Indian stock markets ended on a negative note on Monday following the muted to subdued activity in Asian stock markets and the unhappiness among investors after the WPI based inflation escalated to over 4-year high on the back of rising food and fuel prices. The key equity indices extended losses after opening marginally higher and closed in negative territory. BSE Sensex lost 217.86 points or 0.6% to end at 36,323.77 while NSE Nifty edged down 82.05 points or 0.74% to settle below 11,000 at 10,936.85. Notably, more than 2,000 stocks on BSE concluded in red on Monday out of the total 2,777 traded scrips on Monday.
“Nifty posts a bearish belt hold as it corrects on the back of negative Asian market cues and domestic sentiment on the back of subdued economic data. The benchmark index wasn’t able to hold on to crucial levels of 11K as profit booking was seen due to negative global cues. The participation from small-cap and midcap seems to be sideways while other indices are seeing the only contribution by the heavyweights. This is a point of concern in this uptrend,” said Mustafa Nadeem, CEO, Epic Research.
For now, we believe the range would be very much between 11,100 – 10,800. A breach of this will give further direction. Though we maintain buy on dips in index at lower levels. 10800 is the line in the sand for bulls,” Mustafa Nadeem added.
“There is significant upside risk to WPI inflation emanating from global commodity inflation and INR depreciation. Margins pressure for the manufacturing sector may re-emerge in FY19 till we do not witness any substantial improvement in demand conditions. Also, increasing trade restrictions and tariff hikes can induce inflationary pressure. We believe, with sharp rise in both CPI and WPI inflation RBI is likely to tighten by 25 policy in Aug’18 policy. Overall, we expect more than 50 bps hike in FY19,” said Dhananjay Sinha, Head of Research, Economist & Strategist, Emkay Global Financial Services.
“Overall we continue to maintain a bearish outlook on the markets even though front-line indices are at all-time highs, we would recommend holding short positions at the current juncture,” said Nikhil Kamath, Co-Founder, Zerodha.
10-point stock market wrap
- Shares of Tata Steel, Tata Motors, Sun Pharma, Bharti Airtel, ICICI Bank, Adani Ports, Coal India, Vedanta, SBI, RIL, Asian Paints, Bajaj Auto, Hero MotoCorp and L&T were the major losers among Sensex constituents while NTPC, Infosys, HDFC, Wipro, HUL and Yes Bank were the only notable gainers.
- All the sectoral indices of NSE ended in negative territory barring Nifty IT index with Nifty Pharma, Nifty Metal, Nifty Realty, Nifty PSU Bank, Nifty Media, Nifty Auto falling 1-4% while Nifty Bank shed 0.95% to end at 26,679.8. The broader indices of NSE broke more than Nifty 50 with Nifty Next 50, Nifty 200, Nifty 500, Nifty Midcap50, Nifty Midcap 100, Nifty Smallcap 100 losing 1-3%.
- On BSE, as many as 2,052 stocks ended down, 546 gained, 179 remain unchanged while 377 shares hit 52-week lows out of the total 2,777 scrips traded. The volatility indicator on NSE, India Vix shot up by 5.48% to 12.9775.
- Shares of IDBI Bank fell 7% to a day’s low of Rs 53.3 before closing down 1.48% at Rs 56.45. The LIC board has given the approval to LIC to acquire IDBI Bank by raising its stake to 51% via preferential shares, PTI reported citing S C Garg, Economic Affairs Secretary.
- The global credit rating agency Fitch Ratings said that it is expecting the net debt levels of IOC (Indian Oil Corporation) to rise due to its large capital expenditure and investment plans in the medium term and affirmed ‘BBB-‘ rating. IOC shares ended down 0.91% at Rs 157.65 on NSE.
- Shares of heavyweight companies such as RIL, ICICI Bank, Tata Steel, Sun Pharma, Tata Motors, SBI, HDFC Bank, L&T and Bharti Airtel were the major contributors in the Sensex plunge today. The stocks of RIL and ICICI Bank alone washed off about 124 from Sensex.
- Shares of Delhi-based jewellery maker PC Jeweller emerged as the top losers among ‘A’ group on BSE after the company withdrew its share buyback offer citing “non-receipt of the requisite NOC from the company’s bankers”. The stock of PC Jeweller tumbled 30% to a 4-year low of Rs 83.95 before closing 25.81% lower at Rs 88.95 on NSE.
- Other than PC Jeweller, shares of Den Networks (down 13.45%), DCB Bank (down 10%), NCC (down 9.93%), Dr Reddy’s (down 9.85%), JP Associates (down 9.03%), Welspun Corp (down 8.77%), Reliance Capital (down 8.39%), RTN Power (down 8.26%), Jet Airways (down 7.79%), Hathaway (down 7.47%), RCom (down 7.46%), Chennai Petroleum (down 7%) and Tata Steel (down 6.96%) were the major laggards among ‘A’ group.
- Among the Asian stock markets, most of the benchmarks ended down with Chinese shares hitting hard after China’s economic growth slowed to 6.7% in the second quarter of 2018. “Attention was focused on the latest back-and-forth between China and the US in a tariffs dispute, and on President Donald Trump’s summit with Russian President Vladimir Putin, planned for later in the day, Associated Press said in a report.
- The WPI (Wholesale Price Index) based inflation surged to a four-and-half-year high of 5.77% in June from 4.43% in May 2018 and 0.9% in June 2017. The sharp uptick in the WPI inflation was largely due to ballooning vegetable and fuel prices.