Nifty, Sensex fall to 2-month low on FII, growth concerns

Bears maintained their hold for the second week in a row as the S&P BSE Sensex, Nifty50, Nifty Bank hit fresh 2-month low on FPI worries, deficient rains, and a slowdown in growth.

Finance Minister Nirmala Sitharaman’s statement on FPI surcharge which was part of budget proposals dashed hopes of foreign investors which were looking for some kind of reversal on the proposed tax in the short term.

Additionally, sub-par monsoon, muted earnings from India Inc., lowering of India’s forecast from ADB further dented the sentiment.

Nifty50 which opened with gains failed to hold onto the momentum and quickly tuned negative making a ‘Long Black Day’ kind of candle on the daily charts. The index broke below a crucial support at 11,500, and 11,461 levels on closing basis.

The final tally on D-Street – the S&P BSE Sensex plunged 560 points to 38,337, while Nifty50 closed 177 points down at 11,419.

The Nifty50 registered almost 300 point falls from the recent high of 11,706 levels, in just 3 sessions and a technical pullback can’t be ruled out which could be used to go short, suggest experts. The next is placed at 11300, and 200-DMA placed at 11,125.

“Market slid as it witnessed sharp sell-off by foreign funds due to the government’s reluctance to tweak FPIs income tax surcharge, and the deficiency in monsoon rain, which impacted the risk sentiment,” Vinod Nair, Head of Research, Geojit Financial Services Ltd told Moneycontrol.

“Additionally, the downward revision in India’s growth to 7 percent by ADB and lacklustre earnings from domestic corporates added anxiety over premium valuation. Key heavyweights are likely to announce results next week,” he said.

In terms of sectors, the S&P BSE Auto index plunged 3.2 percent, followed by the S&P BSE Bankex which was down 2.1 percent, and the S&P BSE Consumer Discretionary index saw a dip of 2.1 percent.

Top Sensex losers include names like Tata Motors, Bajaj Finance and M&M which were down 3-4 percent, respectively.

Stocks in news:

Shares of private sector lender RBL Bank ended with loses of over 13 percent on July 19 after management guided for deterioration in corporate exposures in coming quarters despite robust Q1 numbers.

Shares of IT firm Cyient ended over 11 percent lower after the company missed its Q1 earnings estimates. The company on July 18 posted a 9.7 percent rise in net profit at Rs 90.5 crore for the quarter ended June 2019 versus Rs 82.5 crore in the corresponding quarter of the last fiscal.

Dabur India closed almost 2 percent higher after it reported better-than-expected growth across parameters in June quarter with domestic volume growth being 9.6 percent against analyst estimates of 4 percent.

Global Update:

Stocks in major Asia Pacific markets ended strong as comments from a US Federal Reserve official led to rising expectations that the central bank could ease monetary policy more than expected. Nikkei added 2 percent to close at 21,466.99 while Topix rose 1.94 percent to finish its trading day at 1,563.96.

The Shanghai composite rose 0.79 percent to about 2,924.20, while the Shenzhen composite added 0.751 percent to 1,560.27. The Shenzhen component also gained 0.81 percent to 9,228.55. Hang Seng index advanced 1.03 percent.