Shares slide on negative Asian cues; Nifty ends below 11,200

The market edged lower on Monday, resuming its downtrend after a recovery on Friday. Weakness in auto stocks put pressure on indices. Domestic shares mirrored weakness in other Asian stocks ahead of US Fed's policy review starting on Tuesday. The Nifty closed below 11,200 for the first time since 15 May 2019.

The Sensex fell 196.42 points or 0.52% to settle at 37,686.37. The index rose 160.43 points, or 0.42% at the day's high of 38,043.22. The index fell 363.63 points, or 0.96% at the day's low of 37,519.16.

The Nifty 50 index fell 95.10 points or 0.84% to settle at 11,189.20. The index rose 26.65 points, or 0.24% at the day's high of 11,310.95. The index fell 131.90 points, or 1.17% at the day's low of 11,152.40.

Broader markets tumbled. The S&P BSE Mid-Cap index fell 0.67%. The S&P BSE Small-Cap index fell 1.03%.

The market breadth was weak. On the BSE, 766 shares rose and 1706 shares fell. A total of 125 shares were unchanged.

Among the sectoral indices on the BSE, the S&P BSE IT index (up 0.61%), the S&P BSE Bankex (up 0.25%) and the S&P BSE Teck index (up 0.08%) outperformed the S&P BSE Sensex. Meanwhile, the S&P BSE Auto index (down 3.55%), the S&P BSE Metal index (down 3.01%) and the S&P BSE Telecom index (down 2.85%) underperformed the S&P BSE Sensex.

Foreign investors have been selling extensively in the Indian equity market after the government announced levy of surcharge on super rich in the Union Budget. Finance minister Nirmala Sitharaman in her maiden Budget speech on 5 July 2019, proposed to enhance surcharge on individuals having taxable income from Rs 2 crore to Rs 5 crore and Rs 5 crore and above so that effective tax rates for these two categories will increase by around 3% and 7% respectively. The effective tax rate on the highest tax bracket goes up to 42.7% after the hike.

There are concerns that the increased surcharge on super-rich could also affect foreign funds investing in India since a same tax structures apply for individuals, Hindu Undivided Family (HUF) and Associations of Persons (AOPs). FPIs, including pension and retirement funds, educational endowment fund, etc, come in through trusts or AOPs route because it has been the most tax-efficient structure.

On the equity front, HDFC Bank fell 1.39%. Housing finance major HDFC fell 0.44%.

Dr. Reddy's Laboratories fell 1.92%. The company's consolidated net profit rose 45.31% to Rs 662.80 crore on 3.3% increase in net sales to Rs 3843.50 crore in Q1 June 2019 over Q1 June 2018.

Castrol India rose 0.91%. The company's profit after tax rose 11% to Rs 183 crore on a 2% rise in the revenue from operations to Rs 1040 crore in Q1 June 2019 over Q1 June 2018.

ICICI Bank gained 3.32% to Rs 429.30. The bank reported a net profit of Rs 1908.03 crore in Q1 June 2019 as compared to net loss of Rs 119.55 crore in Q1 June 2018. The bank's total income rose 15.24% to Rs 21405.50 crore in Q1 June 2019 over Q1 June 2018. The result was announced on Saturday, 27 July 2019.

Auto shares fell on reports the government is proposing to increase the registration fees for new vehicles across all types. Tata Motors (down 6.52%), Bajaj Auto (down 4.99%), Eicher Motors (down 4.81%), TVS Motor Company (down 4.27%), Ashok Leyland (down 3.5%), Hero MotoCorp (down 2.55%), Mahindra & Mahindra (down 2.07%) and Escorts (down 0.91%), edged lower.

Maruti Suzuki India dropped 4.26% to Rs 5558.05. The car marker announced introduction of CNG variant in Ertiga and Tour M. The ex-showroom price in Delhi and NCR of Ertiga CNG is Rs 8.87 lakh while the price of Tour M CNG is Rs 8.82 lakh. The same shall be effective from 26 July 2019. The announcement was made after market hours on Friday, 26 July 2019.

According to reports, new car buyers will have to shell out Rs 5000 instead of Rs 600 currently for registering their vehicle while renewing of 15 year old vehicle will cost Rs 10,000. Two-wheeler buyers who have been paying Rs 50 so far for registration will have to shell out Rs 1000 for new motorcycles and Rs 2000 for renewing the registration of their old two-wheelers. Fleet operators too will have pay Rs 10,000 for new vehicles and Rs 20,000 for renewing the registration of old vehicles. Earlier, commercial vehicle registration charges were Rs 1000.

Further, registration charge for imported cars has gone up to Rs 20,000 from Rs 2500. Government has also proposed frequent fitness test for petrol and diesel vehicles which are over 15 years old and renewing their registration will only be allowed after they comply with the fitness norms.

Most IT stocks advanced. MphasiS (up 2.48%), MindTree (up 1.54%), HCL Technologies (up 1.40%), Hexaware Technologies (up 1.15%), TCS (up 0.98%) and Infosys (up 0.60%), edged higher. Tech Mahindra (down 0.05%), Wipro (down 0.46%), Oracle Financial Services Software (down 0.99%) and Persistent Systems (down 5.34%), edged lower.

Indiabulls group's shares slumped after BJP Leader Subramanian Swamy sent a letter to PM Modi, accusing the group of Rs 1 lakh crore fraud. Indiabulls Housing Finance (down 10.44%), Indiabulls Integrated Services (down 4.97%), Indiabulls Real Estate (down 4.72%) and Indiabulls Ventures (down 4.68%) declined.

