Benchmarks end with deep cuts on weak global cues

Indian equity benchmarks ended with deep cuts on Friday in line with a global sell-off as investors dialled back risk exposure in Realty, Metal, Auto and IT stocks after weak US job data. Markets traded on negative note since the beginning, impacted by the India Meteorological Department’s (IMD) statement that the monsoon during the remaining two months of the season (August-September) on average is expected to be above-normal with September poised to get more rain than August. The forecast assumes significance as more than normal rains in September, the last month of the four-month season may hurt the standing kharif crops depending on their stage of maturity. Traders took a note of the Global Trade Research Initiative (GTRI) stating that strategic reforms are needed to enhance India's appeal to global investors as despite having huge potential, FDI data shows that the country has not fully capitalised on its opportunities. 

In the second half of the session, benchmarks saw further fall to settle near their intraday low points, as traders reacted negatively to Reserve Bank’s latest data showing that an unfavourable base effect brought down the overall non-food credit growth of the banks to 13.9 per cent at Rs 163.46 lakh crore as of June 30, 2024 as against 16.3 per cent in June 2023, even as gold and housing loans rose sharply. The growth in credit card outstanding, meanwhile, declined during the 12-month period. Traders largely overlooked the government data showing that GST collection in July rose 10.3 per cent to over Rs 1.82 trillion, mainly driven by domestic transactions in goods and services. This is the third-highest monthly collection recorded since the indirect tax regime was rolled out seven years ago on July 1, 2017. According to the data, total refunds stood at Rs 16,283 crore in July. Traders failed to take any sense of relief from Union Minister of Commerce & Industry, Piyush Goyal’s statement that a stable economy will push India to be among the top 3 world economies. He also noted that the Centre will ensure a better quality of life to the last man at the bottom of the pyramid in the next five years, adding that the government is also focused on efforts to replace the oil economy with electric mobility and making quality the fulcrum in manufacturing. 

On the global front, Asian markets ended down on Friday, while European markets were trading lower amid a global sell-off as a measure of U.S. manufacturing activity contracted sharply in July and weekly jobless claims jumped to an 11-month high, heightening concerns about a potential recession and worries that the Federal Reserve might be slow in cutting interest rates. All eyes now remain on the U.S. payrolls data, that could shed some more light on the state of the economy and the Fed's rate path. Back home, sector-wise, the coal industry stocks were in focus as the government said India's coal output rose by 6.69 per cent year-on-year to 74.07 million tonnes (MT) in July. The country's coal production was 69.42 MT in the corresponding month of previous fiscal. Power sector stocks were also in watch as India's power consumption rose a meagre 3.5 per cent to 145.40 Billion Units (BU) in July compared to the year-ago period as rainfall brought down temperatures from the scorching heat.  

Finally, the BSE Sensex fell 885.60 points or 1.08% to 80,981.95, and the CNX Nifty was down by 293.20 points or 1.17% points to 24,717.70.

The BSE Sensex touched high and low of 81,345.60 and 80,868.91 respectively. There were 5 stocks advancing against 25 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 1.19%, while Small cap index was down by 0.58%.

The lone gaining sectoral index on the BSE was Healthcare up by 0.42%, while Realty down by 3.56%, Metal down by 3.00%, Auto down by 2.97%, IT down by 2.05% and Basic Materials down by 1.83% were the top losing indices on BSE.

The top gainers on the Sensex were HDFC Bank up by 1.17%, Sun Pharma up by 0.95%, Kotak Mahindra Bank up by 0.61%, Nestle up by 0.41% and Asian Paints up by 0.32%. On the flip side, Maruti Suzuki down by 4.63%, Tata Motors down by 4.17%, JSW Steel down by 3.92%, Tata Steel down by 2.97% and Larsen & Toubro down by 2.91% were the top losers.

Meanwhile, the government data has showed that the Goods and Services Tax (GST) collections rose 10.3 per cent to over Rs 1.82 lakh crore in July 2024 as against Rs 1.65 lakh crore in the corresponding period last year, mainly driven by domestic transactions in goods and services. This is the third-highest monthly collection recorded since the indirect tax regime was rolled out seven years ago on July 1, 2017. The GST revenue in June was Rs 1.74 lakh crore. 

According to the data, total refunds stood at Rs 16,283 crore in July. The net GST collection after adjusting refunds was over Rs 1.66 lakh crore, a growth of 14.4 per cent. The Gross GST revenue stood at Rs 1,82,075 crore, which includes Central GST of Rs 32,386 crore, State GST of Rs 40,289 crore, and Integrated GST of Rs 96,447 crore. The compensation cess mop-up was Rs 12,953 crore. 

It further stated that the revenues were driven by taxes from domestic activities, which grew 8.9 per cent to Rs 1.34 lakh crore in July. The revenue from imports jumped 14.2 per cent to Rs 48,039 crore. Gross GST revenues hit a record high of Rs 2.10 lakh crore in April 2024, the previous high was on April 2023 when it was Rs 1.87 lakh crore. At Rs 1.82 lakh crore, collection in July 2024 is the third-highest ever. So far this fiscal (April-July), the collections have grown 10.2 per cent to about Rs 7.39 lakh crore.

The CNX Nifty traded in a range of 24,851.90 and 24,686.85. There were 8 stocks advancing against 42 stocks declining on the index.

The top gainers on Nifty were Divi's Lab up by 1.74%, HDFC Bank up by 1.17%, Dr. Reddy's Lab up by 0.84%, Sun Pharma up by 0.80% and Britannia Industries up by 0.63%. On the flip side, Eicher Motors down by 5.15%, Tata Motors down by 4.32%, Maruti Suzuki down by 4.06%, JSW Steel down by 3.91% and Hindalco down by 3.89% were the top losers.

European markets were trading lower; UK’s FTSE 100 decreased 35.62 points or 0.43% to 8,247.74, France’s CAC fell 58.77 points or 0.8% to 7,311.68 and Germany’s DAX lost 283.91 points or 1.57% to 17,799.14.

Asian markets ended down on Friday, with Japanese shares leading regional losses on strengthening yen and tracking Wall Street’s overnight falls as investors’ fears over a US recession surfaced. Data showed that initial jobless claims in the US rose the most since August 2023 to 249,000 for the week ended July 27 and the US ISM manufacturing index came in at 46.8%, worse than expected and a signal of economic contraction. Meanwhile, investors were eyeing on the US payrolls data, due later in the day that could shed some more light on the state of the economy and the Fed's interest rate path. Chinese shares declined on lingering concerns over the country's economic outlook. Moreover, South Korea’s Kospi dropped on deep losses in heavyweight chipmakers.