Sensex falls below 37,000, Nifty gives up 2019 gains

Indian markets that opened lower on weak global cues on August 5 came under pressure after the government decided to do away with Article 370 that extends special status to Jammu and Kashmir.

The border state will be bifurcated. Jammu and Kashmir will be a Union Territory with a legislature, while Ladakh region will be a union territory but without an assembly, home minister Amit Shah told the Rajya Sabha in the morning.

Benchmark indices recouped losses towards the close but Sensex failed to reclaim 37,000, while the Nifty50 gave up gains made in 2019, as the issue continued to be debated in the Upper House.

“Multiple headwinds led to market volatility for the day. Concerns of a political crisis developing in J&K and no further cues on the exclusion of surcharge to FPIs added to volatility in the market,” Vinod Nair, Head of Research, Geojit Financial Services Ltd, told Moneycontrol.

“Selling was broad-based despite late recovery witnessed in auto and banks, while IT held on with gains due to weakening rupee. Consolidation may extend given the headwinds in global trade negotiations and risk aversion strategy by FPIs,” he said.

The final tally on D-Street: the S&P BSE Sensex down 418 points at 36,699, the Nifty50 closed 134 points lower at 10,862.60. It closed at 10,862.55 on December 31, 2018, which essentially wipes out gains made in 2019.

The index hit a record high of 12,103 in June and has since shed more than 1,200 points, or little over 10 percent, to touch 10,862 on August 5.

In terms of sectors, the S&P BSE Energy index fell 2.6 percent, the S&P BSE Power index was down 2.5 percent and the S&P BSE Consumer Durable index was down 2.1 percent. IT and telecom stocks bucked the trend.

The Nifty Bank closed with losses of nearly 2 percent, or 556 points, weighed down by losses in YES Bank, RBL Bank, Kotak Mahindra Bank, SBI, and ICICI Bank.

The S&P BSE Midcap index was down 1.2 percent, while the S&P BSE Smallcap index edged lower by 1.69 percent.

More than 500 BSE stocks hit a fresh 52-week low. These included Indian Bank, Future Consumer, V Mart Retail, YES Bank, Tata Motors (DVR), Tata Motors, Fortis Health, JSPL, Wockhardt, Tata Steel, Hindalco Industries, GAIL India, Bank of India, Motherson Sumi, Escorts and ITC.

Stocks in news

Shares of Housing Development Finance Corporation (HDFC) bucked the broader trend and closed with gains of more than 1 percent after global brokerage firms raised its price targets. Jefferies retained a buy call on the stock, and increased its target price to Rs 2,435 from Rs 2,310.

Shares of ITC fell 1.9 percent to hit a 16-month low after the company’s total revenue, cigarette volume growth and FMCG business in June quarter didn’t meet expectations.

Shares of IT consulting and outsourcing multinational company eClerx Services crashed by about 12 percent to a six-year low, as HDFC Securities downgraded the stock to sell after it reported subdued earnings in the June quarter.

Shares of Cox & Kings locked at 5 percent lower circuit after the company defaulted on payment of commercial paper.

The shares of State Bank of India fell 2.6 percent to a near five-month low, as brokerage houses slashed price target after the country’s largest public-sector lender missed profit expectations in the June quarter amid high slippages.

Global update

Asian markets fell for a sixth day, as the US-China trade tensions spooked markets and the yuan, which fell to its lowest levels in over a decade. European shares fell to two-month lows.

Asian shares suffered their steepest daily drop in 10 months, with MSCI’s broadest index of Asia-Pacific shares outside Japan sinking 2.5% to depths not seen since late January, said a Reuters report.

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