Market slumps one weak global signals

The market slumped on Tuesday, dragged by weakness in auto and IT stocks. Selling in HDFC twins also put pressure on bourses. The Sensex slipped below the 37,000 level while the Nifty breached the 11,000 mark. The Nifty was trading way below its 200-day moving average (DMA) placed at 11,170.31.

Global shares were negative as fears about a Sino-U.S. trade war, protests in Hong Kong and a crash in Argentina's peso currency drove investors to safe harbours.

The barometer index, the S&P BSE Sensex, fell 675.18 points or 1.80% to 36,906.73, as per the provisional closing data. The Nifty 50 index fell 183.80 points or 1.65% to 10,925.85, as per the provisional closing data.

 

Broader markets tumbled. In the broader market, the S&P BSE Mid-Cap index fell 2.25%. The S&P BSE Small-Cap index lost 1.42%.

The market breadth was weak. On the BSE, 819 shares rose and 1672 shares fell. A total of 143 shares were unchanged.

Finance Minister Nirmala Sitharaman met Foreign portfolio investors (FPIs) on Friday, 9 August 2019. FPIs pressed for complete rollback of the higher super-rich surcharge proposed in the Budget. They also sought relief in matters related to long-term capital gains (LTCG) and dividend distribution tax (DDT), beside easier KYC norms. According to media reports, the FM heard all the views, but gave no indication about when the proposals will be implemented.

Last week media reports suggested that the government may withdraw the FPIs surcharge through a notification or ordinance. Reports added that the government could announce a confidence-booster package for investors that included a re-thinking on the long-term capital gains tax.

Foreign investors have been selling extensively in the Indian equity market after the government announced levy of surcharge on super rich in the Union Budget. Finance minister Nirmala Sitharaman in her maiden Budget speech on 5 July 2019, proposed to enhance surcharge on individuals having taxable income from Rs 2 crore to Rs 5 crore and Rs 5 crore and above so that effective tax rates for these two categories will increase by around 3% and 7% respectively. The effective tax rate on the highest tax bracket goes up to 42.7% after the hike.

There are concerns that the increased surcharge on super-rich could also affect foreign funds investing in India since a same tax structures apply for individuals, Hindu Undivided Family (HUF) and Associations of Persons (AOPs). FPIs, including pension and retirement funds, educational endowment fund, etc, come in through trusts or AOPs route because it has been the most tax-efficient structure.

On the macro front, the quick estimates of Index of Industrial Production (IIP) with base 2011-12 showed that India's industrial output grew 2% in June. The data was released by the government after market hours on 9 August 2019.

India's inflation based on consumer price index (CPI) for July 2019 will be unveiled today, 13 August 2019. India's retail price inflation rate rose to 3.18% year-on-year in June 2019, the highest since last October, from 3.05% in the previous month.

On the equity front, Indiabulls Housing Finance (up 14.89%), GAIL (up 1.25%) and Power Grid Corporation of India (up 0.05%) advanced.

Yes Bank (down 10.89%), Bajaj Finance (down 6.07%), Bajaj Finserv (down 5.54%), UPL (down 5%) and HDFC (down 4.96%) declined.

Coal India (down 2.02%) and ONGC (down 3.41%) will announce their Q1 June 2019 results today.

Shares of Reliance Industries (RIL) surged 9.72% to Rs 1275. RIL chairman and managing director Mukesh Ambani on Monday addressed the shareholders of the company at its 42nd annual general meeting (AGM). Ambani said that Jio Fiber Services will be launched on commercial basis on 5 September 2019, the third anniversary of Jio's launch. RIL plans to reach 20 million residences and 15 million business establishments in 1,600 towns. Reliance Jio Infocomm (Jio), a subsidiary of Reliance Industries (RIL), and Microsoft Corp. are embarking on a unique, comprehensive, long-term strategic relationship aimed at accelerating the digital transformation of the Indian economy and society.

Mukesh Ambani revealed a roadmap to becoming a zero net debt company in the next 18 months. Saudi Aramco signed a non-binding letter of intent to acquire a 20% stake in the oil to chemicals division of Reliance Industries valued at an enterprise value of $75 billion.

Mukesh Ambani said that Jio Fiber Services will be launched on commercial basis on 5 September 2019, the third anniversary of Jio's launch. RIL plans to reach 20 million residences and 15 million business establishments in 1,600 towns. Reliance Jio Infocomm (Jio), a subsidiary of Reliance Industries (RIL), and Microsoft Corp. are embarking on a unique, comprehensive, long-term strategic relationship aimed at accelerating the digital transformation of the Indian economy and society.

Sun Pharmaceutical Industries rose 4.01%. On a consolidated basis, the pharma company's net profit rose 31.2% to Rs 1387.5 crore on a 15.9% rise in the total revenue from operations to Rs 8374.4 crore in Q1 June 2019 over Q1 June 2018. The result was announced during market hours today, 13 August 2019.

