The domestic equity market slumped on Tuesday, dragged by auto, telecom and financial stocks. Concerns around protests in Hong Kong and an Argentine currency crash amid fears of global economic slowdown, sapped investors risk appetite.
Weak domestic macroeconomic data and absence of measures by the government to support economic growth also disappointed investors. The Sensex slipped below the 37,000 level while the Nifty breached the 11,000 mark. The Nifty ended way below its 200-day moving average (DMA) placed at 11,170.31.
The Sensex crashed 623.75 points or 1.66% to settle at 36,958.16. The index rose 173.25 points, or 0.46% at the day's high of 37,755.16. The index fell 693.42 points, or 1.85% at the day's low of 36,888.49.
The Nifty 50 index slumped 183.80 points or 1.65% to settle at 10,925.85. The index rose 36.25 points, or 0.33% at the day's high of 11,145.90. The index fell 208.05 points, or 1.87% at the day's low of 10,901.60.
Broader markets tumbled. In the broader market, the S&P BSE Mid-Cap index fell 2.25%. The S&P BSE Small-Cap index lost 1.42%.
The market breadth was weak. On the BSE, 861 shares rose and 1652 shares fell. A total of 148 shares were unchanged.
Among the sectoral indices on the BSE, the S&P BSE Energy index (up 5.98%), the S&P BSE Oil & Gas index (up 1.05%) and the S&P BSE Consumer Durables index (down 0.70%) outperformed the S&P BSE Sensex. Meanwhile, the S&P BSE Telecom index (down 4.34%), the S&P BSE Auto index (down 3.88%) and the S&P BSE Capital Goods index (down 3.20%) underperformed the S&P BSE Sensex.
On the macro front, the quick estimates of Index of Industrial Production (IIP) with base 2011-12 showed that India's industrial output grew 2% in June. The data was released by the government after market hours on 9 August 2019.
India's inflation based on consumer price index (CPI) for July 2019 will be unveiled today, 13 August 2019. India's retail price inflation rate rose to 3.18% year-on-year in June 2019, the highest since last October, from 3.05% in the previous month.
Finance Minister Nirmala Sitharaman met foreign portfolio investors (FPIs) on Friday, 9 August 2019. FPIs pressed for complete rollback of the higher super-rich surcharge proposed in the Budget. They also sought relief in matters related to long-term capital gains (LTCG) and dividend distribution tax (DDT), beside easier KYC norms. According to media reports, the FM heard all the views, but gave no indication about when the proposals will be implemented.
Last week media reports suggested that the government may withdraw the FPIs surcharge through a notification or ordinance. Reports added that the government could announce a confidence-booster package for investors that included a re-thinking on the long-term capital gains tax.
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.
In the foreign exchange market, the rupee declined against the dollar. The partially convertible rupee was hovering at 71.225, compared with its close of 70.78 during the previous trading session.
In the commodities market, Brent crude for October 2019 settlement was up 3 cents at $58.60 a barrel.
Overseas, shares in Europe and Asia fell across the board on Tuesday as fears about a drawn out Sino-US trade war, protests in Hong Kong and a crash in Argentina's peso currency drove investors to safe harbours like bonds, gold, and the yen.
Argentina's currency collapsed on Monday and stocks and bonds crashed after voters snubbed the incumbent government by giving the opposition a surprisingly bigger-than-expected victory in Sunday's primary election.
In Asia, Hong Kong protests escalated and shut down the city's airport, resulting in threats from Chinese outlets, which released a video showing military vehicles amassing near its border.
Meanwhile, Singapore cut its forecast for economic growth this year on Tuesday, amid escalations in global trade tensions and a struggling manufacturing sector. The Ministry of Trade and Industry (MTI) now pegs Singapore's full-year growth at between 0% and 1%.
US stock benchmarks finished sharply lower Monday as simmering geopolitical tensions spooked equity investors and drove a bond market rally while the protracted US-China trade war stoked fears of impending recession.
A foreign brokerage reportedly said that fears of the US-China trade war leading to a recession are increasing and it no longer expects a trade deal between the world's two largest economies before the 2020 US presidential election.
