July 2019. The eight core sector industries - coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity had expanded by 7.3% in July 2018.The data was announced after market hours on Friday, 30 August 2019.

The fiscal deficit of central government increased 1.4% to Rs 547605 crore in April-July 2019-20. The fiscal deficit as a percentage of full year estimate stood at 77.8% in April-July 2019-20 compared with 86.5% touched in the corresponding period of last year.

The IHS Markit India Manufacturing PMI was reported at 51.4 in August, signalling a further improvement in the health of the sector. However, the headline figure was down from 52.5 in July to its lowest mark since May 2018, and below its long-run average of 53.9. The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month and below 50 an overall decrease.

Although economic growth in the Indian manufacturing industry was sustained in August, most survey indicators fell since July to signal a widespread loss of momentum. With sales expanding at the slowest rate in 15 months, production growth and job creation were tamed, while factories lowered input buying for the first time since May 2018.

On the equity front, Tata Motors was down 3.08%. The company's total sales fell 48.41% to 32,343 units in August 2019 over August 2018.

Maruti Suzuki India fell 0.67%. The company's total sales fell 32.7% to 1.06 lakh units in August 2019 over August 2018. Its total production fell 33.99% to 1.11 lakh units in August 2019 over August 2018.

Eicher Motors slipped 2.72%. VE Commercial Vehicles, an unlisted subsidiary of Eicher Motors, reported 41.7% decline in total sales to 3538 units in August 2019 over August 2018.

Royal Enfield, the two-wheeler division of Eicher Motors, reported 24% decline in total sales to 52,904 units in August 2019 over August 2018.

Bajaj Auto declined 0.40%. The company's total sales fell 5% to 3.81 lakh units in August 2019 over August 2018.

Hero MotoCorp added 0.42%. The company's total sales fell 20.68% to 5,43,406 units in August 2019 over August 2018.

Mahindra & Mahindra (M&M) fell 2.20%. The company's total auto sector sales fell 25% to 36,085 units in August 2019 over August 2018.

M&M's Farm Equipment Sector (FES) reported 17% decline in total sales to 14,817 units in August 2019 over August 2018.

Commercial vehicle manufacturer Ashok Leyland gained 2.02%. the company announced that Ashok Leyland has become the first lndian OEM to meetthe BS-VI emission norms across the full range of heavy duty trucks.

The company's total vehicle sales declined 47% to 9231 units in the month of August 2019 as compared to August 2018.

TVS Motor Company rose 2.22%. The auto makers' total sales rose 3.93% to 2.9 lakh units in August 2019 as against sales of 2.79 lakh in July 2019. Total sales declined 15.45% in August 2019 compared with 3.43 lakh units in August 2018.

L&T slipped 1.81%. The firm said that the transportation infrastructure and buildings & factories businesses of L&T Construction have secured a project from the Navi Mumbai International Airport Private (NMIAPL) for the Engineering, Procurement and Construction of the greenfield Navi Mumbai International Airport at Navi Mumbai.

Yes Bank declined 0.34%. The private sector bank announced after market hours on Friday, 30 August 2019, that it will raise the authorised share capital by increasing the equity shares to 450 crore equity shares of Rs 2 each, aggregating to Rs 900 crore from the current 300 crore equity shares of Rs 2 each that aggregates to Rs 600 crore. The preference shares would be kept constant at two crore shares of Rs 100 each aggregating to Rs 200 crore. The proposal is subject to requisite approvals.

In a separate announcement on Saturday, 31 August 2019, Yes Bank said India Ratings and Research (Ind-Ra) has downgraded the bank's long-term issuer rating to 'IND A+' from 'IND AA-'. The outlook is negative. The agency has affirmed the bank's short-term issuer rating at 'IND A1+'.

The credit rating agency said that the downgrade reflects the inadequate progress as per Ind-Ra's expectations on the pace of resolutions on certain stressed assets that it has exposures to, and lower-than-expected quantum of fund raised even after considering recent qualified institutional placement (QIP) of Rs 19.30 billion. Ind-Ra also factors in the likely growth challenges the bank would face over the short-to-medium term as it implements new strategies, the overhang of stressed assets and resultant credit costs

PSU banks stocks slumped after the government unveiled mega merger of select state-run banks.

In a press briefing on Friday, 30 August 2019, finance minister announced that Punjab National Bank (down 7.70%), Oriental Bank of Commerce (down 4.90%) and United Bank of India (up 1.25%) will be merged. The combined entity will be second largest PSU bank in India with business of Rs 17.94 lakh crore. It will have second largest banking network in India with 11,437 branches.

Union Bank of India (down 6.45%), Andhra Bank (up 1.52%) and Corporation Bank (down 1.86%) will be also merged. The entity will be fifth largest public sector bank with business of Rs 14.59 lakh crore.

Canara bank (down 7.16%) and Syndicate Bank (up 0.62%) will be merged. The entity will be fourth largest public sector bank with business of Rs 15.20 lakh crore. Finance minister also announced that Indian Bank and Allahabad Bank will be merged. The entity will be seventh largest public sector bank with business of Rs 8.08 lakh crore.

The S&P BSE Bankex was down 1.72% at 30,418.68.

State owned coal producing major Coal India declined 0.24% after reporting production and offtake for the month of August. Coal production declined 10.3% to 34.77 million tonne in August 2019 as compared to 38.78 million tonne in August 2018. The offtake declined by 10.4% to 40.47 million tonne in August 2019 as compared to 45.15 million tonne in August 2018.

Manganese Ore India (MOIL) declined 2.55% after reducing prices of different grades of Manganese Ore. The company slashed prices of Ferro Grade, SMGR (Mn30% & Mn25%), Fines and Chemical Grades of Ore by about 5% prevailing since 1 July 2019.

ONGC slipped 2.48%. Media reports suggested that a fire break out at ONGC Uran plant. Four persons were reported dead and 5 others were severely injured after a fire broke out in storm water drainage. Although the fire has been brought under control, gas production has been diverted to Hazira plant in Gujarat.

Shares of Mahanagar Gas fell 1.45%. Media reports suggested that fire at ONGC's Uran plant was weighing on the supplies of Mahanagar Gas. The report added that the CNG stations at Mumbai faced low pipeline pressure and some of them remained out of operation.

Reliance Power surged 6.79% after the company announced that it has entered into a joint venture with with JERA (Japan) to develop 750 MW gas based combined cycle power project at Meghnaghat in Bangladesh. Reliance Power will hold 51% stake in the project. The project that will be set up in 36 months is worth Rs 836 crore and will present as the largest FDI in power sector from India in Bangladesh.

Overseas, European opened lower on Tuesday. In Europe, British Prime Minister Boris Johnson indicated he could call an election to stymie lawmakers' efforts to avert a no-deal Brexit. Sterling broke below $1.20 on Tuesday amid Britain's political uncertainty, sliding as low as $1.1978 to reach its lowest point against the greenback since the October 2016 flash crash.

Asian stocks were mixed on Tuesday. The US-China trade tensions continue to rise after China lodged a complaint against the United States at the World Trade Organization over US import duties.

US stock exchanges were closed on Monday for Labor Day holiday. US stocks ended with a lackluster session on Friday as investors were cautious ahead of a holiday weekend in which a fresh round of US tariffs on Chinese imports were due to be levied. US President Donald Trump said the sides would still meet for talks later this month. Trump said his goal was to reduce US reliance on China and he again urged American companies to find alternate suppliers outside China.

The United States began imposing 15% tariffs on a variety of Chinese goods on Sunday - including footwear, smart watches and flat-panel televisions - as China began imposing new duties on US crude, the latest escalation in a bruising trade war.

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