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Sensex, Nifty slump on fears of earnings downgrade

Market turned jittery after Trump warned India that its high tariffs were not acceptable.

, ETMarkets.com|
Jul 10, 2019, 04.20 PM IST
NEW DELHI: Equity benchmarks Sensex and Nifty ended lower in volatile trading session on Wednesday dragged down by PSU bank, auto, and metal stocks as investors awaited for direction from key global and domestic events scheduled this week.

Analysts said that market turned jittery after US President Donald Trump on Tuesday once again warned India that its high tariffs were not acceptable ahead of the Indo-US trade talks on Friday. In May, India had imposed higher tariffs on 28 US products.

The market sentiment was further dented after Moody's warned that weak growth prospects for India will complicate the government's fiscal consolidation efforts, weighing on the sovereign's credit quality.

Meanwhile, TCS Q1 earnings numbers on Tuesday also dissapointed investors.

Investors also turned cautious as they waited for fresh cues from US Federal Reserve Chairman Jerome Powell's testimony before the Congress this week. On the domestic front, the government is scheduled to release data on industrial production and consumer inflation on Friday.

Analysts expect the market to remain volatile for the next few days as investors are watching out as to how the earnings season will pan out which began with TCS reporting its first quarter earnings. TCS closed in the red today, shedding up to 1.16 per cent, after the company reported a 10.8 per cent rise in June quarter net at Rs 8,131 crore.

“Consolidation continued as weak auto sales have dimmed growth expectation while surge in oil prices further impacted the sentiment. Focus remains on the earnings season where the preliminary subdued results in IT stocks have triggered gradual downgrade in earnings expectations," said Vinod Nair, Head of Research at Geojit Financial Services.

Shares of most auto companies fell after industry lobby SIAM reported a decline in vehicles sales across all categories in June 2019. According to the data domestic passenger vehicle (PV) sales slipped by 17.54 per cent to 2,25,732 units in June from 2,73,748 units in the year-ago period. Also, domestic car sales dipped 24.97 per cent to 1,39,628 units as against 1,83,885 units in June 2018.

Shares of Interglobe Aviation fell as much as 19 per cent after one of the co-founders alleged violation of corporate governance rules at the parent company.

Asian markets remained cautious throughout the day as they weighed whether US Federal Reserve Chairman Jerome Powell would confirm or confound expectations for US policy easing this month.

BSE Sensex closed 173.78 points or 0.45 per cent lower at 38,557 while NSE Nifty ended at 11,493.95, down 61.95 points or 0.54 per cent.

Market at a glance
In the 30-pack Sensex, eight stocks ended in the green and 22 in the red with Bajaj Finance as the worst performer and YES Bank best. Tata Steel, Tata Motors, Axis Bank and HUL too joined Bajaj Finance on the losers list, slipping up to 5 per cent.

Sun Pharma, ICICI bank and Kotak Bank were among other Sensex stocks that advanced.

The BSE Midcap index declined 0.75 per cent and the BSE Smallcap index ended 0.75 per cent lower underperformed benchmark Sensex.

BSE Capital Goods index recorded losses of 1.65 per cent followed by Realty, Metal and Auto index.

In terms of index contribution, HDFC Bank, ICICI Bank, Kotak Bank and Infosys were the top support while Bajaj Finance, TCS, L&T and Axis Bank were the top drag on Sensex.
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