Sensex falls over 200 points; Nifty below 8,600

Key benchmark indices weakened once again and hit fresh intraday low in mid-morning trade. At 11:20 IST, the barometer index, the S&P BSE Sensex was down 238.30 points or 0.85% at 27,743.41. The losses for the Nifty 50 index were lower in percentage terms than those for the Sensex.

The Nifty was currently down 63.20 points or 0.73% at 8,559.70. The Sensex hit lowest level in almost two-weeks. The Nifty hit lowest level in more than one-week. Weakness in Asian stocks weighed on sentiment.

The Sensex fell 248.02 points or 0.88% at the day's low of 27,733.69 in mid-morning trade, its lowest level since 22 July 2016. The barometer index rose 33.72 points or 0.12% at the day's high of 28,015.43 at the onset of trading session.
 

The Nifty declined 67.45 points or 0.78% at the day's low of 8,555.45 in mid-morning trade, its lowest level since 25 July 2016. The index rose 12.55 points or 0.14% at the day's high of 8,635.45 at the onset of trading session.

In overseas stock markets, Asian markets slipped after US stocks took their biggest loss in almost a month yesterday, 2 August 2016, underscoring simmering worries about global economic growth. Meanwhile, growth in China's services sector cooled in July, a private survey showed today, 3 August 2016.

The Caixin/Markit services purchasing managers' index (PMI) fell to 51.7 in July on a seasonally adjusted basis, from an 11-month peak of 52.7 in June. US stocks fell yesterday, 2 August 2016 on the back of disappointing auto sales and a steep drop for retailers on forecasts of poor summer sales, after a similar drop on Asian and European markets.

Closer home, the broad market depicted weakness. There were more than two losers against every gainer on BSE. 1548 shares fell and 727 shares rose. A total of 100 shares were unchanged. The BSE Mid-Cap index was currently down 1.25%.

The decline in this index was higher than the Sensex's decline in percentage terms. The BSE Small-Cap index was currently down 0.82%. The decline in this index was lower than the Sensex's decline in percentage terms.

IT stocks were mixed. TCS (down 0.75%), Infosys (down 0.71%), and Tech Mahindra (down 0.35%) declined. Wipro rose 0.47%.

HCL Technologies rose 3.16% to Rs 825.90 after consolidated net profit rose 1.84% to Rs 2050.78 crore on 5.96% increase in total income from operations to Rs 11336.32 crore in Q1 June 2016 over Q4 March 2016. The result was announced before trading hours today. In an investor release, HCL Tech said that its consolidated net profit as per US Generally Accepted Accounting Principles (GAAP) rose 6.3% to Rs 2047 crore on 6% increase in revenue to Rs 11336 crore in Q1 June 2016 over Q4 March 2016. Earnings before interest, taxes, depreciation and amortization (EBITDA) rose 6% to Rs 2521 crore in Q1 June 2016 over Q4 March 2016. EBITDA margin stood at 22.2% in Q1 June 2016, same as in Q4 March 2016.

The company has given a guidance of 12% to 14% growth in revenue in constant currency terms for the year ending 31 March 2017 (FY 2017). This is against revenue growth of 11.2% on year on year basis in constant currency terms achieved in Q1 June 2016. Revenue growth for trailing twelve months ended 30 June 2016 on year on year basis in constant currency terms stood at 10.7%. The constant currency guidance translates to 11.2% to 13.2% growth in revenue in US dollar terms for FY 2017 based on 30 June 2016 exchange rates.

In FY 2017, profit margin based on earnings before interest and tax is expected to be in the range of 19.5% to 20.5%. .

Telecom stocks were also mixed. Reliance Communications (RCom) (up 0.39%), and Idea Cellular (up 1.35%) gained. (Bharti Airtel (down 1.12%) and Tata Teleservices (Maharashtra) (down 1.8%) declined.

Shares of Bharti Infratel gained 2.6%. Bharti Infratel is a provider of tower and related infrastructure and is a unit of Bharti Airtel.

On the macro front, Markit Economics said today, 3 August 2016 that Indian service providers enjoyed a welcome upturn in demand during July, with a faster increase in new business underpinning stronger growth of output and boosting confidence. Part of the upswing in incoming new work was supported by price discounts.

The seasonally adjusted Nikkei India Services Business Activity Index rose to 51.9 in July, posting above the no-change mark of 50 for the thirteenth month running, highlighting ongoing growth of output in the sector. Up from 50.3 in June, the headline index was at a three-month high and indicative of a modest rate of expansion.

Meanwhile, investors are awaiting the progress on the Goods and Services Tax (GST) constitutional amendment bill in parliament. According to reports, the long-pending GST Bill is listed for consideration and passage in Rajya Sabha today, 3 August 2016 amidst strong indications that the most far-reaching taxation reform would be supported by Congress and all other major political parties. The government is keen to get the GST Bill approved during the Monsoon Session of Parliament ending on 12 August 2016.

The GST bill, which has been approved by the Lok Sabha, is pending in the Rajya Sabha because of opposition to the bill in its current form by the Congress party. A constitutional amendment bill requires at least 50% attendance and support of two-third of those present and voting in the house. For the GST bill to become a law, the bill also needs to be approved by half the state assemblies after its passage in the parliament. GST, touted as the single biggest indirect taxation reforms since independence, will simplify and harmonise the indirect tax regime in the country. The GST seeks to create a seamless national market in the country by replacing plethora of state taxes and central taxes by one tax.

Meanwhile, the India Meteorological Department (IMD) said that this year the Southwest monsoon rainfall was 11% below the Long Period Average (LPA) during June, however, July rainfall has been 7% above the LPA. The rainfall data was released yesterday, 2 August 2016. Rainfall over the country as a whole during second half of southwest monsoon season from August to September is most likely to be above normal that is more than 106% of LPA with a probability of 55%.

Quantitatively, the rainfall for the country as a whole during second half of the season is likely to be 107% of LPA with a model error of ±8%. The rainfall during August is likely to be 104 ± 9% of LPA as was forecasted in June. The rainfall in monsoon season from June to September over the country as a whole is likely to be 106% ±4% of LPA as was forecasted in June.

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