On the equity front back home, Yes Bank was the prominent loser from the Sensex pack. The stock slumped 10.35% to Rs 73.60.
HDFC twins were under pressure. HDFC (down 5.07%) and HDFC Bank (down 2.7%), declined.
Bajaj twins also witnessed selling. Bajaj Finance (down 5.72%), Bajaj Finserv (down 5.51%) slumped.
NTPC shed 3.30%. The company reported 5.63% rise in consolidated net profit to Rs 2840.28 crore on 6.9% rise in total income to Rs 26929.85 crore in Q1 June 2019 over Q1 June 2018. The result was announced on Saturday, 10 August 2019.
Auto shares fell across the board after Society of Indian Automobile Manufacturers (SIAM), an apex national body representing auto makers in India, said sales of commercial vehicles fell 25.71% in July 2019 over July 2018. Two-wheelers sales fell by 16.82% in July 2019 over July 2018. A decline of 35.95% was registered in the sales of passenger cars in July 2019 as compared to July 2018.
Tata Motors ended with minor losses at Rs 122. The Tata Motors Group global wholesales in July 2019, including Jaguar Land Rover, were at 78,600 units, lower by 14% compared to July 2018. Global wholesales of all Tata Motors' commercial vehicles and Tata Daewoo range in July 2019 were at 26,168 units, lower by 35% over July 2018. Global wholesales of all passenger vehicles in July 2019 were at 52,432 units, up by 4%, compared to July 2018. Global wholesales for Jaguar Land Rover were 41,783 vehicles. Jaguar wholesales for the month were 12,308 vehicles, while Land Rover wholesales for the month were 29,475 vehicles. The announcement was made during market hours today, 13 August 2019.
Shares of telecom companies crashed after Reliance Industries made slew of announcements regarding its telecom unit Jio. Telecom major Bharti Airtel slumped 5.28%.
Reliance Industries (RIL) surged 9.72% RIL's chairman and managing director Mukesh Ambani on Monday addressed the shareholders of the company at its 42nd annual general meeting (AGM).
Ambani stated that Reliance JioFiber broadband services are set to launch from 5th September. Reliance Jio's digital set-top box will come bundled with ultra high definition entertainment, virtual reality content multi-party video conferencing, voice-enabled virtual assistants, interactive gaming, home security and many other smart-home solutions. Voice calls from home to any Indian operator - mobile or fixed - will be absolutely free forever.
Jio Fibre prices are at less than 1/10th the global rates, to make it accessible for all. Jio Fiber plans will be priced between Rs 700 to Rs 10,000 per month to suit every budget and every need.
RIL has received strong interest from strategic and financial investors in its consumer businesses, Jio and Reliance Retail. The firm will induct leading global partners in these businesses in the next few quarters, and move towards listing both these companies within the next five years.
Future Enterprises rose 5.37%. The company reported a consolidated net loss of Rs 10.51 crore in Q1 June 2019 compared with net loss of Rs 21.05 crore in Q1 June 2018. Consolidated net sales increased 5.2% to Rs 1,414.73 crore in Q1 June 2019 over Q1 June 2018. The result was announced on Saturday, 10 August 2019.
Future Retail rose 0.80%. Amazon.com Inc. is reportedly in talks to acquire as much as 10% of Future Retail. The deal with the Mumbai-based company, which operates its flagship Big Bazaar" grocery store chain, will give Amazon more exposure to the business after it bought Whole Foods Market Inc. for $13.7 billion in 2017 and secured a foothold in the U.S. food retailing segment. The proposed investment in Future Retail offers some parallels, enabling Amazon to tap into India's rising demand for household products and home-delivered fresh produce and vegetables.
Drug maker Sun Pharmaceuticals Industries rose 3.71% after consolidated net profit rose 31.22% to Rs 1387.48 crore on a 15.69% rise in net sales to Rs 8,259 crore in Q1 June 2019 compared with Q1 June 2018. The result was announced during the market hours today, 13 August 2019.
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