Indices end at 2-month low, Sensex sinks 560 pts, Nifty holds 11,400
19 July 2019
Benchmark indices ended at two-month low on July 19 after Finance Minister Nirmala Sitharaman dashed hope of a tweak in FPI surcharge. Continued asset quality concerns in Q1 also spooked markets.
The BSE Sensex was down 560.45 points or 1.44 percent at 38,337.01 and the Nifty50 plunged 177.60 points or 1.53 percent to 11,419.30. About three shares declined for every share rising on the BSE.
The broader markets also traded in line with benchmarks as the Nifty Midcap cracked 2.15 percent and Smallcap index declined 1.8 percent.
All sectoral indices ended in red, losing 1-3 percent. Nifty Bank lost 660 points.
Earnings Yet to be Announced today
Reliance Industries, L&T Finance Holdings, InterGlobe Aviation, L&T Technology Services, ICICI Lombard General Insurance Company, Bhageria Industries, Mahindra CIE Automotive, Indbank Merchant Banking Services and Tokyo Plast International will announce June quarter earnings later today.
Phillips Carbon Q1 Earnings
Consolidated net profit fell sharply by 31.6 percent to Rs 67 crore but revenue grew by 16.6 percent to Rs 911.5 crore in Q1.
At operating level, earnings before interest, tax, depreciation and amortisation (EBITDA) slipped 28 percent to Rs 113 crore and margin contracted sharply to 12.4 percent in Q1 from 20.1 percent in year-ago period.
Sensex Falls 500 pts:
Bears tightened their grip on Dalal Street with the Sensex falling 496.53 points or 1.28 percen to 38,400.93 and the Nifty50 declining 153.60 points or 1.32 percent to 11,443.30.
About more than three shares declined for every share rising on the BSE,
RBL Bank Q1 Performance
The bank reported earnings in line with street expectations with stable asset quality but provisions turned higher.
Profit in June quarter grew by 41 percent year-on-year to Rs 267 crore and net interest income increased 48 percent to Rs 817.3 crore with healthy loan growth of 35 percent YoY.
Reason For Sharp Correction in Equity Market - FM dashes hopes of a tweak in FPI surcharge
Foreign portfolio investors (FPis) should consider the option of structuring themselves as companies rather than trusts to avoid paying the increased surcharge announced in Budget 2019, Finance Minister Nirmala Sitharaman said, in a discussion on the Finance Bill in the Parliament on July 18.
FPIs registered as trusts will have to pay the new tax surcharge, Sitharaman said, dashing hopes the government may tweak relevant portions of the Finance Bill to ring-fence FPIs from the effects of the “super-rich” tax.
Foreign investors have pulled out more than Rs 5,000 crore from the cash segment of Indian equity markets so far in July.
Dabur Earnings Expectations
"We expect Dabur to post 3.7 percent YoY revenue growth fully led by 3 percent volume growth on a high base (Q1FY19 volume growth of 21 percent). Also, as 45-50 percent of its revenues are from rural regions, moderation in rural demand from erstwhile quarters would have an impact on its sales growth," ICICI Direct said.
International operations would witness slower growth of 2.3 percent YoY on account of underperformance of MENA region and currency fluctuation impact, said the brokerage which expects EBITDA margins to contract marginally by 19 bps to 18.4 percent on a low base. "PAT is expected to remain flat at Rs 333.3 crore"
CARE on Anti-Dumping Duty
The rating agency feels anti-dumping duty on coated flat products may slow down solar industry.
Solar capacity additions have been sluggish during FY2018-19 (refers to period 1 April to 31 March) on account of Goods and Services Tax (GST) implementation issues, imposition of safeguard duty on imported cells and modules, the agency said.
Solar capacity addition slowed down to 6.5 GW in FY2018-19 against 9.5 GW in FY2017-18. Capacity addition further slowed down to 1.35 GW during Q1FY2020.
CARE Ratings expects capacity addition to be in the range of 7.5 to 8.0 GW during FY2020 as a result of anti-dumping duty and dismal tender activity during FY2018-19.
Nifty Below 11,500 after 6 trading Sessions:
Benchmark indices continued to reel under selling pressure as all sectoral indices traded in red amid concerns over growth and earnings recovery.
The BSE Sensex fell 375.71 points to 38,521.75 and the Nifty50 slipped 115.90 points to 11,481.
The broader markets also fell in line with benchmark indices. About two shares declined for every share rising on the BSE.
Nifty Breaks 11,500:
The selling pressure extended in late morning deals following rising crude oil prices and worries over earnings recovery. The BSE Sensex was down 319.34 points at 38,578.12 and the Nifty50 fell 99.90 points to 11,497.
About three shares declined for every share rising on the BSE.
IEA on Crude Price
The International Energy Agency (IEA) doesn't expect oil prices to rise significantly because demand is slowing and there is a glut in global crude markets, its executive director said.
