Key equity benchmarks declined for fifth straight trading session after the International Monetary Fund (IMF) cut its annual growth forecast for the country. Continous selling by foreign portfolio investors for the past few days also spoiled sentiment. Firm crude oil prices also raised concerns of higher inflation and fiscal slippage. The Nifty closed below 11,300 mark for the first time since 16 May 2019.
The Sensex fell 135.09 points or 0.36% to settle at 37,847.65. The index rose 120.10 points, or 0.32% at the day's high of 38,102.84. The index fell 274.33 points, or 0.72% at the day's low of 37,708.41.
The Nifty 50 index fell 59.75 points or 0.53% to settle at 11,271.30. The index rose 28.70 points, or 0.25% at the day's high of 11,359.75. The index fell 101.25 points, or 0.89% at the day's low of 11,229.80.
The Nifty 50 index has fallen 416.20 points, or 3.56%, in five sessions from its recent closing high of 11,687.50 on 17 July 2019.
The Nifty is trading way below its 100-day simple moving average (DMA) placed at 11,581.93. The other key level to watch for the Nifty is 11,130.55, which is 200-DMA.
Broader markets tumbled. The S&P BSE Mid-Cap index fell 1.48%. The S&P BSE Small-Cap index fell 1.23%.
The market breadth was weak. On the BSE, 831 shares rose and 1627 shares fell. A total of 151 shares were unchanged.
Among the sectoral indices on the BSE, the S&P BSE FMCG index (up 0.17%) outperformed the S&P BSE Sensex. Meanwhile, the S&P BSE Metal index (down 2.48%), the S&P BSE Auto index (down 1.98%) and the S&P BSE Basic Materials index (down 1.91%) underperformed the S&P BSE Sensex.
IMF further cut its annual growth forecast for India. India's economy is set to grow at 7% in 2019, picking up to 7.2% in 2020. The downward revision of 0.3 percentage point for both years reflects a weaker-than-expected outlook for domestic demand, IMF said on Tuesday in its update to the World Economic Outlook (WEO).
IMF added that the global economy is expected to expand by 3.2% in 2019, down 0.1 percentage points from its April forecast and 0.3 percentage points below the estimate at the start of the year. The IMF cited concerns about the impact of the intensification of trade tensions and the weakening economic outlook. Second, market participants have been grappling with the implications of these tensions for the monetary policy outlook. Global technology supply chains were threatened by the prospect of US sanctions, Brexit-related uncertainty continued, and rising geopolitical tensions roiled energy prices.
Among index heavyweights Reliance Industries (down 1.10%) and Tata Consultancy Services (down 0.72%) declined. HDFC Bank rose 0.70% to Rs 2279.80.
Housing finance major HDFC rose 1.84% to Rs 2177. The housing finance major announced after market hours yesterday, 23 July 2019, that it received several queries regarding the circular issued by the National Housing Bank (NHB) on 19 July 2019 to all registered housing finance companies on disbursement of housing loan to individuals linked to the stages of construction. As a policy, in the case of under-construction properties, HDFC disburses loans to individuals based on the stage of construction. HDFC has adequate mechanisms for monitoring the progress of construction of housing projects and customer consent is obtained prior to the release of each stage of payment to the developer. Further, the company's exposure to housing loan products involving subvention schemes offered by developers is negligible, at less than 2% of the individual loans. As a precautionary measure, in such cases, the amount due from the developer is collected upfront by the corporation. HDFC is of the view that there is unlikely to be any significant impact on growth of its individual business due to the above-mentioned circular, the company added.
Asian Paints rose 3.42% to Rs 1477.15 after the company's consolidated net profit rose 17.7% to Rs 655.44 crore on 16.6% increase in revenue from operations to Rs 5130.63 crore in Q1 June 2019 over Q1 June 2018.
On a standalone basis, the paint maker's net profit rose 20.5% to Rs 652.45 crore on 18.2% increase in revenue from operations to Rs 4380.16 crore in Q1 June 2019 over Q1 June 2018. The result was announced during trading hours today, 24 July 2019.
