The market ended lower on Wednesday, amid renewed concerns over trade tension between the United States and India. The Nifty closed below the 11,500 mark for the first time since 17 May 2019.
The Sensex fell 173.78 points or 0.45% to settle at 38,557.04. The index rose 124.03 points, or 0.32% at the day`s high of 38,854.85. The index fell 256.16 points, or 0.66% at the day`s low of 38,474.66.
The Nifty 50 index fell 57 points or 0.49% to settle at 11,498.90. The index rose 37.80 points, or 0.33% at the day`s high of 11,593.70. The index fell 80.25 points, or 0.69% at the day`s low of 11,475.65.
The S&P BSE Mid-Cap index and the S&P BSE Small-Cap index fell by 0.75% each and underperformed the Sensex.
The market breadth was weak. On the BSE, 946 shares rose and 1496 shares fell. A total of 142 shares were unchanged.
Ahead of the Indo-US trade talks on Friday, US President Donald Trump once again warned the Asian country that its high tariffs were not acceptable. In May, India imposed higher tariffs on 28 US products, including almonds and apples.
India has long had a field day putting Tariffs on American products. No longer acceptable!, wrote Donald Trump on Twitter on Tuesday.
Among the sectoral indices on the BSE, the S&P BSE Bankex (down 0.16%), the S&P BSE Healthcare (down 0.2%) and the S&P BSE Energy index (down 0.31%) outperformed the S&P BSE Sensex. Meanwhile, the S&P BSE Capital Goods index (down 1.65%), the S&P BSE Realty index (down 1.52%) and the S&P BSE Industrials index (down 1.51%) underperformed the S&P BSE Sensex.
Bajaj Finance (down 4.91%) and Bajaj Finserv (down 2.47%), tumbled.
IT major and index pivotal TCS fell 1.11% to Rs 2107.70. On a consolidated basis, TCS reported 0.06% rise in net profit to Rs 8131 crore on 0.43% rise in total income to Rs 38172 crore in Q1 June 2019 over Q4 March 2019. TCS announced Q1 result after market hours yesterday, 9 July 2019.
TCS said that the growth was lead by UK (16%), India (15.9%) and Europe (15%). Other markets showed good momentum: North America (7.7%), Asia Pacific (9.5%), MEA (6.4%) and Latin America (6.4%). The company further added that revenue growth was broad-based across verticals. Life Sciences & Healthcare led the pack, growing 18.1%. The other verticals - BFSI (9.2%), Retail & CPG (7.9%), Communications & Media (8.4%), Technology & Services (7.8%) and Manufacturing (5.5%) - all showed industry-leading growth rates.
Interglobe Aviation crashed 10.73% to Rs 1397.75 after the company`s co-founder raised corporate governance issue with market regulator Securities and Exchange Board of India. Co-founder, Rakesh Gangwal has written letter to Security Exchange Board of India (SEBI) alleging several violations at IndiGo including those pertaining to related-party transactions; appointment of senior management personnel, directors and the chairman, who has always been an independent director by convention.
In his letter, Gangwal who holds 36.68% stake in Indigo has sought permission to hold an extraordinary general (EGM) meeting, alleging that the company has participated in objectionable related-party transactions (RPTs) and has not complied with corporate governance standards.
Investors fear that the fight between the two founders could potentially impact the company`s expansion plans.
A foreign brokerage reportedly said that the dispute between Rakesh Gangwal & InterGlobe Enterprises has potential of lingering on and becoming a significant headwind. The investment firm further said dispute has not had an operational impact so far but cannot rule out, it added.
Another low-cost air carrier SpiceJet jumped 2% to Rs 119.60.
Indian Acrylics rose 9.97% to Rs 13.02. On a consolidated basis, the company`s net profit rose 203.18% to Rs 10.49 crore on 38.49% increase in net sales to Rs 221.10 crore in Q1 June 2019 over Q1 June 2018. The result was announced durfing trading hours today, 10 July 2019.
Suzlon Energy jumped 3.38% to Rs 4.89. Media reports suggested that Canada-based Brookfield Asset Management Inc. is planning an offer for a majority stake in Suzlon Energy. Brookfield is working with a financial adviser for due diligence on Suzlon, reports added.
Autoline Industries rose 1.59% to Rs 51.25. The company announced that the Government of Maharashtra has approved additional Industrial Promotion Subsidy (IPS) claim of Rs 44.61 crore. Out of said approved amount, the company has received an amount of Rs 14.50 crore on 8 July 2019 and with this amount the company has received total of Rs 35.12 crore in three tranches. The remaining amount is expected shortly.
Manpasand Beverages hit lower circuit of 5% at Rs 38.85 after Mehra Goel & Co. resigned as statutory auditors due to probe into company by GST authorities.
Private sector banks were mixed. Yes Bank (up 1.81%), Kotak Mahindra Bank (up 0.85%), ICICI Bank (up 0.75%), HDFC Bank (up 0.46%) and City Union Bank (up 0.35%), edged higher. RBL Bank (down 0.17%), IndusInd Bank (down 0.31%), Federal Bank (down 1.27%) and Axis Bank (down 2.25%), edged lower.
