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Friday turns out to be horrible day for Dalal Street
Jun-21-2019

Friday turned out to be a horrible day for the Indian equity markets, as both the larger peers, Sensex and Nifty closing lower by over 400 and 100 points, respectively. The markets made a weak start of the day, affected by Reserve Bank of India Governor Shaktikanta Das’ statement that the Indian economy has been clearly losing traction and needs a decisive monetary policy to promote growth. He also favoured shifting the stance of monetary policy from neutral to accommodative to send a clear signal, indicating that more measures could be taken in the near future to boost growth. Traders were also worried with the Reserve Bank of India’s (RBI) report stating that both bank credit and deposits slowed to 9.92 percent and 12.31 percent at Rs 96.52 lakh crore and Rs 125.40 lakh crore, respectively, for the fortnight ending June 7.

Key Indices remained under the grip of bears throughout the day, with a report indicating that the merger and acquisition activity recorded an 87 percent fall in terms of value and a 27 per cent drop in volume last month, due to weakness in the rupee, spike in crude oil prices and indecisiveness among investors until results of the general elections. The street paid no heed towards the Retirement fund body, Employment Provident Fund Organisation’s (EPFO) latest ‘Provisional Estimate of Net Payroll’ data report which showed that India created 10,43,044 new jobs in the first month of current fiscal i.e. April 2019. The job creation for the last fiscal (2018-19) stood at 61,12,223.

On the global front, European markets were trading in green, as the euro area private sector expanded at the fastest pace in seven months in June, as growth in the service sector offset the fall in manufacturing. The flash survey data from IHS Markit showed that the composite output index rose to a 7-month high of 52.1 in June from 51.8 a month ago. Asian markets ended mixed, after Japan's manufacturing activity deteriorated further in June on weak orders. The flash data from IHS Markit showed that the flash manufacturing Purchasing Managers' Index, or PMI, fell to 49.5 in June from 49.8 in May. Any reading below 50 indicates contraction in the sector.

Back home, stocks related to logistic industry remained in focus, amid reports that the Indian logistics and warehousing sector is expected to grow to $215 billion by 2020. Further, infrastructure stocks also remained in limelight, amid report that terming infrastructure as pivotal in propelling prosperity and growth, President Ram Nath Kovind said the government's endeavour is to build 35,000 km of highways, besides expressways, by 2022 and to lay a strong foundation for urban infrastructure that will encourage employment generation.

Finally, the BSE Sensex lost 407.14 points or 1.03% to 39,194.49, while the CNX Nifty was down by 107.65 points or 0.91% to 11,724.10.

The BSE Sensex touched a high and a low of 39,617.95 and 39,121.30, respectively and there were 05 stocks advancing against 25 stocks declining, while 1 stock remain unchanged on the index.

The broader indices ended mixed; the BSE Mid cap index fell 0.38%, while Small cap index was up by 0.14%.

The few gaining sectoral indices on the BSE were Basic Materials up by 0.14%, Power up by 0.10% and PSU up by 0.07%, while Auto down by 1.32%, Energy down by 1.13%, Telecom down by 1.08%, FMCG down by 0.91% and Healthcare down by 0.84% were the top losing indices on BSE.

The top gainers on the Sensex were SBI up by 1.28%, Indusind Bank up by 0.92%, Vedanta up by 0.23%, Mahindra & Mahindra up by 0.10% and Axis Bank up by 0.06%. On the flip side, Yes Bank down by 4.36%, Maruti Suzuki down by 3.39%, HDFC down by 2.63%, Hero MotoCorp down by 2.17% and Hindustan Unilever down by 2.04% were the top losers.

Meanwhile, observing initiatives taken towards labour law reforms till date are miniscule, State Bank of India (SBI) in its research report 'Ecowrap' has stated that the Centre and state governments need to pursue labour law reforms as these are necessary for improving employment and employability, streamline labour issues and developing adequate means to absorb the labour in the economy.

The report said that the investors look out for stability and sustainability and land and labour resources are critical for them to firm up their investment plans. It noted that presently, there are close to 44 central labour laws and over 100 state labour laws. It also pointed out that the labour ministry has taken steps to codify the existing central labour laws into four codes -- Labour Code on Wages, Labour Code on Industrial Relations, Labour Code on Social Security and Welfare, and Labour Code on Occupational Safety, Health and Working Conditions.

SBI further stated that of the four codes, the one on wages has been introduced in the Lok Sabha and is under examination. The other three codes are at the pre-legislative consultation stage and should be completed urgently. Separately, it said a national policy for domestic workers needs to be brought in at the earliest to recognize their rights and promote better working conditions. It added that steps may be taken from both state and central legislation to take the labour reforms forward.

The CNX Nifty traded in a range of 11,827.95 and 11,705.10. There were 10 stocks advancing against 39 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were UPL up by 2.20%, Hindalco up by 1.98%, Indiabulls Housing Finance up by 1.71%, Tech Mahindra up by 1.44% and SBI up by 1.14%. On the flip side, Yes Bank down by 4.50%, Maruti Suzuki down by 2.90%, HDFC down by 2.56%, Hindustan Unilever down by 2.06% and Hero MotoCorp down by 1.98% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 8.40 points or 0.11% to 7,432.84, France’s CAC rose 23.63 points or 0.43% to 5,559.20 and Germany’s DAX added 25.96 points or 0.21% to 12,381.35.

Asian markets ended mixed on Friday as escalating tensions between the US and Iran and renewed trade uncertainty kept investors on the sidelines ahead of the weekend. After Iran shot down a US military drone over the Strait of Hormuz, US President Donald Trump declined to say whether the US would retaliate against Iran for the shooting. Media reports suggest that Trump has abruptly pulled back the decision to carry out military strikes against the country after previously approving it. Chinese shares ended higher on expectations that China's monetary authorities may moderately ease their overall prudent policy stance in the second half of the year. Meanwhile, Japanese shares ended down as weak manufacturing data dented sentiment and investors looked forward to US-China trade talks for direction.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

3,001.98
14.86
0.50

Hang Seng

28,473.71
-76.72
-0.27

Jakarta Composite

6,315.44
-20.26
-0.32

KLSE Composite

1,682.23

6.80

0.41

Nikkei 225

21,258.64
-204.22
-0.95

Straits Times

3,321.40
6.89
0.21

KOSPI Composite

2,125.62
-5.67
-0.27

Taiwan Weighted

10,803.77
18.76
0.17
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