Shares reverse 3-day gains amid slowdown fears

Key equity benchmarks snapped three-day winning streak amid broad based selling pressure. Concerns about a global recession spoiled trading sentiment. Barring IT and realty stocks, selling was witnessed across all sectors with metal stocks declining the most.

The barometer index, the S&P BSE Sensex, fell 189.43 points or 0.50% to 37,451.84. The Nifty 50 index fell 59.25 points or 0.53% to 11,046.10.

The Nifty opened above 11,100 mark but soon gave up that level amid selling pressure. The Nifty made lower lows in the intraday and briefly slipped below the crucial 11,000 mark in mid-afternoon trade.

In the broader market, the S&P BSE Small-Cap index fell 0.92%. The S&P BSE Mid-Cap index fell 0.64%.

The market breadth was weak. On the BSE, 953 shares rose and 1585 shares fell. A total of 146 shares were unchanged.

The Nifty jumped 364 points, or 3.39% in three trading sessions to 11,105.35 yesterday from its recent closing low of 10,741.35 on 22 August 2019. The rally was backed by finance minister Nirmala Sitharaman on Friday, 23 August 2019, announcing measures to revive the economy. A huge dividend from the Reserve Bank of India (RBI) to the government also supported buying.

In the overseas market, European markets were trading lower while Asian stocks ended mixed on Wednesday, as deeper worries about the global economy kept a lid on sentiment.

US stocks slipped on Tuesday, weighed down by financial stocks as a deepening of the Treasury yield curve inversion raised US recession worries and uncertainty over any progress in trade negotiations between the United States and China took a toll.

Back home, Hindustan Unilever fell 1.82% on reports the company has cut prices across some of its product portfolios to pass on the benefit of softening input costs. "HUL does selective and judicious price changes across its portfolio in the normal course of its business. Given that the commodity prices are expected to remain benign for certain time period, we have taken price reductions in range of 4-6% in Lux and Lifebuoy portfolio while it may be higher on certain packs in order to pass on the benefits to the consumers", a company spokesperson was quoted by the media as saying on Tuesday.

Car major Maruti Suzuki India fell 2.90%. Japanese vehicle manufacturers Toyota Motor and Suzuki Motor Company on Wednesday announced 'capital alliance' for equity investment in each other. While Toyota will purchase 4.94% shares of Suzuki Motor Co worth 96 billion Japanese yen, the latter will buy shares worth 48 billion yen in the former. Apart from manufacturing electric and hybrid models, both companies will jointly develop autonomous driving technology.

Yes Bank fell 7.47%. Moody's Investors Service has downgraded Yes Bank's long-term foreign-currency issuer rating to Ba3 from Ba1, concluding the review for downgrade initiated on 11 June. The ratings agency also downgraded the bank's long-term foreign and local currency bank deposit ratings to Ba3 from Ba1, foreign currency senior unsecured MTN program rating to (P) Ba3 from (P) Ba1, and Baseline Credit Assessment (BCA) and adjusted BCA to b1 from ba2. The outlook on the bank's ratings, where applicable, is negative, it said.

Yes Bank said that its board will meet on Friday, 30 August 2019, to consider raising funds by issuing equity shares.

Godfrey Phillips India gained 3.13% after media reports suggested that Philip Morris International and Altria, which used to be one, giant tobacco company, may merge once again. Philip Morris International is in talks to merge with Altria in a deal that would reunite the makers of Marlboro brand and create the world's largest tobacco group with a market value of nearly $200 billion. Philip Morris sells tobacco products internationally and Altria does business in the United States. As on 30 June 2019, Philip Morris Global Brands Inc. held 25.1% stake in Godfrey Phillips India.

Realty shares advanced on hopes of measures by finance minister Nirmala Sitharaman for homebuyers and the real estate sector this week. Anant Raj (up 6.36%), Sobha (up 4.77%), DLF (up 2.11%), Prestige Estates (up 1.48%), Omaxe (up 0.62%), Mahindra Lifespace Developers (up 0.55%) and Godrej Properties (up 0.40%) rose.

According to media reports, the measures could include setting up of a stressed assets fund, widening of the scope of affordable housing and announcing of dedicated income tax deductions for principal repayment of home loans. The FM last week suggested that her government will announce measures to address stuck realty projects.

Sitharaman on Friday, 23 August 2019, announced multiple initiatives to help boost the economy. FM indicated that she would meet the press twice over the coming weeks to address more issues.

Oberoi Realty surged 10.27%. The company informed that the Income Tax team has left the company's premises and normal day-to-day business activities have resumed fully. The company implements the best practices of compliance with applicable laws, and it does not anticipate the search and seizure operations to have any material or adverse impact. The announcement was made after market hours yesterday, 27 August 2019.

Most IT shares advanced amid weak domestic currency. HCL Technologies, Infosys, Tech Mahindra and TCS rose by between 0.18% to 2.61%.

In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 71.785, compared with its close of 71.48 during the previous trading session.

Kalpataru Power Transmission fell 5.33% to Rs 448.75 after the company received a notice from the World Bank alleging violations in bidding process submitted by its transmission business on two projects in Africa more than 7 years ago. The company has disagreed and intends to contest the proceedings.

Metal shares fell across the board amid fears of worldwide economic slowdown, which could undermine usage of metals. China is the world's top consumer of industrial metals.

Hindustan Copper (down 4.19%), NMDC (down 3.4%), National Aluminium Company (down 2.45%), Hindalco Industries (down 1.55%) and Hindustan Zinc (down 1.1%) declined.

Vedanta lost 4.06%. According to the media houses, Zambia's High Court suspended the petition of ZCCH-IH to liquidate the copper mine of Vedanta resources, pending ruling by Zambia's appeals court.

Steel makers declined after Moody's Investors Service said in a new report that rising input costs and an inability to pass on higher costs to customers is pressuring the profitability of Asian steel producers and as a result revised its outlook for the sector to negative.

Among steel makers, Jindal Steel & Power (down 7.84%), Steel Authority of India (down 5.34%), Tata Steel (down 4.02%) and JSW Steel (down 3.49%) tumbled.

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