Sensex slumps 660 pts; bank stocks drag

July 14,2020

The domestic equity benchmark slumped on Tuesday, dragged by banks shares. Negative global cues and rising global coronavirus cases dented investors' sentiment.

As per provisional closing, the barometer S&P BSE Sensex tumbled 660.63 points or 1.80% at 36,033.06. The Nifty 50 index slumped 195.35 points or 1.81% at 10,607.35.

In the broader market, the S&P BSE Mid-Cap index slipped 0.95% while the S&P BSE Small-Cap index lost 0.93%.

Sellers outpaced buyers. On the BSE, 831 shares rose and 1852 shares fell. A total of 122 shares were unchanged. In Nifty 50 index, 3 stocks advanced while 47 stocks declined.

COVID-19 Update:

India reported 3,11,565 active cases of COVID-19 infection and 23,727 deaths, according to the data from the Ministry of Health and Family Welfare, Government of India. Total coronavirus cases worldwide stood at 13,103,290 with 573,042 deaths so far, according to data from Johns Hopkins University.

Economy:

India's inflation based on wholesale price index (WPI) contracted by 1.81% (provisional) in June 2020 (over June 2019) compared with 2.02% during the corresponding month of the previous year. WPI contracted by 3.21% in May 2020.

The all-India general CPI inflation declined to 6.09% in June 2020, compared with 6.27% in May 2020. The corresponding provisional inflation rate for rural area was 6.20% and urban area 5.91% in June 2020 as against 6.18% and 6.43% in May 2020. The core CPI inflation eased to 4.87% in June 2020 compared with 4.93% in May 2020. The cumulative CPI inflation has moved up to 6.52% in June-May FY2020 compared with 3.07% in June-May FY2019.

The retail inflation has surpassed the Reserve Bank of India's (RBI) upper limit of 6%. The government has mandated the Indian central bank to keep inflation within the range of 4% with a margin of 2% on either side.

The growth in the domestic retail inflation was mainly due to a rise in prices of pulses and products (up 16.68% YoY), followed by meat and fish (up 16.22% YoY), oils and fats (12.27% YoY) and spices (up 11.74% YoY).

Buzzing Index:

The Nifty Bank index slumped 3.10% to 21,405.25, extending losses for third day. The index has fallen 6.55% in three sessions while the benchmark Nifty 50 index has declined 1.87% during the same period.

While the index has managed to trade above its 50-day simple moving average (SMA) placed at 20373.63, it is still below its 100-day and 200-day SMA placed at 21793.42 and 26301.07, respectively.

The weekly and the monthly option chain for the Nifty Bank index suggests a trading range of 21000-23000 for the index.

Among the index constituents, RBL Bank (down 7.08%), IndusInd Bank (down 5.34%), Axis Bank (down 5.06%), Bandhan Bank (down 3.81%), IDFC First Bank (down 3.72%), Federal Bank (down 3.39%), SBI (down 3.27%), Kotak Mahindra Bank (down 2.84%), Bank Of Baroda (down 2.87%), Punjab National Bank (down 2.75%), ICICI Bank (down 2.22%) and HDFC Bank (down 1.88%) declined.

Stocks in Spotlight :

Housing Development Finance Corporation (HDFC) fell 2.91% to Rs 1792.75. The housing finance major on Monday (13 July) said it is planning to raise up to Rs 45,000 crore by issuing debt securities, and will seek approval of shareholders in its upcoming AGM later this month.

The board of directors of HDFC will meet on 30 July to announce the Q1 June 2020 results. The 43rd annual general meeting (AGM) of the corporation is scheduled to be held later on the same day (30 July 2020).

5paisa Capital hit an upper circuit of 5% at Rs 324.60 after it reported consolidated net profit of Rs 2.81 crore in Q1 June 2020 as compared to net loss of Rs 0.52 crore in Q1 June 2019. Total income rose 85.17% to Rs 42.44 crore. The company said that it has maintained its swift pace of client acquisitions with over 160,000 acquisitions in the quarter, crossing 700,000 customers in total.

BF Utilities hit an upper circuit of 10% at Rs 220.95 after billionaire investor and DMart founder, Radhakishan Shivkishan Damani, acquired 1.30% stake in the Kalyani Group-owned company during April-June 2020 quarter.

Meanwhile, BF Utilities on Monday (13 July) announced that it has suspended operations at its Pune office from 14 July 2020 till further notice, to comply with the lockdown order issued by Pune Municipal Corporation.

Motherson Sumi Systems fell 2.29% to Rs 93.85 after the credit rating agency Moody's Investors Service lowered the outlook on the company's rating to negative from ratings under review. The ratings agency said that the negative outlook indicates the risk of a downgrade if the global auto industry does not recover, with a slower-than-anticipated recovery in the company's financial metrics.

Dr. Reddy's Laboratories gained 1.96% to Rs 3975. The company announced the launch of over-the-counter Nicotine Polacrilex lozenges, 2 mg and 4 mg, the store brand version of Nicorette lozenges in the US market. Nicotine Polacrilex lozenges are medical products used to aid in smoking cessation in adults.

Global Markets:

Shares in Europe and Asian declined on Tuesday amid concerns over rising coronavirus cases across the globe coupled with rising US-Sino tensions.

The United States on Monday rejected China's territorial claims in the South China Sea, drawing an angry response from Beijing, which claimed Washington was trying to inflame tensions in the disputed waters.

China's yuan-denominated trade data for June was released on Tuesday, with exports rising 4.3% year-on-year while imports increased 6.2% as compared to a year earlier, according to customs data. China's dollar-denominated trade figures for June are expected to be released later. Singapore's economy contracted 12.6% in the second quarter as compared to a year ago, according to advance estimates by the Ministry of Trade and Industry released Tuesday.

The US stock market settled volatile session lower on Monday, 13 July 2020, as investors pocketed recent gains late afternoon amid rekindled worries about another coronavirus lockdown. The Dow Jones Futures were down 3 points, indicating a flat opening in US markets.

Meanwhile, World Health Organization Director-General Tedros Adhanom Ghebreyesus on Monday warned that “too many countries are headed in the wrong direction.” In several countries across the world, we are now seeing dangerous increases in Covid-19 cases, and hospital wards filling up again,” Tedros added

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