Sensex ends at 12-month low on weak eco data, global cues

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Benchmark Indices crashed today, amid a sell-off in global stocks, after weaker than expected Q1 GDP data coupled with slower pace of core sector and factory growth raised worries about a pick up in the economy going forward.  Further, sales by foreign institutional investors also weighed on investor sentiment.

The S&P barometer BSE Sensex closed at 25,696 level, plummeting by 587 points or 2.2% while the CNX Nifty nosedived 185 points or 2.3%, to settle at 7,786 level.  

In the broader markets the scene is no different with BSE Midcap and Smallcap indices down 2% and 2.1%, respectively. The health of the market was extremely weak with 2,082 declines against 611 advances on the BSE.

Meanwhile, the prospects of a Fed rate hike in September on the back of robust US economic data has also dampened the sentiments of market participants.

MARKET OUTLOOK

According to Kunal Bothra, Head-Advisory, LKP Securties, “Today’s unexpected down move would now be the first prominent test of the last week bottom of 7660 odd spot levels. Though Nifty has managed to make a fresh low on closing basis, RSI is still at higher levels w.r.t to its previous week low.”

He further added, “Also, there is now a channel support emerging at current levels of 7750 odd on Nifty spot levels. We believe that if the index trades around these levels for the next few days, there could be chance of a short term bottom and a rally till 8050-8100 could be due on the indices, if the support holds.”

 

KEY ECONOMIC DATA

In key economic data released in the last two days, India’s gross domestic product (GDP) growth at 7% in the April-June quarter, which was lower than the 7.5% growth recorded in the preceding quarter, but remained higher than the 6.7% growth logged in the corresponding quarter last year.

On the other hand, the Nikkei Manufacturing PMI for India stood at 52.3 compared to the six-month high at 52.7 in July on the back of  slower than expected pick up in new orders and slower than expected pick up in output, data showed on Tuesday.

“PMI reading for the month of August dropped to 52.3 below the six month high of 52.7 seen in July. Importantly, the new orders index, new export orders index and the overall output index registered increases albeit at a slower pace than the previous month," said Rishi Shah, an economist with Deloitte.

"Within the three monitored market groups in output index, the consumer goods sector rose more than the capital and intermediate goods possibly showing that consumption demand could pick up in the coming months as benefits from lower inflation materialise. The latest print also shows that there was transmission of the decrease in input prices faced by the manufacturers to the output prices aiding the case for some more easing of the monetary policy,” shah adds.

The numbers came in a day after China’s manufacturing sector showed contraction at its fastest pace in three years. The official Purchasing Managers’ Index (PMI) fell to 49.7 in August from the previous month’s reading of 50, the first time since February, according to the data released on Monday.

RUPEE

The Indian rupee recovered 13 paise to quote at 66.36 against the greenback on the back of selling of the American currency.

CRUDE OIL

Crude oil prices fell in today’s trade in Asia since Chinese manufacturing data contracted. Crude Oil (NYmex) was quoting at $47.64 while Brent Crude was quoting at $52.48

SECTORS & STOCKS

All the sectoral indices ended in the negative zone with BSE Bankex leading the decline with 3.6% followed by BSE Metal index with a drop of 3.2%

Out of 30 stocks on the Sensex, 29 ended in red with only 1 stock up with marginal gains.

HDFC Bank cut on Monday its base or minimum lending rate by 35 basis points to 9.35%, effective Tuesday. The stock dipped nearly 3%

Axis Bank cut its deposit rates by up to 0.50 per cent across maturities. A cut in deposit rate is generally considered a precursor for reduction in lending rates. The stock dived 5%.

The weaker-than-expected GDP data affected the other banking stocks with ICICI Bank, SBI, HDFC all ending down between 2.5-3.5%

The capital goods pack witnessed selling pressure on the back of slower pace of manufacturing data. LT( 2.9%) and BHEL (4%) edged lower on the Sensex.

Metal stocks also saw a heavy sell-off as Chinese economic data has offset the commodity prices. Vedanta, Tata Steel, Hindalco, Jindal Steel, Coal India all ended with losses between 3-5.2% each.

Oil marketing companies ended lower after fuel retailers cut petrol and diesel prices by Rs.2 and Rs.0.50 per litre, respectively. Bharat Petroleum Corp fell 2.4%, Hindustan Petroleum Corp. Ltd slipped 3.3%,IOC dipped 2.3%.

Maruti sold a total of 1,17,864 vehicles in August, a growth of 6.4%. This included 1,06,781 units in the domestic market and 11,803 units were sold in the exports category. However, the stock ended 2.6% lower.

Mahindra & Mahindra reported 1.29% increase in total sales at 35,634 vehicles in August. However, the stock ended down by 3.7%

Among index heavyweights, Reliance Industries ended with 2% drop even though the government permitted Reliance Industries to sell up to 1.2 lakh tonnes of LPG produced at its plants to private cooking gas marketers.

The lone winner on the Sensex Sun pharma registered 0.3% gains following the successful completion of the acquisition of GSK's opiates manufacturing facilities in Australia.


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