Sensex ends down 418 points on weak global cues, Kashmir uncertainty

Closing bell

The equity benchmark BSE Sensex tanked over 418 points to close at 36,699.84 on Monday due to intense selling in banking, finance and metal stocks, amid weak global cues and political uncertainty over the Kashmir issue.

After cracking over 700 points in day trade, the 30-share index pared losses to close at 36,699.84, still down by 418.38 points, or 1.13 per cent. It hit a low of 36,416.79 and a high of 36,844.05.

The 50-share Nifty plunged by 134.75 points or 1.23 per cent to close at 10,862.60 points as 38 of its constituents declined. 

The government on Monday abolished Article 370 that gave special status to Jammu and Kashmir and moved a separate bill to bifurcate the state into two separate union territories of Jammu and Kashmir, and Ladakh, amid a massive Opposition uproar in the Rajya Sabha.

The rupee declined sharply by 90 paise to 70.50 in afternoon trade, following jitters in the global currency markets. The Chinese yuan slipped to 7.03 level against the US dollar, which investors consider as a key threshold, amid reports that Beijing was devaluing its currency to support exporters, and neutralise US President Donald Trump’s decision to impose fresh 10 per cent tariffs on $300 billion in Chinese goods.

Elsewhere in Asia, the Shanghai Composite Index, Hang Seng, Nikkei and Kospi declined on Monday, following the intensifying trade war between the US and China and a sharp fall in yuan.

The global oil benchmark Brent crude futures were trading 0.74 per cent lower at 61.43 per barrel. - PTI

Commodity-linked stocks fall as China woes hurt European stocks

The pan-European stocks benchmark rose 0.2 per cent. File Photo

European shares joined a China-driven global sell-off on Monday, dragged down heavily by commodity-linked stocks as anxiety over trade frictions with the US sent the country's yuan below 7 per dollar for the first time in a decade.

The pan-European STOXX 600 index fell 1.5 per cent, adding to a 2.5 per cent fall on Friday, its worst day so far in 2019, as traders dumped stock investments in favour of perceived safe-havens like government bonds. Click here to read in full the European markets report .

China's yuan goes through 7 to the dollar to an 11-year low

Yuan slumps past 7 per dollar for first time in over decade as trade war between China and US escalates.

China let its yuan weaken below 7 yuan per dollar on Monday, an 11-year low, as the escalation in the US-China trade war shook currency markets.

Fearful of the impact on global growth, investors dumped export-oriented Asian currencies and rushed into safe havens, with the Japanese yen surging to a seven-month high.

Chinese authorities, who had been expected to defend the psychologically important level of 7 per dollar, allowed the currency break through the floor to its lowest in the onshore market since the 2008 global financial crisis. Click here to read in full the global forex report .

Oil prices fall as trade tensions hit demand outlook

Oil prices fell on Monday amid renewed global economic growth concerns after US President Donald Trump vowed to escalate the trade war with China with more tariffs, which would likely limit fuel demand in the world's two biggest crude consumers.

Brent crude futures had dropped 92 cents, or 1.5 per cent, to $60.97 a barrel by 0640 GMT. US West Texas Intermediate (WTI) crude futures declined 73 cents, or 1.3 per cent, to $54.93 a barrel. Both crude benchmarks fell last week, with Brent down 2.5 per cent and US crude falling 1 per cent. Click here to read in full the oil markets report .

How the trade war took a toll on the rupee, stocks

The famous domino effect that is much talked about in financial markets, is once more obvious in today’s trades. The Sensex is down over 600 points, The Nifty has lost around 200 points, the rupee is below 70 and GOI 10-year bonds yields have moved higher. Click here to read in full the report on how the trade war hurt the rupee, stocks .

The BSE Sensex and the NSE Nifty were trading weak, but off their early lows in the afternoon session on Monday.

The Sensex was at 36,677, down 440 points or 1.19 per cent lower, while the Nifty was at 10,859, down 137 points or 1.25 per cent lower.

Bharti Airtel, TCS, Tech Mahindra, Bajaj Auto and HDFC were the top gainers in the Sensex pack, while YES Bank, Power Grid, Tata Motors, SBI and Reliance Industries were the laggards during the session.

According to agency reports, selling pressure in key frontline stocks amid weak global cues led to the sharp fall in the indices.

Market sentiment also improved after the Government moved a bill to propose bifurcation of Jammu and Kashmir, traders said.

The government on Monday moved a bill proposing bifurcation of the state of Jammu and Kashmir into two Union Territories -- Jammu and Kashmir division and Ladakh.

