The market ended steeply lower on Tuesday, after data last week showed India's gross domestic product (GDP) growth moderated to 5% in Q1 June 2019. PSU banks and auto stocks witnessed major selling pressure.
The barometer index, the S&P BSE Sensex, fell 769.88 points or 2.06% to 36,562.16, as per the provisional closing data. The Nifty 50 index fell 225.35 points or 2.04% to 10,797.95 as per the provisional closing data.
The Nifty opened below 11,000 mark and extended losses as the session progressed. Selling exacerbated in the last hour of the trade, which dragged the barometer below 10,800 mark.
The S&P BSE Small-Cap index was down 1.32%. The S&P BSE Mid-Cap index was down 1.65%.
The market breadth was weak. On the BSE, 813 shares rose and 1615 shares fell. A total of 180 shares were unchanged.
India's gross domestic product (GDP) growth moderated to 25-quarters low of 5% in Q1 of 2019-20 from 5.8% growth recorded in the previous quarter and 8% improvement in the corresponding quarter last year.
The IHS Markit India Manufacturing PMI was reported at 51.4 in August, signalling a further improvement in the health of the sector. However, the headline figure was down from 52.5 in July to its lowest mark since May 2018, and below its long-run average of 53.9. The indices vary between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month and below 50 an overall decrease.
Meanwhile, growth of eight core industries dropped to 2.1% in July 2019. The eight core sector industries - coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity had expanded by 7.3% in July 2018. The data was announced after market hours on Friday, 30 August 2019.
The fiscal deficit of central government increased 1.4% to Rs 547605 crore in April-July 2019-20. The fiscal deficit as a percentage of full year estimate stood at 77.8% in April-July 2019-20 compared with 86.5% touched in the corresponding period of last year.
Among index pivotals, HDFC (down 3.55%) and Reliance Industries (down 2.52%) tumbled.
IT majors Infosys (up 0.12%) and TCS (up 0.11%) advanced due to weak rupee. Infosys hit an intraday high of Rs 822.30 which is also a record high for the counter. While, TCS hit an intraday high of Rs 2296 which is a record high for the counter.
Shares of HDFC Asset Management Company (HDFC AMC) gained 3.57% to Rs 2649.75. The stock hit an intraday high of Rs 2697.35 which is also a record high for the counter.
PSU banks stocks slumped after the government unveiled mega merger of select state-run banks. In a press briefing on Friday, 30 August 2019, finance minister announced that Punjab National Bank (down 8.78%), Oriental Bank of Commerce (7.55%) and United Bank of India (0.29%) will be merged. The combined entity will be second largest PSU bank in India with business of Rs 17.94 lakh crore. It will have second largest banking network in India with 11,437 branches.
Union Bank of India (down 8.23%), Andhra Bank (up 1.01%) and Corporation Bank (down 2.65%) will be also merged. The entity will be fifth largest public sector bank with business of Rs 14.59 lakh crore.
Canara bank (down 10.77%) and Syndicate Bank (down 1.7%) will be merged. The entity will be fourth largest public sector bank with business of Rs 15.20 lakh crore.
Finance minister also announced that Indian Bank (down 12.59%) and Allahabad Bank (down 5.81%) will be merged. The entity will be seventh largest public sector bank with business of Rs 8.08 lakh crore.
However, IDBI Bank surged 7.66% to Rs 28.80 after the cabinet approved a plan to infuse over Rs 9000 crore in the lender.
The S&P BSE Bankex was down 2.5% at 176.87.
Mahindra & Mahindra (M&M) fell 2.66%. M&M announced its total auto sales fell 25% to 36,085 units in August 2019 over August 2018. M&M's Farm Equipment Sector (FES) announced its total tractor sales fell 17% to 14,817 units in August 2019 over August 2018.
The company further announced that it has signed a share subscription and Shareholder Agreement for subscribing upto 55% of the equity share capital of Meru Travel Solutions in tranches. Meru was one of the first radio taxi operators in the ride hail segment.
Maruti Suzuki India fell 1.22% after total sales fell 32.7% to 1.06 lakh units in August 2019 over August 2018.
Tata Motors dropped 3.64% as sales in the domestic & international market, stood at 32,343 vehicles in August 2019 compared to 62,688 units during August 2018.
Eicher Motors was down 2.87% to Rs 15928.95. VE Commercial Vehicles, an unlisted subsidiary of Eicher Motors, reported 41.7% decline in total sales to 3538 units in August 2019 over August 2018. Royal Enfield, the two-wheeler division of Eicher Motors, reported 24% decline in total sales to 52,904 units in August 2019 over August 2018.
Bajaj Auto was down 0.93% to Rs 2783. The company's total sales fell 5% to 381,530 units in August 2019 over August 2018.
Hero Motocorp was down 0.5% at Rs 2598. The company's total sales fell 20.68% to 5,43,406 units in August 2019 over August 2018.
Commercial vehicle manufacturer Ashok Leyland gained 0.85% after the company's total vehicle sales declined 47% to 9231 units in the month of August 2019 as compared to August 2018.
The S&P BSE Auto was down 1.64% at 15,509.47
State owned coal producing major Coal India declined 2.25% after reporting production and offtake for the month of August. Coal production declined 10.3% to 34.77 million tonne in August 2019 as compared to 38.78 million tonne in August 2018. The offtake declined by 10.4% to 40.47 million tonne in August 2019 as compared to 45.15 million tonne in August 2018.
L&T shed 2.82%. L&T said that the Transportation Infrastructure and Buildings & Factories businesses of L&T Construction have secured a project from the Navi Mumbai International Airport Private (NMIAPL) for the Engineering, Procurement and Construction of the greenfield Navi Mumbai International Airport at Navi Mumbai.
Tata Steel fell 3.73% to Rs 332.1 after the company informed that its European subsidiary has announced the outcome of a sales process for non-core business units. One of the five non-core businesses was Cogent Electrical Steels which comprised of Orb Electrical Steels, in Newport, South Wales, Cogent Power Inc, in Burlington, Canada and Surahammars Bruks AB, in Surahammar, Sweden. Tata Steel said that it has signed a sales and purchase agreement for Cogent Power Inc (CPI), with Japanese steel giant JFE Shoji Trade Corporation. Furthermore, the company said that it has decided to retain Surahammars Bruks AB, which makes advanced steels for electric vehicles. However, despite exploring all options, the company has been unable to find a way forward for Orb Electrical Steels and has, hence, proposed to close the site.
Overseas, European shares were trading lower on Tuesday, with British opposition lawmakers bidding to seize control of the House of Commons and stop the UK leaving the European Union without a deal on October 31.
British Prime Minister Boris Johnson indicated he could call an election to stymie lawmakers' efforts to avert a no-deal Brexit. Sterling broke below $1.20 on Tuesday amid Britain's political uncertainty, sliding as low as $1.1978 to reach its lowest point against the greenback since the October 2016 flash crash.
Asian markets closed on a mixed note. The US-China trade tensions continue to rise after China lodged a complaint against the United States at the World Trade Organization over US import duties.
US stock exchanges were closed on Monday for Labor Day holiday. US stocks ended with a lackluster session on Friday as investors were cautious ahead of a holiday weekend in which a fresh round of US tariffs on Chinese imports were due to be levied. US President Donald Trump said the sides would still meet for talks later this month. Trump said his goal was to reduce US reliance on China and he again urged American companies to find alternate suppliers outside China.
The United States began imposing 15% tariffs on a variety of Chinese goods on Sunday - including footwear, smart watches and flat-panel televisions - as China began imposing new duties on US crude, the latest escalation in a bruising trade war.
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