Electric vehicles are not expected to make a dent on crude demand in India and elsewhere, IEA's Fatih Birol also 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 Reuters on July 18.
RIL Q1 Earnings Expectations:
Reliance Industries, India's largest company by market capitalisation, will declare its June quarter earnings later today. The refining & petrochemical volumes, and Jio & retail businesses are expected to be strong and will drive revenue growth on a sequential basis for the company.
However, there could be some pressure on consolidated margin from Jio & petchem segments, which may impact profitability a bit in Q1 but standalone operating income is likely to see sequential increase on higher refining margin, crude throughput and petchem volumes, brokerages feel.
Sensex Falls 200 Pts:
Benchmark indices fell further in morning as all sectoral indices traded in red amid concerns over economic growth and earnings recovery.
The BSE Sensex was down 238.34 points at 38,659.12 and the Nifty50 fell 78 points to 11,518.90.
Rupee Remains Strong:
The rupee appreciated by 16 paise to 68.79 against the US dollar, as market participants pinned their hopes on aggressive interest cut by the US Federal Reserve later this month.
Forex traders said rupee along with most Asian currencies were trading in the positive territory following dovish comments from both New York Fed President John Williams and Vice Chair Richard Clarida.
The rupee opened strong at 68.78 at the interbank forex market then gained further ground to touch 68.74 per dollar, displaying gains of 23 paise over its last close. Source: PTI
Sensex Extends Losses:
Benchmark indices extended losses in morning with the Sensex falling 175.96 points to 38,721.50 and the Nifty50 declining 58.70 points to 11,538.20.
About two shares declined for every share rising on the BSE.
Nifty breaks 11,600:
Benchmark indices erased all openign gains with the Sensex falling 106.12 points to 38,791.34 and the Nifty50 declining 33.10 points to 11,563.80 as all sectoral indices traded in red.
About three shares declined for every two shares rising on the BSE.
Crude Rallies US Navy destroys Iranian drone:
Oil prices rose more than 2 percent today after the US Navy destroyed an Iranian drone in the Strait of Hormuz, a major chokepoint for global crude flows, again raising tensions in the Middle East.
Brent crude futures were up 2.02 percent at $63.18. They closed down 2.7 percent on Thursday, falling for a fourth day.
West Texas Intermediate crude futures firmed 1.52 percent, at 56.14. They fell 2.6 percent in the previous session.
The United States said on Thursday that a US Navy ship had “destroyed” an Iranian drone in the Strait of Hormuz after the aircraft threatened the vessel, but Iran said it had no information about losing a drone.
"Indian markets are expected to open in the green on the back of positive global cues. Going ahead, key monitorable for the markets include earnings traction and global news flows," ICICI Direct said.
Domestic markets ended lower tracking tepid global cues on July 18. US markets ended the volatile session flat amid optimism relating to expected rate cut by the Federal Reserve.
The Indian rupee opened strong at 68.75 against the US dollar, rising 20 paise compared to Thursday's close of 68.95 a dollar on hope of Federal Reserve's interest rate in upcoming policy meeting.
Benchmark indices were trading higher in pre-opening with the BSE Sensex rising 217.53 points to 39,114.99 and the Nifty50 climbing 36.90 points to 11,633.80.
CLSA Bullish on ACC
The global brokerage house maintained buy call on the stock and increased price target to Rs 2,050 from Rs 2,000 per share as EBITDA expanded to an 8-year high & in four digits in Q2.
CLSA raised its EPS forecasts by 3-4 percent. "Cement pricing, a key stock price driver, needs to be monitored," it said.
Japan's June Core Inflation Near Two-Year Low
Japan's core inflation slowed to its weakest in about two years in June, data showed, adding pressure on the Bank of Japan to deliver more stimulus to meet its 2 percent price target.
The core consumer price index, which includes oil products but excludes fresh food prices, rose 0.6 percent in June from a year earlier, matching with economists' median estimate.
The June reading was the weakest since July 2017 when the index climbed 0.5 percent and compared with a 0.8 percent gain in May. Source: Reuters.
Asian stocks gained and the dollar sagged after a top Federal Reserve official all but cemented expectations of a US interest rate cut later this month.
Japan's Nikkei, China's Shanghai Composite, Hong Kong's Hang Seng and South Korea's were trading 1-1.7 percent higher.
New York Fed President John Williams said on Thursday that policymakers need to add stimulus early to deal with too-low inflation when interest rates are near zero and cannot wait for economic disaster to unfold.
"Indian markets could open mildly higher following flat US markets on Thursday and positive Asian markets this morning. They could later run into resistance/ profit taking at higher levels. Technically, with the Nifty correcting sharply, the bears seem to have made a comeback. Further downsides are likely once the immediate support of 11,582 is broken. Any pullback rallies could find resistance at 11,677," Deepak Jasani, Head of Retail Research, HDFC Securities said.
According to him, PSU and Auto indices could underperform.