Making the announcement in the Rajya Sabha, Home Minister Amit Shah said the UT in Ladakh will have no legislature like Chandigarh, while the other UT of Jammu and Kashmir will have a legislature similar to Delhi and Puducherry.

The rupee was trading down by 77 paise at 70.37 against the American currency in afternoon trade.

Foreign institutional investors (FIIs) remained net sellers in the capital markets, pulling out Rs 2,888.06 crore on Friday, according to provisional data.  (with inputs from PTI)

Nifty call: Go long above 10,925 level, with fixed stop-loss

Tracking the bearish Asian markets, the Sensex and Nifty began the session with a gap-down opening and continued to trend down. The Nikkei 225 slumped 1.7 per cent to 20,720 and the Hang Seng index nose-dived 2.9 per cent to 26,129 in today's session. The rupee has also weakened against the dollar.

Although the Sensex and the Nifty are witnessing a minor corrective rally from their intra-day low, a decisive rally above the key resistance level of 36,800 and 10,900 respectively is required to strengthen the momentum.  Click here to read in full the Nifty call report .

Asia stocks at 6-month lows

File photo

Asian shares suffered their steepest daily drop in 10 months on Monday, as Sino-US trade friction sent the yuan slumping to a more than decade trough and stampeded investors into safe harbours including the yen, bonds and gold.

The panic is likely to spread to Europe and Wall Street with futures signalling sharp losses in their benchmark indices.

The pan-region Euro Stoxx 50 futures lost 1.1 per cent in Asian trades, while those of London's FTSE slipped over 1 per cent and futures for Germany's DAX were down 1.25 per cent. E-minis for the S&P 500 stumbled 1 per cent. Click here to read in full the Asian markets report .

Coffee Day Enterprises plunges to fresh low on delayed results

Shares of Coffee Day Enterprises Ltd fell by 9.95 per cent daily limit to a record low of Rs 89.55. The company on Friday said it will not consider financial results for the June quarter at its August 8 board meet due to “certain unavoidable circumstances”.

The company says it does not expect preparation of quarterly financial results to be completed by the stipulated time, plans to extend date of submission with the stock exchanges.

The company said in a separate statement that independent director Sulakshana Raghavan had resigned due to personal reasons.

The Coffee Day stock is down for the ninth straight session; it has lost 64.3 per cent this year up to last close. - Reuters

Andhra Bank turns around

Andhra Bank has returned to profit with a net profit of Rs 52 crore in the first quarter ended June 30, 2019, due to reduction in the provision for bad loans. In the comparable quarter of the previous year, it posted a net loss of Rs 540 crore.

Andhra Bank’s net interest income (NII) increased 13 per cent at Rs 1,651 crore as against Rs 1,460 crore in the year-ago period. Its total business increased 9.22 per cent, while total income, including treasury, grew by 6.77 per cent at 5,437 crore (Rs 5,092 crore).

There was some improvement in the bad assets ratio, as the gross non-performing assets (NPAs) stood at 16.44 per cent of gross advances as on June 30, compared with 16.69 per cent a year ago.

Sensex, Nifty recoup some losses

The benchmark indices, which sank over 1.5 per cent in the morning session on Monday, trimmed some of its losses by mid-session.

The Sensex was trading at 36,631, down 487 points or 1.31 per cent lower, while the Nifty was at 10,849, down 148 points or 1.35 per cent lower.

TCS, Infosys, Bajaj Auto, Tech Mahindra and HDFC were the top gainers in the Sensex pack. The laggards were YES Bank, which dropped over 6 per cent, followed by Tata Motors (down 5 per cent), Power Grid (4.25 per cent). SBI (4.13 per cent) and Reliance (3.82 per cent).

IT and technology sector shares were in positive territory, while power sector shares slipped 2.77 per cent, while realty was down 2.76 per cent. Utilities were down 2.83 per cent, followed by industrials (2.43 per cent), banking (2.39 per cent) and capital goods (2.27 per cent).

Gold hits six-year peak as trade, growth concerns spur demand

India gold prices reflect global upside ANDREA COMAS

Gold prices jumped 1 per cent to their highest level in more than six years on Monday, as the escalating trade war between the US and China along with global growth worries drove investors towards safe-haven assets.

Spot gold was up 0.8 per cent at $1,451.37 per ounce as of 0405 GMT, after hitting its highest since May 2013 at $1,455.26. US gold futures rose 0.5 per cent to $1,464.50. Click here to read in full the gold markets report .

DHFL hits over 2-month low

Shares of Dewan Housing Finance Corp Ltd (DHFL) fell as much as 10 per cent to Rs 42, its lowest since May 20.