Zee Entertainment Enterprise lost 0.20%. The company announced acquisition of balance 26% equity stake in Zee Network Distribution. Accordingly Zee Network Distribution has now become a wholly owned subsidiary on and from 9 August 2019. The announcement was made during market hours today, 13 August 2019.

Grasim Industries fell 4.47%. The viscose staple fibre (VSF) and chemicals manufacturer said its board will meet on 14 August 2019 to consider raising of funds through issue of non-convertible debentures, in one or more tranches, on private placement basis. The announcement was made on Monday, 12 August 2019.

Bharat Heavy Electricals slumped 10.81%. On a consolidated basis, the power plant equipment manufacturer reported net loss of Rs 217.72 crore in Q1 June 2019 compared with net profit of Rs 40.69 crore in Q1 June 2018. Net sales fell 23.9% to Rs 4411.09 crore in Q1 June 2019 over Q1 June 2018. The result was announced after market hours on Friday, 9 August 2019.

Future Consumer rose 2.97%. On a consolidated basis, the sourcing-to-supermarket food company reported net loss of Rs 14.94 crore in Q1 June 2019 compared with net loss of Rs 5.91crore in Q1 June 2018. Net sales rose 24.7% to Rs 1048.45 crore in Q1 June 2019 over Q1 June 2018. The result was announced after market hours on Friday, 9 August 2019.

In a separate announcement, the company said that CARE Ratings has re-affirmed its rating of CARE Al assigned to the company in respect of commercial paper worth Rs 100 crore. The announcement was made on Monday, 12 August 2019.

Balkrishna Industries fell 3.45%. On a consolidated basis, the tire manufacturing company's net profit fell 21.4% to Rs 176.84 crore on a 11% fall in the net sales to Rs 1198.93 crore in Q1 June 2019 over Q1 June 2018. The result was announced on Saturday, 10 August 2019.

New Delhi Television (NDTV) lost 1.47%. NDTV said that its founders Mrs. Radhika Roy and Dr. Prarmoy Roy were prevented trom leaving the country. They have been stopped from traveling abroad on the basis of wholly unsubstantiated corruption case filed by the CBI about an ICICI loan that was taken by their company, RRPR Holding, which was fully repaid with interest ahead of schedule. The case has been challenged in the Hon'ble Delhi High Court by RRPR, owned by the NDTV founders, which has stake in NDTV. The announcement was made after market hours on Friday, 9 August 2019.

IRB Infrastructure Developers fell 3.87%. The highway construction company informed that Mhaiskar Infrastructure - wholly owned subsidiary of the company, has successfully completed concession period of Mumbai Pune Project on 10 August 2019. Subsequently, this SPV has handed over the Project to the Maharashtra State Road Development Corporation (MSRDC). The annoucment was made on Monday, 12 August 2019.

Bharat Forge slumped 6.06% after it announced its Q1 June 2019 result during market hours today, 13 August 2019. The company reported a profit after tax or Rs 174.1 crore in Q1 June 2019, a decline of 25.8% as compared to Rs 234.5 crore in Q1 June 2018. Total revenues of the company in Q1 June 2019 stood at Rs 1346.6 crore, registering a decline of 9% as compared to Q1 June 2018. The decline was caused by weak demand environment in domestic market and inventory de-stocking in oil & gas.

Premier Explosives lost 1.89%. The explosives maker's net profit fell 5.6% to Rs 0.68 crore on a 15.3% decrease in net sales to Rs 52.87 crore in Q1 June 2019 compared with Q1 June 2018. The result was announced on Saturday, 10 August 2019.

In a separate announcement on Monday, 12 August 2019, the company announced winning an order from MoD (Army) for supply of Air Target Imitator valued at Rs 13.50 crore. The order is to be executed within one year and falls under 'Make in India' programme and has got all necessary quaility approvals from defense agencies.

Godfrey Phillips India hit 20% upper circuit at Rs 850.95. The cigarettes and chewing products manufacturer's consolidated net profit rose 106.49% to Rs 118.63 crore on 40.01% rise in total income to Rs 824.78 crore in Q1 June 2019 over Q1 June 2018. The result was announced on Saturday, 10 August 2019.

Divis Laboratories slumped 8.37%. The company's consolidated net profit rose 1.8% to Rs 272.44 crore on a 16.8% rise in net sales to Rs 1,162.88 crore in Q1 June 2019 compared with Q1 June 2018.

On standalone basis, the company's net profit was almost flat at Rs 267.35 crore while the net sales rose 14.5% to Rs 1139.92 crore. The result was announced on Saturday, 10 August 2019.

Auto stocks declined. Mahindra & Mahindra (down 6.44%), Eicher Motors (down 5.42%), Escorts (down 5.08%), TVS Motor Company (down 4.93%), Ashok Leyland (down 4.66%), Maruti Suzuki India (down 4.53%), Hero MotoCorp (down 1.5%) and Bajaj Auto (down 0.96%) declined.

