Fed comments spook markets; Nifty at 5-month low

Indian markets saw some recovery in the last hour of the trading session on August 1 that helped the S&P BSE Sensex to climb above 37,000 and Nifty to climb above 10,900-10,950.

Nifty breached 10,900 on an intraday basis but then recovered sharply to close at 5-month low helped by gains in energy, and auto stocks.

Selling was seen in sectors like metals and media that were down over 3 percent each, followed by PSU Bank, and IT. Nifty Bank closed 508 points lower at 28,367.

The final tally on D-Street – the S&P BSE Sensex dropped 462 points while Nifty closed 138 points lower at 10,980.

Indian markets remained in the bear grip since the beginning of the trade weighed down by comments made by US Federal Reserve chair on the future trajectory of rate cuts.

Muted corporate results, and weakness in the core sector growth which reflects a slowdown in economic growth acted as a tailwind for Indian markets. Crisil slashed the gross domestic product (GDP) growth estimate for India by 0.2 percent for FY20.

“Domestic market is going through a tough time due to mixed earnings announcements and negative FII inflows. Globally, a less dovish stance of Fed triggered a sell-off across the markets,” Vinod Nair, Head of Research, Geojit Financial Services Ltd told .

“While on the domestic front, no clue about monthly auto sales, volatility in rupee and concerns over further downside in the economy affected negatively. The Indian market is hoping for an ease in policy to overcome the current liquidity issue, RBI may oblige to contain this anxiety and spur growth,” he said.

Over 500 stocks have hit 52-week low on the BSE including Indiabulls Ventures, Tata Motors, Vedanta, GE T&D India, Tata Motors (DVR), Hindalco Industries, Tata Elxsi, Bank of India, Escorts, Castrol, Biocon, Wockhardt, M&M, Central Bank, GAIL India, Fortis Health, Eicher Motors and Monsanto India, among others.

Top Nifty gainers were Maruti Suzuki, Wipro, and Bharti Infratel that were up 1-2 percent while on the losing front, JSW Steel, and Vedanta fell over 5 percent each.

Stocks in news:

Shares of commercial vehicle maker Ashok Leyland fell 1 percent after the company reported subdued sales in July and disappointing numbers in June quarter.

Shares of Eicher Motors hit 44-month low as global brokerages cut price target after subdued earnings in June quarter.

Zee Entertainment fell 4 percent as brokerages were not convinced with Oppenheimer deal, and saw uncertainty till September.

Shares of Escorts slipped 2 percent on the back of poor sales in the month of July 2019.

FMCG company Marico August 1 reported 21.6 percent jump in its Q1FY20 consolidated net profit to Rs 315 crore against Rs 259 crore in Q1FY19. The stock closed 1.2 percent lower at Rs 362.55.

Global updates:

European shares recovered from early losses on August 1 as a solid batch of bank earnings outweighed the impact of falling expectations of US interest rate cuts, reported Reuters.

Asian markets ended lower post a report about contraction in Chinese factory activity in July. Shanghai Composite slipped 0.81 percent at 2,908.77, Hang Seng fell 0.76 percent at 27,565.70 and Kospi was down 0.36 percent at 2,017.34.Subscribe to Pro and gain access to curated markets data, exclusive trading recommendations, independent equity analysis, actionable investment ideas, nuanced takes on macro, corporate and policy actions, practical insights from market gurus and much more.