Deloitte has quit as the auditor of cash-strapped DHFL, according to a news report. Earlier, DHFL had said it has submitted a restructuring plan to its core committee of creditors.

DHFL warned this month that its financial situation was grim and business had ground to a halt. DHFL and Deloitte did not immediately respond to requests for comment.

Shares of DHFL have skid 81.3 per cent this year. - Reuters

Andhra Bank shares rise after lender posts Q1 profit

Shares of Andhra Bank gained as much as 5.1 per cent to Rs 20.6 in the morning session on Monday.

The lender posted a June-quarter net profit of Rs 51.56 crore ($7.32 mln) against a loss of Rs 540 crore a year earlier, aided by reduced provisions and contingencies.

June-quarter provisions stood at Rs 1,041 crore, a decline of 39 per cent from the previous year. The stock PE of 12.09 was well above the sector average of 10.40.

Up to last close, the stock was down 33.3 per cent this year. - Reuters

Sensex, Nifty extend losses to over 1.5%

The Sensex and the Nifty extended their losses to over 1.5 per cent in the morning session on Monday. The Sensex plunged 606 points or 1.63 per cent to trade at 36,511. The Nifty dropped 192 points or 1.75 per cent to 10,805.

The top gainers on the Sensex were TCS, Infosys, Bharti Airtel, HDFC and Bajaj Auto. The laggards were led by YES Bank, which slipped over 6 per cent, Tata Motors (down over 5 per cent), SBI (4.38 per cent), Reliance (3.78 per cent) and Power Grid (3.28 per cent).

Among the sectoral indices, the energy index fell 3 per cent, followed by banking, industrials, utilities, capital goods, metal,  power and reality, all of which dropped over 2 per cent.

According to agency reports, foreign fund outflows amid negative global cues led to the sell-off in the domestic market. The Kashmir issue also spooked investor sentiment after the authorities stepped up security at vital installations and in sensitive areas, suspended mobile Internet services and either “arrested” or “detained” several leaders in fast-paced developments on Sunday night.

In the previous session, the 30-share BSE Sensex rose 99.90 points or 0.27 per cent to settle at 37,118.22. Similarly, the broader NSE Nifty gained 17.35 points or 0.16 per cent to end at 10,997.35.

On a net basis, foreign institutional investors sold equities worth Rs 2,888.06 crore, provisional data available with stock exchanges showed on Friday.

“FPIs withdrew more than they invested as the US-China trade war has started brewing again, which is not helping investor sentiments,” said Harsh Jain, COO at Groww.

Further, “the announcement of rate cuts by Fed in the US has evoked confused reactions and added to the uncertainty,” he added.

The Reserve Bank will hold its three-day policy meeting, beginning Monday (August 5). It is widely expected to cut the benchmark interest rate for the fourth time in a row to boost the economy at time when key indicators are pointing towards a slowdown, experts said.

Elsewhere in Asia, the Shanghai Composite Index, Hang Seng, Nikkei and Kospi were trading in the red in their respective early sessions, following the intensifying trade war between the US and China. Equities on Wall Street too ended on a negative note on Friday last week. 

Meanwhile, the rupee depreciated by 86 paise to 70.46 against the US dollar (intra-day). The global oil benchmark Brent crude futures were trading 1.18 per cent lower at 61.16 per barrel.

Oil prices drop as US-China tension fuels growth concerns

Oil prices fell on Monday amid concerns about weaker crude demand after US President Donald Trump said he would impose tariffs on more Chinese imports, potentially ramping up a trade war between the world's two largest economies.

Tensions in the Middle East offered some support to prices, with Iran seizing a tanker that it said was smuggling fuel. Click here to read in full the oil markets report .

Rupee skids 98 paise to 70.58 against $ in early trade

The rupee slumped 98 paise to 70.58 against the US dollar in opening trade on Monday, tracking the weak opening in the domestic equity market and unabated foreign fund outflows.

Forex traders said US-China trade related concerns weighed on the investor community and kept up the pressure on the Indian rupee. Click here to read in full the rupee report .

Asian stocks skid to 6-1/2-month lows as Sino-US trade row shakes markets

Asian shares slid to 6-1/2-month lows on Monday and the yuan plunged as a rapid escalation in the Sino-US trade war drove nervous investors to safe-havens such as the yen, bonds and gold. Click here to read in full the Asian markets report .

India Inc laid low by slowing demand, lack of pricing power

Earnings growth continues to be weak for India Inc in the quarter ended June 2019, though the optical improvement in earnings of banks is providing a heft to the overall numbers.