Tata Motors lost 0.20%. The Tata Motors Group global wholesales in July 2019, including Jaguar Land Rover, were at 78,600 units, lower by 14% compared to July 2018. Global wholesales of all Tata Motors' commercial vehicles and Tata Daewoo range in July 2019 were at 26,168 units, lower by 35% over July 2018. Global wholesales of all passenger vehicles in July 2019 were at 52,432 units, up by 4%, compared to July 2018. Global wholesales for Jaguar Land Rover were 41,783 vehicles. Jaguar wholesales for the month were 12,308 vehicles, while Land Rover wholesales for the month were 29,475 vehicles. The announcement was made during market hours today, 13 August 2019.

According to the data released by Society of Indian Automobile Manufacturers, passenger vehicle sales declined 31% to 2 lakh units in July 2019 over July 2018. Following the news, most auto shares declined.

Most IT stocks fell. MindTree (down 4.36%), Tech Mahindra (down 3.99%), Infosys (down 3.75%), Oracle Financial Services Software (down 2.79%), Wipro (down 2.1%), TCS (down 2.07%), HCL Technologies (down 1.69%) and Persistent Systems (down 1.41%) declined.

Hexaware Technologies (up 3.57%) and MphasiS (up 0.22%) advanced.

Steel Authority of India slumped 6.19%. The steel company reported 81.4% drop in consolidated net profit to Rs 102.68 crore on 6.11% fall in total income to Rs 15043.53 crore in Q1 June 2019 over Q1 June 2018. The result was announced after market hours on Friday, 9 August 2019.

Hindustan Copper fell 3.50%. The company's consolidated net profit fell 39.9% to Rs 21.19 crore on a 27.2% decline in net sales to Rs 304.07 crore in Q1 June 2019 compared with Q1 June 2018.

NIIT lost 1.18%. The company's consolidated net profit jumped 510.3% to Rs 115.17 crore on a 1.8% decline in net sales to Rs 210.30 crore in Q1 June 2019 compared with Q1 June 2018. EBITDA rose 16% to Rs 22 crore in Q1 June 2019 over Q1 June 2018. Its EBITDA margin also increased 159 bps to 10% in Q1 June 2019 as against Q1 June 2018. The result was announced on Saturday, 10 August 2019.

Info Edge (India) lost 1.14% after the company announced its Q1 June 2019 result during market hours today, 13 August 2019. On a consolidated basis, the online classifieds company reported a net loss of Rs 187.58 crore in Q1 June 2019 over a net loss of Rs 18.57 crore in Q1June 2018. Net sales rose 15.43% to Rs 319.73 crore in Q1 June 2019 over Q1 June 2018.

IPCA Laboratories lost 2.68%. The pharmaceutical company reported a rise of 89% in consolidated net profit after tax to Rs 129.43 crore on a 23% rise the consolidated net total income to Rs 1098.53 crore in Q1 June 2019 over Q1 June 2018. The result was announced during market hours today, 13 August 2019.

Varroc Engineering fell 2.17%. The company announced acquisition of 74% equity stake in the Pune - based CarlQ Technologies. The transaction is to be completed On or before 31 August 2019 or such other date as may be mutually agreed between the parties. The cost of the said acquisition is Rs 19.24 crore. The announcement was made on Saturday, 10 August 2019.

BPCL lost 1.02%. The company's consolidated net profit dropped 44.1% to Rs 1623.75 crore on a 6.3% rise in net sales to Rs 76,325.39 crore in Q1 June 2019 over Q1 June 2018. The result was announced after market hours on Friday, 9 August 2019. On standalone basis, the company's net profit declined 53.1% to Rs 1075.12 crore on 6.4% rise in net sales to Rs 76,317.94 crore in Q1 June 2019 over Q1 June 2018.

The company's market sales were at 11.11 MMT (Million Metric Tonne) in Q1 June 2019 as compared to 10.97 MMT in Q1 June 2018. The company's average gross refining margin declined to $2.81 per barrel in Q1 June 2019 as compared to $7.49 per barrel in Q1 June 2018.

NTPC lost 3.09%. The company reported 5.63% rise in consolidated net profit to Rs 2840.28 crore on 6.9% rise in total income to Rs 26929.85 crore in Q1 June 2019 over Q1 June 2018. The result was announced on Saturday, 10 August 2019.

Overseas, European stocks were trading lower on Tuesday as investors monitor political uncertainty in Italy, Hong Kong and Argentina. Asian stocks ended lower on Tuesday as fears about a drawn out Sino-US trade war, protests in Hong Kong and a crash in Argentina's peso currency drove investors to safe harbours like bonds, gold, and the yen.

US stock benchmarks finished sharply lower Monday as simmering geopolitical tensions spooked equity investors and drove a bond market rally while the protracted US-China trade war stoked fears of impending recession.

A foreign brokerage reportedly said that fears of the US-China trade war leading to a recession are increasing and it no longer expects a trade deal between the world's two largest economies before the 2020 US presidential election.

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