HOME > MARKETS > MARKET COMMENTARY
  MARKET COMMENTARY
EQUITY
Markets face volatility; Sensex loses around 75 points
Aug-20-2019

Indian equity markets faced volatility on Tuesday, with Sensex & Nifty closing below their crucial psychological levels of 37,400 & 11,050, respectively. Indices made a cautious start, as former Reserve Bank of India’s Governor Raghuram Rajan called slowdown in the economy as very worrisome and said the government needs to fix the immediate problems in power and non-bank financial sectors and come out with a new set of reforms to energise private sector to invest. Sentiments also got hit, with Care Ratings’ report that India's jobs scene -- with unemployment at a 45-year high -- is looking gloomy with hiring activity slowing across most sectors.

In the last leg of trade, markets managed to come off their day’s low points to settle with marginal losses, on the back of firm global markets. Traders took support with Finance Minister Nirmala Sitharaman’s statement that corporate tax rate for companies with over Rs 400 crore turnover will be gradually cut to 25% and the government will support wealth creators. Besides, Competition Commission of India (CCI) has introduced an automatic system of approval for combinations under Green Channel, with an effort to make mergers and acquisitions (M&A) filings approval faster. This system would significantly reduce time and cost of transactions.

On the global front, European markets were trading mostly in green, as German employment increased in the second quarter largely due to the growth in outdoor work in spring. The data from Destatis showed that employment increased by seasonally adjusted 50,000 or 0.1 percent sequentially in the second quarter. Asian markets ended mostly higher, despite Taiwan's export orders decreased further in July, but at a slower-than-expected pace, as the foreign demand for machinery and basic metals plummeted. The figures from the Ministry of Economic Affairs showed that export orders fell 3 percent year-on-year in US dollar terms in July.

Back home, the realty sector stocks remained in watch, after Housing and Urban Affairs Secretary Durga Shankar Mishra said that the government may consider amendments in the real estate law RERA, if required, to make it more effective. Further, stocks related to the textile industry also remained in focus, as the Confederation of Indian Textile Industry (CITI) said the government should extend benefits of ‘Rebate of State and Central Taxes and Levies (RoSCTL)’ scheme, which presently covers apparel and made-up segments, to yarn and fabric as well to boost their export competitiveness.

Finally, the BSE Sensex lost 74.48 points or 0.20% to 37,328.01, while the CNX Nifty was down by 36.90 points or 0.33% to 11,017.00.

The BSE Sensex touched a high and a low of 37,511.55 and 37,219.90, respectively and there were 13 stocks advancing against 18 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.60%, while Small cap index was down by 0.62%.

The top gaining sectoral indices on the BSE were IT up by 1.34%, Auto up by 1.18%, TECK up by 1.07%, Consumer Durables up by 0.36% and Consumer Disc up by 0.32%, while Metal down by 1.71%, Basic Materials down by 1.39%, PSU down by 1.32%, Energy down by 1.18% and Realty down by 1.08% were the top losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 3.75%, Tata Motors up by 2.53%, Infosys up by 1.94%, HCL Tech. up by 1.87% and Mahindra & Mahindra up by 1.56%. On the flip side, Yes Bank down by 7.11%, Indusind Bank down by 2.36%, ITC down by 2.01%, Axis Bank down by 1.64% and ICICI Bank down by 1.48% were the top losers.

Meanwhile, with an aim to reduce cost of raising capital, the government has removed the redemption reserve requirement for issuance of debentures by Non-Banking Financial Companies (NBFCs), Housing Finance Companies (HFCs) and listed firms. Under the companies law, these entities raising money had to create Debenture Redemption Reserve (DRR) of 25% of the value of outstanding debentures and that requirement has now been done away with.

The changes would be applicable for public issue as well as private placements. On the other hand, in the case of unlisted companies, the DRR requirement has been reduced to 10% from 25% of the outstanding debentures. The measure has been taken by the government with a view to reducing the cost of the capital raised by companies through issue of debentures and is expected to significantly deepen the bond market.

The corporate affairs ministry has amended the Companies (Share Capital & Debentures) Rules to effect the changes. Till now, listed companies had to create a DRR for both public issue as well as private placement of debentures. In the case of NBFCs and HFCs, they had to have DRR when they opted for public issue of debentures. The amendments are aimed at creating a level-playing field between NBFCs, HFCs and listed companies on the one hand and also between them and banking companies and all India financial institutions on the other, which are already exempted from DRR.

The CNX Nifty traded in a range of 11,076.30 and 10,985.30. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Maruti Suzuki up by 4.02%, Tata Motors up by 2.48%, HCL Technologies up by 1.97%, Infosys up by 1.91% and Dr. Reddy’s Lab up by 1.75%. On the flip side, Yes Bank down by 6.65%, Indiabulls Housing Finance down by 3.32%, Britannia down by 3.24%, Ultratech Cement down by 3.23% and IndusInd Bank down by 2.66% were the top losers.

European markets were trading mostly in green, UK’s FTSE 100 increased 18.55 points or 0.26% to 7,208.20 and France’s CAC was up by 2.79 points or 0.05% to 5,374.35. On the other side, Germany’s DAX was down by 10.88 points or 0.09% to 11,704.49.

Asian markets ended mostly higher on Tuesday amid signs of a slight easing of US-China trade tensions and on growing expectations of fresh stimulus measures by major economies, such as Germany and China. Japanese share ended up after the Trump said that Apple CEO Tim Cook has made a ‘very compelling argument’ against trade tariffs. The Trump administration on Monday extended a reprieve that permits China’s Huawei Technologies to buy components from US companies by 90 days, to supply existing customers. Though, Chinese and Hong Kong shares ended slightly lower on profit taking after a strong rally as the People's Bank of China unveiled a major reform to its system of benchmark interest rates.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

2,880.00
-3.10
-0.11

Hang Seng

26,231.54
-60.30
-0.23

Jakarta Composite

6,295.74
-0.98
-0.02

KLSE Composite

1,602.75

6.30

0.39

Nikkei 225

20,677.22
114.06
0.55

Straits Times

3,135.95
7.50
0.24

KOSPI Composite

1,960.25
20.35
1.05

Taiwan Weighted

10,522.50
33.75
0.32
  RELATED NEWS >>
Most Viewed >>
April 22 , 2024
Invest lumpsum through systematic transfer pla
April 24 , 2024
Fund managers trim PSB exposure, see better va
April 22 , 2024
FPIs mount bearish bets as risk aversion grows
April 22 , 2024
FPIs withdraw over Rs 5,200 crore in April so
EXPLORE
© CITRUS INTERACTIVE
Designed & Developed Accord Fintech Pvt. Ltd.