Published on 14/08/2020 5:16:06 PM | Source: LKP Securities Ltd

Markets end lower on late hour sell-off - LKP Securities

Posted in Market Outlook| #Market Outlook #LKP Securities Ltd

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Markets end lower on late hour sell-off

Indian equity benchmarks traded with a positive bias for most part of the day but selling activity which took place during late hour of trade mainly forced the markets to cut all of their gains and ended Friday’s session with losses of over a percent each, amid selling in Auto, Banking and Finance counters. The benchmarks opened higher and were trading in a narrow range, as traders took some support with the Union Health Ministry’s statement that the Covid-19 recovery rate has risen to 70.77 per cent on August 13 with the total number of patients recuperating from the disease reaching nearly 1.7 million, while the case fatality rate has further declined to 1.96 per cent. Sentiments remained positive with Finance Minister Nirmala Sitharaman’s statement that the faceless tax scrutiny assessment and appeal system would help ease compliance burden of taxpayers and increase fairness and objectivity in the tax system.

However, key indices wiped off morning gains and fell sharply in the late afternoon session, amid cooling off buying interest across sectors. Some cautiousness also came in with the data released by the National Statistics Office (NSO) showing that India's retail inflation as measured by the Consumer Price Index (CPI) increased to 6.93 percent in the month of July as food prices continued to soar due to disrupted supply chains. Though, markets managed to trim some losses in final minutes of trading, taking support from data showing that the wholesale price-based inflation declined 0.58 per cent in July, even as food items turned costlier. WPI inflation in June was at (-) 1.81 per cent, while for the month of May and April it was (-) 3.37 per cent and (-) 1.57 per cent respectively. However, fuel and power basket inflation fell 9.84 per cent in July, compared to 13.60 per cent in the previous month. Manufactured products, however, witnessed inflation of 0.51 per cent in July, as against 0.08 per cent in June.

On the global front, Asian markets ended mixed on Friday, as investors reacted to the stalled U.S. stimulus talks and a raft of economic data from China. Official data showed that China's industrial production grew 4.8 percent on a yearly basis in July, the same rate of growth as seen in June and weaker than the expected rise of 5.1 percent. Retail sales dropped 1.1 percent from last year, confounding expectations for an increase of 0.1 percent. During January to July period, fixed asset investment decreased 1.6 percent versus a 3.1 percent decrease in January to June. European markets were trading lower, as new quarantine rules in the U.K. raised uncertainty about the evolution of coronavirus pandemic. Meanwhile, Eurostat said that Eurozone economic output shrank 12.1 percent sequentially in the second quarter - matching the expectation of -12.1 reported in the first estimate.

Back home, on the sectoral front, telecom stocks were buzzing with private report stated that digital offerings represent a ‘growing area of investment’ for every telecom company, with Reliance Jio leading the way. While Jio is building or partnering for these offerings, it said Airtel and Vodafone Idea are largely going to opt for the partnership route. The report 'takeaways from Q1 results' on Indian telecom industry pointed out that the June quarter trends diverged across Average Revenue Per User (ARPU), subscriber and 4G ads. Aviation stocks were also in focus with civil aviation regulator - the Directorate General of Civil Aviation’s(DGCA) statement that a total of 2.1 million people travelled by air domestically in July this year, which is 82.3 per cent lower than the corresponding period last year.

Finally, the BSE Sensex fell 433.15 points or 1.13% to 37,877.34, while the CNX Nifty was down by 122.05 points or 1.08% to 11,178.40.

The BSE Sensex touched high and low of 38,540.57 and 37,654.92, respectively and there were 5 stocks advancing against 25 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 1.02%, while Small cap index was down by 0.61%.

The few gaining sectoral indices on the BSE were Metal up by 0.78%, Healthcare up by 0.75% and Consumer Durables up by 0.06%, while Auto down by 2.50%, Bankex down by 2.18%, Finance down by 1.88%, Consumer discretionary down by 1.41%, PSU down by 1.39% and Oil & Gas down by 1.39% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 2.04%, NTPC up by 1.38%, Tata Steel up by 1.26%, Titan Company up by 0.43% and Infosys up by 0.24%. On the flip side, Axis Bank down by 2.81%, SBI down by 2.68%, Mahindra & Mahindra down by 2.60%, Bajaj Finance down by 2.57% and ITC down by 2.48% were the top losers.

Meanwhile, Finance Minister Nirmala Sitharaman has said that the faceless tax scrutiny assessment and appeal system would help ease compliance burden of taxpayers and increase fairness and objectivity in the tax system. She noted that the government has launched the platform 'Transparent Taxation – Honoring the Honest' which provides for launch of faceless assessment and adoption of a taxpayer charter.

Sitharaman has stated that the Central Board of Direct Taxes (CBDT), which administers personal income tax and corporate tax, will also launch faceless appeals beginning September 25, as part of the process to reduce physical interface between tax officers and taxpayers.  She noted that today is a landmark day in the history of tax administration, and added that the vision of the government is to empower the taxpayers, to provide a transparent system and to honour the honest taxpayers.

The minister further said to realize this vision, the CBDT has given a framework and put in place a system in the form of this platform, a transparent efficient and accountable tax administration is what this platform brings in. It uses technology, data analytics, and also uses artificial intelligence. It eases compliance burden, it brings in fair objective and a just system, there shall not be any physical interface between the department and the tax payer and to an extent it shall bring in certainity of Information. She added that the Income Tax department has undertaken several reforms, including lowering corporate tax rate from 30 percent to 22 percent for existing manufacturing units.

The CNX Nifty traded in a range of 11,366.25 and 11,111.45 and there were 12 stocks advancing against 17 stocks declining, while 1 stock remains unchanged on the index.

The top gainers on Nifty were JSW Steel up by 2.57%, Coal India up by 2.33%, Sun Pharma up by 1.97%, Cipla up by 1.76% and NTPC up by 1.55%. On the flip side, Eicher Motors down by 7.15%, Tata Motors down by 4.80%, Mahindra & Mahindra down by 3.27%, Axis Bank down by 2.63% and Bajaj Finance down by 2.59% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 128.91 points or 2.08% to 6,056.71, France’s CAC fell 99.95 points or 1.98% to 4,942.43 and Germany’s DAX was down by 163.71 points or 1.26% to 12,830.00.

Asian markets ended mixed on Friday as disappointing economic data from China and uncertainty over an additional US stimulus package dented global economic recovery hopes. Japanese shares ended marginally higher as a weaker yen helped lift exporters. Chinese shares ended higher even as slower than expected rise in Chinese industrial production and a surprise fall in retail sales continue to point to weak recovery in the region. Data showed that China's industrial production grew 4.8 percent on a yearly basis in July, and against weaker than the expected rise of 5.1 percent. Retail sales dropped 1.1 percent from last year, confounding expectations for an increase of 0.1 percent.


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