Larsen & Toubro fell 1.62% to Rs 1387.15. L&T said that consolidated profit after tax (PAT) from continuing operations rose 20.5% to Rs 1361 crore on 10% growth in consolidated gross revenue to Rs 29636 crore in Q1 June 2019 over Q1 June 2018. The result was announced after trading hours yesterday, 23 July 2019. L&T won new orders worth Rs 38700 crore at the group level in Q1 June 2019, registering a growth of 11%. Consolidated order book of the group stood at Rs 294014 crore as at 30 June 2019, with international order book constituting 21% of the total order book. L&T said that order wins in infrastructure and power segments were the major contributors to the order inflow during the quarter. While orders from the central and state governments were affected during the general elections, strong PSU and private sector orders enabled growth for the quarter. In its outlook, L&T said that the company looks forward to a period of increased investment momentum and continued growth. Initiatives towards improved productivity, cost efficiencies derived from leveraging digital technology, capacity utilization and capability enhancement are expected to help the company maximize its shareholder returns (RoE) on a sustainable basis.
Hindustan Unilever (HUL) rose 2.06% to Rs 1728. HUL's consolidated net profit rose 11.27% to Rs 1,787.23 crore on 6.04% increase in net sales to Rs 10197 crore in Q1 June 2019 over Q1 June 2018. The result came after trading hours yesterday, 23 July 2019. HUL said that domestic consumer growth was 7% with underlying volume growth at 5%. It reported an EBITDA improvement of 250 bps with a reported EBITDA growth of 18%. Margin expansion was driven by improved mix, leverage in operating and advertising spends and the firm's savings agenda. Earnings before interest, tax, depreciation and amortization (EBITDA) at Rs 2647 crore, was up by 18% (13% on comparable basis after adjusting for accounting impact of IndAS 116).
Zee Entertainment Enterprises jumped 5.07% to Rs 379.25. The company's consolidated net profit rose 62.56% to Rs 530.57 crore on 15.96% increase in total income to Rs 2114.33 crore in Q1 June 2019 over Q1 June 2018. The result was announced after trading hours yesterday, 23 July 2019. Consolidated EBITDA grew by 16.6% to Rs. 659.80 crore in Q1 June 2019 over Q1 June 2018. EBITDA margin stood at 32.9%. Zee Entertainment Enterprises said that the growth was driven by the strong performance of domestic broadcast and digital businesses.
Consolidated advertising revenue for the quarter was Rs 1186.7 crore, growth of 3.6% YoY. Domestic advertising revenue grew by 4.2% YoY to Rs 1132.2 crore. International advertising revenue for the quarter was Rs 54.5 crore. Consolidated subscription revenue for the quarter was Rs 708.8 crore, growth of 36.7% YoY. Domestic subscription revenue grew by 46.7% YoY to Rs 624 crore. International subscription revenue was Rs. 84.8 crore.
Jubilant Foodworks tumbled 5.92% after muted Q1 results. The company's net profit rose 0.13% to Rs 74.77 crore on 9.94% increase in revenue from operations to Rs 940.08 crore in Q1 June 2019 over Q1 June 2018. Jubilant FoodWorks reported same store sales growth (SSG) of 4.1% in Domino's Pizza, on a strong base of 25.9% last year. SSG refers to the year-over-year growth in sales of restaurants opened before previous financial year.
Auto shares tumbled. Eicher Motors (down 4.31%), Escorts (down 3.65%), Ashok Leyland (down 3.33%), Tata Motors (down 3.17%), TVS Motor Company (down 2.82%), Hero MotoCorp (down 2.63%), Mahindra & Mahindra (down 2.07%), Maruti Suzuki India (down 1.85%) and Bajaj Auto (down 0.1%), edged lower.
Bosch was down 2.45% to Rs 14650. The company announced that in order to adjust its production to meet the demand for products and to avoid unnecessary buildup of inventory, it has proposed to suspend all the manufacturing operations in its plant situated at Naganathapura in Karnataka for two days, i.e. 27 July 2019 and 29 July 2019.