Most auto stocks witnessed selling. TVS Motor Company (down 2.66%), Mahindra & Mahindra (down 1.77%), Eicher Motors (down 1.68%), Bajaj Auto (down 1.64%) and Maruti Suzuki India (down 0.31%), edged lower. Escorts (up 0.07%) and Ashok Leyland (up 1.31%), edged higher.
Hero MotoCorp fell 1.77%. The company announced during market hours today, 10 July 2019, that Aberdeen Standard Investments has acquired 68.20 lakh shares or 3.41% stake in the company. The acquisition of shares was made on 2 July 2019 via open market sale.
Tata Motors fell 2.79%. Jaguar Land Rover (JLR) retail sales in June 2019 were 47,060 vehicles, down 9.6% compared to June 2018. Jaguar retail sales in June 2019 were 14,933 vehicles, down 8.5% year-on-year and Land Rover retailed 32,127 vehicles, down 10.1% compared to June 2019.
The Society of Indian Automobile Manufacturers (SIAM) reported that domestic passenger vehicle sales declined 17.54% to 2.25 lakh units in June 2019 over June 2018. The domestic car sales have fallen 24.07% to 1.39 lakh units in June 2019 over June 2018. The total two wheeler sales declined 11.69% to 16.49 lakh units, while the sales of commercial vehicles fell by 12.27% to 70,771 units during the period under review.
Meanwhil, a foreign brokerage expects auto companies` Q1 to be one of the weakest quarters in recent times. For its coverage universe (ex-JLR), the brokerage forecast 5% YoY revenue decline and EBITDA/PAT is likely to decline 23%/34% YoY. Margin is likely to come off by 250 bps YoY on lower operating leverage, the brokerage explained. However, lower commodity prices will support margin by 50-100 bps in Q1 & Q2.
Most Anil Ambani group stocks witnessed selling. Reliance Infrastructure (down 6.03%), Reliance Capital (down 5.41%), Reliance Power (down 1.48%) and Reliance Nippon Life Asset Management (down 0.24%), edged lower. Reliance Naval and Engineering (up 0.25%) and Reliance Communications (up 3.59%), edged higher.
Media reports suggested that State Bank of India (SBI) has commissioned a probe against Reliance Group chairman, Anil Ambani, after SBI flagged transaction of Rs 5,500 crore in books of Reliance Communications, Reliance Telecom and Reliance Telecom Infrastructure. SBI alleged evergreening of loans (providing a fresh loan to repay an old loan), fund diversion and preferential transactions in these companies. The probe which looked at transactions between May 2017 and May 2018, has covered nearly 1,00,000 book entries.
Shares of most public sector oil marketing companies (PSU OMCs) declined as Brent crude oil price rose. BPCL (down 2.96%), Indian Oil Corporation (down 2.37%) and HPCL (down 0.76%), edged lower.
In the commodities market, Brent crude for September 2019 settlement rose $1.23 at $65.39 a barrel. The contract rose 5 cents or, 0.08% to settle at $64.16 a barrel in the previous trading session.
In the foreign exchange market, the rupee edged lower against the dollar. The partially convertible rupee was hovering at 68.56, compared with its close of 68.51 during the previous trading session.
Meanwhile, Fitch Ratings reported that India`s new budget outlined some economic reforms that could support the economy, but its fiscal stance was left broadly unchanged, with no plans for meaningful consolidation. The budget targets a slight narrowing in the fiscal deficit target, to 3.3% of GDP, from an estimated 3.4% in FY19 and in the FY20 interim budget.
The America based rating agency further said that the fiscal targets are broadly credible, although projected revenue growth, at 13.5%, may prove optimistic as it is based on the government`s higher 7% real GDP growth forecast and disinvestment targets might not be met.
The rating agency believes off-budget spending is likely to increase due to, for instance, the additional banking-sector recapitalisation, which is equivalent to 0.3% of GDP. This should not affect the deficit, but it will raise the debt level, Fitch added.
Further, Moody`s Investors Service reported that weak growth prospects for India will complicate the government`s fiscal consolidation efforts, weighing on the sovereign`s credit quality. The 2019-20 Budget presented in Parliament last week projected to contain fiscal deficit at 3.3% of GDP, lower than 3.4% estimated in the interim Budget.
Overseas, most European markets were trading lower while most Asian markets closed higher. Investors around the globe await comments from US Federal Reserve Chairman Jerome Powell for possible clues on the central bank`s next move on interest rates.
US stocks ended mixed on Tuesday after a late-day rally boosted the S&P 500 and Nasdaq Composite but left the Dow Jones Industrial Average to suffer its third straight loss.
Investors await the two-day testimony before Congress by Fed Chairman Jerome Powell due to start Wednesday. Also due on Wednesday is the central bank`s June policy meeting minutes. Markets are hoping the central bank`s chief will shed some light on a meeting of the central bank`s interest-rate setting committee, slated for July 30-31, with investors clinging to hopes for a rate cut.
On the economic data front, the National Federation of Independent Business released its small business optimism index, which fell to 103.3 in June, from 105 in May.
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