The key equity barometers reversed early gains and ended with modest losses on Tuesday. Gains in IT and auto stocks were offset by weakness in banks stocks. The Nifty managed to end above the crucial 11,000 mark after flirting with that level in intraday.
The Sensex fell 74.48 points or 0.20% to settle at 37,328.01. It advanced 109.06 points, or 0.29% at the day's high of 37,511.55 in the early trade. It later reversed trend and tumbled 182.59 points, or 0.49% at the day's low of 37,219.90 in the mid-afternoon trade.
The Nifty 50 index fell 36.90 points or 0.33% to settle at 11,017. It rose 22.40 oints, or 0.20% at the day's high of 11,076.30. It fell 68.60 points, or 0.62% at the day's low of 10,985.30.
In the broader market, the S&P BSE Mid-Cap index fell 0.60%. The S&P BSE Small-Cap index fell 0.62%. Both these indices underperformed the Sensex.
The market breadth was tilted in favour of the sellers. On the BSE, 918 shares rose and 1524 shares fell. A total of 141 shares were unchanged.
Among the sectoral indices, the S&P BSE IT index (up 1.34%), the S&P BSE Auto index (up 1.18%) and the S&P BSE Consumer Durables index (up 0.36%) outperformed the Sensex. The S&P BSE Metal index (down 1.71%), the S&P BSE Basic Materials index (down 1.39%) and the S&P BSE Energy index (down 1.18%) underperformed the Sensex.
Media reports suggested that a government panel on Monday recommended an across-the-board 25% tax rate for both local and foreign companies and changes in personal tax slabs to benefit middle and upper middle class Indians. The government will release the report of the panel in the public domain for consultations after examining the recommendations, reports added.
Meanwhile, global consulting firm McKinsey & Co. warned that signs of another Asian debt crisis are "ominous" and the health of the real and financial sector is deteriorating. Increased indebtedness, stresses in repaying borrowing, lender vulnerabilities and shadow banking practices are some of the concerns cited by McKinsey in an August report.
McKinsey examined the balance sheets of more than 23,000 companies across eleven Asia-Pacific countries, and found firms in most of Asia face "significant stress" in servicing debt obligations. In countries such as China and India, those pressures have risen since 2007, while falling sharply in the U.S. and U.K. during the same period, according to McKinsey.
The capital buffer in the financial system across Asia could be challenged materially, it said. The analysis looked at the share of long-term debt at corporations with an interest coverage ratio of less than 1.5 times. At these levels, corporations are using a predominant share of their earnings to repay their debt, according to the study. In 2017, Australia, China, Hong Kong, India, and Indonesia had more than 25% of long-term debt held by companies with an interest coverage ratio of less than 1.5, and the share has increased materially since 2007, the report said.
On the equity front, IT shares rose after the rupee slipped against the dollar in the foreign exchange market. Persistent Systems (up 4.37%), Infosys (up 1.94%), HCL Technologies (up 1.87%), TCS (up 1.09%), MindTree (up 0.79%), MphasiS (up 0.68%) and Wipro (up 0.44%) advanced. Tech Mahindra (down 0.42%), Hexaware Technologies (down 0.75%) and Oracle Financial Services Software (down 0.82%) declined.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 71.6825, compared with its close of 71.435 during the previous trading session.
A weak rupee boosts revenues of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.
Car major Maruti Suzuki India jumped 3.75% to Rs 6198.75. The company announced a new warranty scheme in which the firm will offer a 5-year, 1-lakh km warranty for diesel-powered Dzire, S-Cross, Swift and Vitara Brezza. The warranty scheme will cover a host of parts and their replacements. High-pressure pump, compressor, Electronic Control Module (ECM), turbocharger assembly, critical engine and transmission parts will all be covered as part of the scheme. The steering assembly and suspension struts are also a part of the scheme. The company has also reported that it has received good response from its customers, for the BS-VI range of vehicles. The BS-VI models offered by the company currently constitute about 70% of the total petrol vehicles sold.