Metal shares tumbled. Jindal Steel & Power (down 7.8%), Steel Authority of India (down 5.22%), JSW Steel (down 3.61%), Hindustan Copper (down 3.13%), Tata Steel (down 3.06%), Hindalco Industries (down 2.73%), NMDC (down 2.19%), Hindustan Zinc (down 2.04%), Vedanta (down 1.79%) and National Aluminium Company (down 1.19%), edged lower.
Torrent Pharmaceuticals jumped 8.45% after the company's consolidated net profit rose 32.5% to Rs 216 crore on 7.7% increase in net sales to Rs 1976 crore in Q1 June 2019 over Q1 June 2018. Torrent Pharmaceuticals said that its revenues from India business rose by 9% to Rs 907 crore in Q1 June 2019 over Q1 June 2018. Its revenues from US business rose by 13% to Rs 376 crore in the same period. EBITDA grew by 11% to Rs 558 crore in Q1 June 2019 over Q1 June 2018. and EBITDA margin stood at 28%.
Mahindra & Mahindra Financial Services slumped 10.52% after the company's consolidated net profit fell 66.3% to Rs 108.46 crore on a 23.16% rise in total income to Rs 2,851.70 crore in Q1 June 2019 over Q1 June 2018.
Bajaj Electricals fell 4.46% after the company received a credit rating downgrade from ICRA. The company has announced that ICRA has downgraded its long-term line of credit rating from [ICRA]A+ to [ICRA]A. Ratings on short-term line of credit and commercial paper were downgraded from [ICRA]A1+ to [ICRA]A1. Ratings on non-convertible debentures (NCDs) were downgraded from [ICRA]A+ to [ICRA]A. The rating agency considered the increasing leveraging level and the subsequent weakening of debt coverage metrics of the company as the primary reasons for its downgrade of the credit rating of the company.
Media reports suggested that Finance Minister Nirmala Sitharaman is likely to bring down the corporate tax rate to 25% for all companies. In her maiden budget, FM Sitharaman chose to reduce the corporate tax rate to 25% from 30% for companies with a turnover of up to Rs 400 crore, mentioning that this would cover 99.3% of enterprises.
In her reply to the discussion on the appropriation and finance bills in the Rajya Sabha, Sitharaman said: We brought it down in order that now 99.3% of all industries are covered by the 25% rate. Therefore, hardly any are left behind We shall cover them sooner.
In the foreign exchange market, the rupee edged higher against the dollar. The partially convertible rupee was hovering at 69.0125, compared with its close of 68.9475 during the previous trading session.
In the commodities market, Brent crude for September 2019 settlement fell 3 cents at $63.80 a barrel. The contract rose 57 cents or 0.9% to settle at $63.83 a barrel in the previous trading session as rising tensions with Iran fuelled concerns about supply disruptions and as U.S. inventory data showed a much bigger than expected drop in crude stockpiles.
Overseas, most European markets were trading lower. Asian stocks closed on a mixed note on Wednesday following developments on the U.S.-China trade front. Market focus is largely attuned to global central banks, amid expectations that the ECB and the Federal Reserve could soon cut interest rates. The ECB is seen cutting rates by 10 basis points on Thursday, with the U.S. central bank expected to lower rates by 25 basis points at the end of the month.
In Europe, Boris Johnson was named the new British prime minister and his tenure, set to begin on Wednesday will have a huge impact across global markets and the geopolitical landscape. All eyes will be on his Brexit strategy and the composition of his cabinet.
US stocks closed higher Tuesday on upbeat quarterly reports from Coca-Cola and United Technologies and on optimism the United States would resolve its trade conflict with China.
Talks between China and the U.S. would start Monday as U.S. negotiators headed to China, as per reports. The U.S. delegation will be led by Trade Representative Robert Lighthizer and will be in China through Wednesday. The world's two largest economies have been locked in a trade war that has seen 25% tariffs imposed by President Donald Trump on $200 billion of Chinese products. China has retaliated with their own tariffs prompting fears of a global economic slowdown.
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