On first look, adjusted profit growth (year–on-year) for about 750 companies that have declared their results so far stands at a healthy 22.4 per cent for the April-June 2019 period. But a closer read reveals that this number has been majorly supported by the return to profitability of many banks such as State Bank of India, Punjab National Bank and ICICI Bank during the June 2019 quarter, as against losses recorded in the June 2018 quarter. Besides, the high growth in profits from a low base for some banks such as Axis Bank and the narrowing of losses at some others have propped up the numbers, though elevated slippages, huge bad loans, large stressed book and low recoveries remain a concern for many banks. Click here to read in full the report on India Inc laid low by slowing demand .

Commodity bourses get set for index futures

If you are a trader in the Indian stock markets, you would be spending more time trading the Bank Nifty and Nifty futures and options, than the time spent trading single-stock futures and options. Since index derivatives have higher volume, are less volatile with lower impact costs and are harder to manipulate, it is common to see many investors and traders turn to index derivatives.

The commodity market regulator, the Securities and Exchange Board of India’s decision to introduce trading based on commodity indices is therefore likely to change the trading pattern in commodity exchanges, imparting greater liquidity and attracting more participation. Click here to read in full the report on commodity bourses get set for index futures .

Borrowing to build a home? Pick a developer wisely

Buying a house can be both a happy and a stressful experience. We spend years collecting a down payment to be able to get a loan to afford a place where we would like to live.

We have been witness to a new phenomenon over the last few decades. Developers have been coming up with schemes where properties “under construction” are purchased. This could mean that the plot of land where the property is to be built has just been bought or some amount of construction has already started. This seemed to benefit all parties. Click here to read in full the report on picking a real estate developer wisely when buying a house .

Does renting out your house make sense?

The Budget, and the Model Tenancy Act that was released later, emphasise the need and role of renting to meet housing demand. But for owners, there are no compelling incentives in the current market situation to rent out their houses. Click here to read in full the report on whether renting out your house makes sense?

Benchmark indices down 1.5%

The Sensex and the Nifty plunged nearly 1.5 per cent in early session on Monday. The Sensex tanked 545 points or 1.47 per cent to trade at 36,589, while the Nifty dropped 157 points or 1.43 per cent to quote at 10,840.

On the Sensex, all the stocks with the exception of Infosys, TCS and HDFC were in the red. The shares of Infosys and TCS gained over 1 per cent each, while HDFC gained 0.28 per cent.

YES Bank dropped over 7 per cent, while Vedanta and Tata Motors were down over 5 per cent. Other major laggards in the Sensex pack were SBI, Power Grid, Tata Steel and ICICI Bank.

On the BSE index, the IT and technology sector indices were the only ones in the green. On the other hand, metal sector shares dropped over 3 per cent in the session, followed by energy (down 2.86 per cent), power (down 2.78 per cent), oil & gas (2.69 per cent), industrials (2.58 per cent), banking (2.59 per cent) and auto (2.54 per cent).

Behavioural biases to overcome in a bear market

The stock market is on a rather weak wicket and many investors would understandably be getting the jitters. In times like these, there is increased risk of giving in to emotions and taking wrong decisions that could hurt you financially. Here are some behavioural biases to watch out for and avoid. Click here to read in full the report on behavioural biases to overcome in a bear market .

Bg Story: How to pick the right equity ETF

Exchange traded funds were first introduced in India in 2001. Despite their low cost, simplicity and transparency, retail participation in ETFs has been low.

However, there has been increased interest among retail investors in recent times, thanks to the underperformance of the actively-managed large-cap equity funds against their respective benchmarks such as the Nifty 50 TRI and the Sensex 30 TRI. Click here to read in full the Big Story on how to pick the right equity ETF .

Opening bell

The benchmark indices, the BSE Sensex and the NSE NIfty, opened the session on a weak note. The Sensex was quoting at 36,842, down 276 points or 0.74 per cent lower than its Friday close. The Nifty was down 101 points or 0.92 per cent at 10,895.

Index Outlook: Corrective rally may be short-lived

The Sensex and the Nifty began the week on a muted note, owing to weak sentiment in the domestic market. The indices slumped further, taking cues from global markets, which reacted sharply after the Fed action last week. As expected, the Federal Reserve reduced rate by 25 basis points. But the Fed Chairman’s comment, indicating that there may not be further rate cuts, displeased markets.

Trump's new tariff threat dragged markets further; the Dow Jones was down by 2 per cent for the week.

In the ensuing week, the investors should tread with caution. All eyes are on the RBI’s upcoming monetary policy meeting. Click here to read in full the Index Outlook .