Vodafone Idea fell 2.50% to Rs 5.84 after company's chief executive officer, Balesh Sharma, resigned citing personal reasons. The board has approved the appointment of Ravinder Takkar as the Managing Director and Chief Executive Officer of the Company for a period of three years effective from 19 August 2019.
Mahanagar Gas (MGL) jumped 7.76% to Rs 848.45 on reports Netherlands-based Royal Dutch Shell Plc, will sell its 10% stake for over Rs 700 crore held in the city gas distributor. Shell holds its stake in MGL through its wholly owned subsidiary BG Asia Pacific Holdings. As on 30 June 2019, Shell's subsidiary held 98.77 lakh shares or 10% stake in MGL.
Shares of Sterling & Wilson Solar settled at Rs 725.35 on BSE, a discount of 7.01% over the initial public offer (IPO) price of Rs 780. The stock debuted at Rs 700, a discount of 10.26% to the IPO price. So far the stock hit a high of Rs 755.50 and low of Rs 691. On BSE, 3.09 lakh shares were traded on the counter.
CG Power and Industrial Solutions hit a lower circuit of 20% at Rs 14.75 after an internal probe uncovered several irregularities in the financial statements of the company. The announcement was made before market hours today, 20 August 2019.
The total liabilities of the company and the group may have been potentially understated by approximately Rs 1,053.54 crore and Rs 1,608.17 crore, respectively, as at 31 March 2018; and by Rs 601.83 crore and Rs 401.83 crore, respectively as at 1 April 2017. Advances to related and unrelated parties of the company and the group may have been potentially understated by Rs 1,990.36 crore and Rs 2,806.63 crore, respectively, as at 31 March 2018; and by Rs 1,479.34 crore and Rs 1,331.47 crore, respectively as at 1 April 2017.
Following the disclosure by CG Power, shares of Yes Bank slumped 7.11% to Rs 71.25. As on 30 June 2019, Yes Bank held 12.79% stake in CG Power.
Yes Bank recently raised Rs 1,930 crore via qualified institutions placement (QIP) of 23.1 crore equity shares at Rs 83.55 each. The stock has fallen 14.72% below the QIP issue price.
NMDC slumped 11.49% to Rs 90.15 on reports that the Karnataka government has decided to cancel the lease given to the state-run company for the Donimalai iron ore mine and to put it under auction.
In November 2018, NMDC had suspended operations at its Donimalai mine following the Karnataka government's decision to impose 80% premium on sales of iron ore. NMDC later petitioned the high court (HC), which in July 2019, allowed the firm to resume operations at the mine.
Dr. Reddy's Laboratories announced the launch of Vigabatrin Powder for Oral Solution, USP in the US market. The Vigabatrin Powder for Oral Solution, USP is a therapeutic equivalent generic version of Sabril Powder for Oral Solution, USP, approved by the U.S. Food and Drug Administration (USFDA). Vigabatrin Powder for Oral Solution is available in 500 mg per packet in count size of 50 per carton. The stock rose 1.77% to Rs 2554.90.
Overseas, European markets were trading higher. Finnish central bank governor Olli Rehn said on Monday that the European Central Bank (ECB) was determined to act if the medium-term inflation outlook continues to miss its target of below but close to 2%. This follows the German finance minster indicating over the weekend that the government is prepared to deploy fiscal stimulus to boost its ailing economy.
Asian markets closed on a mixed note on Tuesday as the People's Bank of China published its new loan prime rates under a new mechanism that was unveiled over the weekend. The new 1-year LPR was set at 4.25%, as compared to 4.31% previously. The 5-year LPR was at 4.85%.
U.S. stocks rallied Monday, lifted by encouraging comments from President Donald Trump and other officials on trade talks, along with a move by China over the weekend to lower borrowing costs for companies.
The Commerce Department said Monday that it has given Chinese telecom giant Huawei Technologies Co. Ltd. another 90-day reprieve during which it can continue to do business with American companies, without the granting of case-by-case licences that would otherwise be needed, after the Commerce Department added it to its 'entity list' in May. At the same time, the Commerce Department added another 46 Huawei subsidiaries to the list that will be subject to the full sanctions after 19 November.
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