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Indian equity benchmarks slumped in today's trade and ended in red for fifth consecutive session

Jainam Research | 11 Aug, 2017  | Follow Author | Add to my Favourites 
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Post session - Quick Review

Indian equity benchmarks slumped in today’s trade and ended in red for fifth consecutive session, with NSE and Sensex ending at over 1 month closing lows, on account of geopolitical tensions. Reliance and SBI drag the Nifty index the most. Besides, caution ahead of IIP data for June due later in the day, too weighed on the sentiments. The equity benchmarks made a gap-down start and traded dreadfully in early deals as the sentiments were under pressure amid a persistent war of words between the US and North Korea. Geopolitical tension gained momentum after a North Korean army commander said, sound dialogue isn’t possible with President Donald Trump and only absolute force can work on him. Traders also took note that the Reserve Bank of India (RBI) would pay Rs 30,659 crore as dividend to the government,less than half the surplus it transferred the previous year. This would potentially impact the government’s fiscal math this financial year, which is under pressure due to state-run banks’ sluggish earnings growth. In the budget for fiscal year 2017-18, finance minister Arun Jaitley had pegged dividend income from RBI, public sector banks and financial institutions at Rs 74,901 crore.

Some selling also crept in on report that there were downside risks to India’s projected growth of 6.75-7.5 percent growth in 2017-18, the finance ministry’s Mid-Term Economic Survey said in a guarded forecast, indicating that multiple pain points continue to hinder growth in the broader economy amid an uncertain fiscal outlook. The second part of the Economic Survey for 2016-17, which besides giving an overview of India’s economy, was also critical about ad hoc state-sponsored farm loan write-offs to deal with rural distress. The fiscal outlook for 2017-18 still remains uncertain while deflationary impulses continue to weigh on the economy.The survey also said that farm loan waivers could cut overall demand in the economy by 0.7 percent. Separately, flows from foreign portfolio investors into India have slowed of late as rich valuations and delay in corporate earnings recovery have reduced their appetite for domestic stocks. According to data available with depository NSDL, after pouring over Rs 50,000 crore in equity markets during February-July, foreign portfolio investors have sold shares worth Rs 1,080 crore in August so far.

The BSE Sensex ended at 31222.75, down by 308.58 points or 0.98% after trading in a range of 31128.02 and 31379.20. There were 7 stocks advancing against 24 stocks declining on the index. (Provisional) The broader indices ended in red; the BSE Mid cap index was down by 0.08%, while Small cap index was down by 0.10%. (Provisional) The only gaining sectoral indices on the BSE were Consumer Durables up by 0.86% and Healthcare up by 0.29%, while Metal down by 3.24%, PSU down by 1.42%, Basic Materials down by 1.41%, Auto down by 1.33% and Energy down by 1.11% were the top losing indices on BSE. (Provisional) The top gainers on the Sensex were Dr. Reddy’s Lab up by 3.35%, Tata Motors - DVR up by 1.55%, Axis Bank up by 0.70%, Power Grid up by 0.67% and Lupin up by 0.60%.(Provisional) On the flip side, SBI down by 5.13%, Mahindra & Mahindra down by 2.91%, Reliance Industries down by 2.34%, Larsen & Toubro down by 2.33% and Sun Pharma down by 2.21% were the top losers. (Provisional) The CNX Nifty ended at 9712.95, down by 107.30 points or 1.09% after trading in a range of 9685.55 and 9771.65. There were 15 stocks advancing against 36 stocks declining on the index.(Provisional)

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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.

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