Weekly Trading Guide for the week beginning August 5, 2019

Resistances can cap the upside in SBI

SBI (₹308.45)

SBI plummeted 10 per cent last week. The sharp fall has dragged it well below the key support level of ₹328 (21-week moving average). The outlook is bearish. Immediate support is at ₹306 (200-day moving average). If SBI manages to sustain above this support this week, a corrective rally to ₹320 is possible. A break above ₹320 will see the upmove extending to ₹330. But a rise beyond ₹330 is unlikely as fresh selling is likely to emerge at higher levels and limit the upside. SBI is likely to resume its downtrend either from ₹320 or ₹330. Such a move will take the stock initially lower to ₹300 and ₹290. An eventual break below ₹290 will see the stock targeting ₹280 and ₹275. The region between ₹280 and ₹275 is a significant medium-term support which may halt the current fall. A bounce from there can take SBI higher to ₹300 and ₹320 again. But a break below ₹275 will increase the downside pressure. Such a break will increase the likelihood of the stock tumbling towards ₹250-245.

ITC hovers above a key support

ITC (₹264.6)

ITC was down 2 per cent last week. The 21-day moving average resistance at ₹271 continues to cap the upside. Immediate support is near the current levels at ₹263.5 (200-week moving average). If ITC manages to sustain above this support, a rally to ₹270-272 is possible. In such a scenario, the stock can remain range-bound between ₹263 and ₹272. ITC has to surpass ₹272 decisively to ease the downside pressure and see a relief rally to ₹275 or ₹278 in the near term. But such an upmove looks less likely as the bias continues to remain negative. As such, ITC is likely to break below ₹263 and fall initially to ₹257. A further break below ₹257 will increase the likelihood of the fall extending to ₹245 — a strong long-term support level. A fall below ₹245 looks less probable. A strong bounce from ₹245 may take the stock higher to ₹300 levels from a long-term perspective. Hence a fall to ₹245 will be a good opportunity for investors to buy the stock.

Near-term outlook is unclear for Infosys

Infosys (₹775.4)

Infosys declined below the key support level of ₹780 last week. The stock was down 1.5 per cent for the week. The near-term outlook continues to remain unclear. Infosys has been struggling to breach the psychological level of ₹800 over the last few weeks. A decisive close above ₹800 is needed for it to gain fresh bullish momentum. On the downside, key supports are at ₹765 and ₹755. Infosys can remain broadly sideways between ₹755 and ₹800 for some time. A breakout on either side of ₹755 or ₹800 will give a clear indication on the next direction of move. A strong break above ₹800 is needed to bring back the bullish sentiment. Such a break can trigger a fresh rally to ₹850 and ₹870 thereafter. On the other hand, if Infosys breaks the range below ₹755, it can come under renewed pressure. In such a scenario, the stock can initially test ₹740 on the downside. A further break below ₹740 will then increase the likelihood of the downmove extending to ₹715 or even ₹700.

RIL confirms trend reversal

RIL (₹1,184.2)

RIL extended its fall breaking below the psychological level of ₹1,200 last week. The stock tumbled over 5 per cent intra-week but managed to recover some of its loss and closed 2.5 per cent lower for the week. The sharp fall last week confirms the trend reversal. Cluster of resistances are poised between ₹1,220 and ₹1,250. These can cap the upside if RIL rises past ₹1,200 in the coming days. Fresh sellers are likely to come in, around the ₹1,220-1,250 region and drag the stock lower again. The outlook is bearish. RIL can test ₹1,130 on the downside. A bounce from ₹1,130 can take it up to ₹1,200 again. But a break below ₹1,130 will increase the likelihood of the fall extending to ₹1,100 in the coming weeks. A complex head and shoulder reversal pattern on the chart leaves the possibility high for the stock to test ₹1,050 on the downside, over the medium term. The price action in the coming weeks will need a close watch to gauge whether the current fall can halt around ₹1,100 or extend towards ₹1,050.

Tata Steel (₹409)

Downtrend is intact in Tata Steel

Tata Steel tumbled 8 per cent last week. The stock is heading towards ₹400 as expected, but the pace of fall has been much faster than anticipated. The downtrend is getting intensified. Next significant support is at ₹390, which can be tested in the near term. If Tata Steel manages to bounce back from this support, a relief rally to ₹430 or even ₹445 is possible. But a rise beyond ₹445 is unlikely as fresh sellers are likely to emerge at higher levels and cap the upside. In such a scenario, Tata Steel can remain range-bound between ₹390 and ₹445. However, the downtrend is likely to remain intact. An eventual break below ₹390 will see the stock resuming its downtrend towards ₹360. From a long-term perspective the current downtrend, which had begun in 2018, may have the potential to drag Tata Steel lower to ₹250-230.