Swamy urged Prime Minister Narendra Modi to institute a Special Investigation Team of the Central Bureau of Investigation (CBI), Enforcement Directorate (ED), Serious Frauds Investigation Office (SFIO) and Income Tax (IT) officials to probe into the money laundering of the Indiabulls group by siphoning the funds of the National Housing Bank (NHB).

Indiabulls Housing Finance clarified to the bourses on 28 July 2019, that loans outstanding as on date from NHB to Indiabulls Housing is zero. Indiabulls Housing, in its history, has never taken any loan or refinancing facility from NHB. The total loan book of Indiabulls Housing is approximately Rs 87,000 crore, it added.

Vodafone Idea slumped 26.81% to Rs 6.77. On a consolidated basis, Vodafone Idea reported net loss of Rs 4067.01 crore in Q1 June 2019 compared with net loss of Rs 2757.60 crore in Q1 June 2018. Net sales rose 92% to Rs 11264.70 crore in Q1 June 2019 over Q1 June 2018. The result was announced after market hours on Friday, 26 July 2019.

Vedanta lost 5.09%. The company's consolidated net profit fell 11.9% to Rs 1,351 crore on a 3.5% decline in net sales to Rs 21,167 crore in Q1 June 2019 over Q1 June 2018. The result was announced after market hours on Friday, 26 July 2019.

Revenue in Q1 was lower primarily due to lower commodity prices partially offset by higher aluminium sales, volume addition from ESL, commencement of Gamsberg mine and currency depreciation. EBITDA fell 20% to Rs 5,188 crore in Q1 June 2019 over Q1 June 2018, mainly due to lower commodity prices partially offset by easing of input commodity inflation, rupee depreciation and volume addition from ESL acquisition. EBITDA margin stood at 27% in Q1 June 2019 as against 34% in Q1 June 2018.

Kansai Nerolac Paints jumped 6.86%. The paint maker's consolidated net profit rose 5.34% to Rs 146.02 crore on 9.38% increase in net sales to Rs 1542.41 crore in Q1 June 2019 over Q1 June 2018. The result was announced during market hours today, 29 July 2019.

TeamLease Services fell 4.77%. On a consolidated basis, TeamLease Services' net profit fell 13.8% to Rs 18.79 crore on a 22.5% rise in the net sales to Rs 1251.23 crore in Q1 June 2019 over Q1 June 2018. The result was announced after market hours on Friday, 26 July 2019.

Music Broadcast lost 7.65%. The company's net profit fell 37.6% to Rs 8.43 crore on a 7.8% fall in the net sales to Rs 69.78 crore in Q1 June 2019 over Q1 June 2018. The result was announced after market hours on Friday, 26 July 2019.

Cipla fell 1.95%. The drug making company announced during market hours, 29 July 2019, that Alvotech and Cipla Gulf, its wholly-owned subsidiary, have entered into an exclusive partnership for the commercialization of AVT02, an adalimumab biosimilar, in select emerging markets. AVT02 is a mAb biosimilar to AbbVie's HUMIRA, which is a leading drug indicated for the treatment of several autoimmune diseases. AbbVie's HUMIRA recorded sales of about $20 billion in 2018, making it the largest-selling blockbuster medicine worldwide.

Mahindra Lifespace Developers lost 6.12%. The company's consolidated net profit fell 51.6% to Rs 12.92 crore on 31% decline in net sales to Rs 106.22 crore in Q1 June 2019 over Q1 June 2018. The result was announced after market hours on Friday, 26 July 2019. EBITDA declined 55.8% to Rs 19 crore in Q1 June 2019 over Q1 June 2018. The EBITDA margin fell to 16% in Q1 June 2019 from 24% in Q1 June 2018.

Power Mech Projects fell 7.16%. The company announced after trading hours on Friday, 26 July 2019, that it received communication from State Project Director, Samagra Shiksha, Andhra Pradesh cancelling the order worth Rs 512.78 crore given to the company for providing necessary infrastructure facilities in all government schools on hybrid annuity mode. The order was cancelled on the ground that the project work was not commenced. As the construction activity is not commenced, there is no implication on the financials of the company.

On a consolidated basis, Power Mech Projects' net profit rose 16.5% to Rs 28.41 crore on a 6.3% increase in net sales to Rs 491.22 crore in Q1 June 2019 over Q1 June 2018. The result was announced on Saturday, 27 July 2019.

PNB Housing Finance lost 1.34%. The housing finance company, before market hours today, 29 July 2019, announced that it has raised $100 million from International Finance Corporation, a member of the World Bank Group, for onlending to buyers in affordable housing projects.

In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 68.8475, compared with its close of 68.89 during the previous trading session.

In the commodities market, Brent crude for September 2019 settlement fell 25 cents at $63.21 a barrel. The contract rose 7 cents or 0.11% to settle at $63.46 a barrel in the previous trading session.

Overseas, European stocks were mixed. Asian stocks fell across the board on Monday as US-China negotiations resume in Beijing later this week amid low expectations for a major breakthrough.

Meanwhile, Chinese industrial profits fell in June, according the country's National Bureau of Statistics on Saturday. Industrial profits fell 3.1% in June from a year earlier, following a 1.1% gain in May.

US stocks closed at new highs for the S&P 500 and Nasdaq Composite indexes on Friday, as investors welcomed strong corporate earnings, government approval of the T-Mobile and Sprint merger.

On the economic front, the U.S. economy grew at an annualized pace of 2.1% in the second quarter, according to the Commerce Department, slowing from 3.1% in the first three months of the year.

The US Fed will gather on July 30-31 for policy meeting and the U.S. central bank is widely anticipated to cut benchmark rates by at least 25 basis points to combat headwinds from the China-U.S. trade dispute and signs of slowing economic growth outside of the U.S.

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