The market ended steeply lower amid broad-based selling pressure. The Nifty closed below 11,450 level for the first time since 17 May 2019. The market shrugged off positive global cues. Domestic shares came under selling pressure after the government did not offer any respite to foreign investors registered as trusts from the proposed super-rich tax.
The Nifty slipped below its 100-day moving average (DMA) placed at 11,567. The other key level to watch for the Nifty is 11,125, which is 200-DMA.
The barometer index, the S&P BSE Sensex, fell 560.45 points or 1.44% to 38,337.01, as per the provisional closing data. The Nifty 50 index fell 177.65 points or 1.53% to 11,419.25, as per the provisional closing data.
The S&P BSE Mid-Cap index was down 1.99%. The S&P BSE Small-Cap index was down 1.83%.
The market breadth was weak. On the BSE, 667 shares rose and 1874 shares fell. A total of 130 shares were unchanged.
Index heavyweight TCS rose 0.71%. HDFC (down 1.88%) and HDFC Bank (down 1.26%) declined.
NTPC (up 2.52%), Coal India (up 1.34%) and Oil and Natural Gas Corporation (up 0.91%) were major gainers.
Bajaj Finance (down 3.77%), Bajaj Finserv (down 3.48%) and Indiabulls Housing Finance (down 3.47%) were major losers.
Index major Reliance Industries was down 1.39%, ahead of its Q1 June 2019 result today.
Media stocks witnessed selloff. Dish TV India (down 7.03%), Eros International Media (down 4.95%), TV18 Broadcast (down 3.74%), Siti Networks (down 2.9%), New Delhi Televison (down 2.34%), Zee Entertainment Enterprises (down 2.28%), Zee Media Corporation (down 2.17%), Sun TV Network (down 0.77%) and Network 18 Media Investments (down 0.22%) declined. Balaji Telefilms (up 1.05%) and TV Today Network (up 1.3%) gained.
Auto stocks witnessed selling. Mahindra and Mahindra (down 4.49%), TVS Motor Company (down 4.45%), Eicher Motors (down 4%), Hero MotoCorp (down 3.86%), Escorts (down 3.7%) Bajaj Auto (down 2.95%), Ashok Leyland (down 2.33%) and Maruti Suzuki India (down 1.93%) declined.
Tata Motors fell 3.45%. The auto major said that it has incorporated a wholly owned subsidiary company named Brabo Robotics and Automation with effect from 17 July 2019. Brabo Robotics and Automation is engaged in manufacture of machinery and equipment relating to factory automation and robotics. The announcement was made after market hours yesterday, 18 July 2019.
RBL Bank was down 13.77%. The bank's net profit increased 40.5% to Rs 267.05 crore on a 48.1% rise in total income to Rs 2,503.88 crore in Q1 June 2019 over Q1 June 2018. Gross NPA has increased from Rs 595.94 crore in Q1 June 2018 to Rs 789.21 crore in Q1 June 2019. Provision coverage ratio increased from 60.41% in Q1 June 2018 to 69.13% in Q1 June 2019.
Larsen & Toubro Infotech was down 3.96% after the company announced its Q1 June 2019 result after market hours yesterday, 18 July 2019. On a consolidated basis, L&T Infotech's net profit fell 6.1% to Rs 355.80 crore on a 0.04% fall in the net sales to Rs 2484.90 crore in Q1 June 2019 over Q4 March 2019.
Cyient was down 11.58% after the company announced its Q1 June 2019 result after market hours yesterday, 18 July 2019. On a consolidated basis, Cyient's net profit fell 49.57% to Rs 90.50 crore on a 6.35% fall in the net sales to Rs 1089 crore in Q1 June 2019 over Q4 March 2019.
Sasken Technologies was down 7.38% after the company announced its Q1 June 2019 result after market hours yesterday, 18 July 2019. On a consolidated basis, Sasken Technologies's net profit fell 15.56% to Rs 23.18 crore on a 0.65% fall in the net sales to Rs 134.66 crore in Q1 June 2019 over Q4 March 2019.
InterGlobe Aviation was up 0.92% ahead of its Q1 June 2019 result today. InterGlobe Aviation announced after market hours yesterday, 18 July 2019, that it has received a communication from the Ministry of Corporate Affairs (MCA) vide its letter dated 17 July 201 9, requiring the company to furnish certain information/explanations in relation to complaint dated 8 July 2019 received from Mr. Rakesh Gangwal, co-founder and director of the company. The company will respond to MCA within the prescribed period.
Finance minister Nirmala Sitharaman on Thursday declined to remove or relax the applicability of the new surcharge on the super rich on foreign portfolio investors (FPIs), but advised those staring at an increase in tax outflows to shift to the corporate structure where the Budget has not made any change in tax treatment.
Replying to a debate on the Finance Bill in the Parliament on 18 July, Finance Minister Nirmala Sitharaman dismissed the argument of the Opposition that the tax would lead to a flight of foreign portfolio investors (FPIs). "It will have an impact on FPIs registered as trusts. There is an option for FPIs to register as companies. If they are registered as companies, they don't have a problem with this new tax," Sitharaman said. She said a trust was treated as an individual entity and came under the tax.
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.
The Lok Sabha passed the Finance Bill by voice vote, completing the budget process for 2019-20 in the Lower House. It will now go to the Rajya Sabha. A money bill does not need Upper House approval.
Meanwhile, Asian Development Bank on 18 July 2019 lowered India's GDP growth forecast to 7% for the current year on the back of fiscal shortfall concerns. India is expected to grow by 7% in 2019 (FY20) and 7.2% in 2020 (FY21), slightly slower than projected in April because the fiscal 2018 outturn fell short, ADB said in its supplement to the Asian Development Outlook 2019. For the south Asian region, ADB said the outlook remains robust, with growth projected at 6.6% in 2019 and 6.7% in 2020.
In the commodities market, Brent crude for September 2019 settlement was up $1.1 at $63.03 a barrel. The contract fell $1.73 or 2.72% to settle at $61.93 a barrel in the previous trading session.
Oil prices bounce back after the US Navy shot down an Iranian drone in the Strait of Hormuz, a key checkpoint for global crude flows.
The International Energy Agency (IEA) does not expect oil prices to rise significantly because demand is slowing and there is a glut in global crude markets, IEA executive director was quoted by the media as saying. Electric vehicles are not expected to make a dent on crude demand in India and elsewhere, IEA's Fatih Birol said, adding that he expects India's oil demand to continue rising. The IEA is reducing its 2019 oil demand forecast due to a slowing global economy amid a US-China trade spat, and may cut it again if the global economy and especially China shows further weakness, Birol told the media on 18 July.
Overseas, Europe markets were trading higher while Asian markets closed on a positive note on Friday, as comments from US Federal Reserve official cemented expectations of a US interest rate cut later this month.
US stocks closed higher Thursday, after New York Federal Reserve President John Williams said the central bank's wisest strategy is to cut interest rates at the first sign of economic distress when interest rates are already low.
The Fed is widely expected to cut interest rates at the conclusion of its two-day July 30-31 policy meeting.
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