The market reversed all the gains clocked a day before and finished the session on August 7 sharply lower following a late sell-off. The 35 basis points repo rate cut delivered by the Reserve Bank of India's Monetary Policy Committee in line with expectations and the measures listed out to boost the NBFC sector failed to lift sentiment.
The BSE Sensex fell more than 400 points from the day's high indicating that the rate cut and measures may not have been perceived to be enough to boost the slowing economy. The index declined 286.35 points to close at 36,690.50 while the Nifty 50 dropped 92.80 points to 10,855.50, forming a bearish candle on the daily charts.
The broader markets also fell in line with benchmark indices as the Nifty Midcap index lost 0.75 percent. Among sectors, Nifty Bank, Auto and Metal indices shed 1-2 percent.
According to the pivot charts, the key support level is placed at 10,802.37, followed by 10,749.23. If the index starts moving upward, the key resistance levels to watch for out are 10,942.17 and 11,028.83.
The Nifty Bank closed at 27,702.05, down by 320.05 points on August 7. The important pivot level, which will act as crucial support for the index, is placed at 27,504.07, followed by 27,306.04. On the upside, key resistance levels are placed at 28,037.87 and 28,373.63.
Stay tuned to Moneycontrol to find out what happens in currency and equity markets today. We have collated a list of important headlines from across news agencies.
US Markets
The S&P 500 recovered from steep early losses to end slightly higher on Wednesday as investors snapped up oversold shares and bond yields rebounded from significant lows that raised fears about a recession.
The Dow Jones Industrial Average fell 22.45 points, or 0.09%, to 26,007.07, the S&P 500 gained 2.21 points, or 0.08%, to 2,883.98 and the Nasdaq Composite added 29.56 points, or 0.38%, to 7,862.83.
Asian Markets
Asian shares braced for more volatility on Thursday as eye-catching easings by central banks stoked fears of global recession, driving U.S. yields to near-record lows and lifting gold past $1,500 for the first time since 2013.
Japan’s Nikkei inched up 0.1%, and away from seven-month lows. E-Mini futures for the S&P 500 lost 0.13%.
SGX Nifty
Trends on SGX Nifty indicate a flat to positive opening for the broader index in India, a with 0.04 percent gain or 4 points. Nifty futures were trading around 10,869-level on the Singaporean Exchange.
Oil dives nearly 5% to 7-month low on surprise US stock build, trade war
Oil prices tumbled more than 4.5% on Wednesday to a seven-month low, extending recent heavy losses following a surprise build in US crude stockpiles and fears that demand will shrink due to Washington’s escalating trade war with Beijing.
Brent crude futures settled down USD 2.71, or 4.6%, at USD 56.23 a barrel, the lowest close since early January. Prices have lost 24.5% since their 2019 peak in April. US West Texas Intermediate (WTI) crude futures finished USD 2.54, or 4.7%, lower at USD 51.09.
Rupee skids for 5th day; drops 8 paise to 70.89 against dollar
The rupee dropped 8 paise to finish at 70.89 against the US dollar on August 7 after the RBI cut the key interest rate and lowered the growth estimate for the current fiscal. This is the fifth straight session of loss for the domestic currency, during which it has lost a hefty 210 paise.
During the day, the local currency witnessed high volatility following the announcement of RBI Monetary Policy Committee (MPC) decision. At the interbank foreign exchange market, the rupee opened weak at 70.92. It shuttled between a high of 70.62 and a low of 70.99, before finally closing at 70.89, down 8 paise over its previous close.
Donald Trump: Fed 'must cut rates bigger and faster'
US President Donald Trump on August 6 continued to hammer the Federal Reserve, demanding more stimulus to boost the economy as the 2020 elections approach. Even as stocks and bond yields worldwide fell amid concern about Trump's escalating trade war with Beijing, he accused the US central bank of being a bigger threat to the American economy than China.
"They must cut rates bigger and faster and stop their ridiculous quantitative tightening NOW," he said on Twitter, just a week after the US central bank cut the benchmark lending rate for the first time in more than a decade.
"Incompetence is a... terrible thing to watch, especially when things could be taken care of sooo easily," Trump said in his screed.
India's monsoon rains above-average for second straight week: IMD
India's monsoon rains in the week through August 7 were above average for the second straight week, the India Meteorological Department said, easing concerns of drought, although excessive rainfall flooded some areas on the west coast. Monsoon rains are crucial for farm output and economic growth, as agriculture forms about 15% of India's $2.5-trillion economy.
India received 28% more rainfall than the 50-year average in the week to Aug. 7, data from the IMD showed. Overall, India has received 5% less rain than average since the start of the monsoon season on June 1.
RBI will have to do more heavy-lifting for economy to even clip at 6.9%: Analysts
Describing the lower GDP forecast of 6.9 percent as "optimistic", analysts have opined that the Reserve Bank will have to undertake more rate cuts in the near future to help the economy. In an unprecedented move, the central bank on August 7 slashed the repo rate by a 35 bps to 5.4 percent, which is a nine-year low and also lowered its GDP forecast by 10 bps to 6.9 percent, with a bias to more downward risks.
Economists at largest private sector lender HDFC Bank termed reduction in growth as "paltry and somewhat dissonant with the characterization of the economic situation". In a note, Japanese brokerage Nomura said, the lower growth projection "is still optimistic", while analysts at Bank of America Merrill Lynch said GDP can print in at 6.8 percent as it see a 0.20 percent risks to their 7 percent estimate now. It also expects another 40 bps rate cut through the course of the year.
Maruti cuts production by 25% in July for sixth month in a row
Maruti Suzuki India cut its production in July by 25.15 percent, making it the sixth month in a row that the country's largest car maker reduced its output, according to a regulatory filing. The company produced a total of 1,33,625 units in July, compared with 1,78,533 units in the year-ago month, Maruti Suzuki India (MSI) said in a BSE filing.
Passenger vehicles' production last month stood at 1,30,541 units as against 1,75,456 units in July 2018, a decline of 25.6 percent, it added.
Spandana Sphoorty Financial IPO subscribed 1.05 times on final day
The initial public offering (IPO) by microfinance lender Spandana Sphoorty Financial got fully subscribed on August 7, the final day of the issue, led by support from qualified institutional buyers. The Rs 1,200-crore public issue received bids for 1.03 crore equity shares against a size of 98.22 lakh equity shares (excluding anchor investors portion), resulting in the IPO being subscribed 1.05 times, as per data available on exchanges.
The portion reserved for qualified institutional buyers subscribed 3.11 times, while non-institutional investors received 55 percent subscription and retail 9 percent. The IPO comprises a fresh issue of Rs 400 crore and an offer for sale of 93,56,725 equity shares, including anchor portion of 42,08,886 equity shares. Spandana Sphoorty Financial has already raised Rs 360.28 crore from 18 anchor investors.
172 companies to report June quarter numbers today
As many as 172 companies will declare their results for June quarter which include names like Adani Enterprises, City Union Bank, LT Foods, Engineers India, GE Shipping, Godrej Properties, Hexaware Technologies, Mahanagar Gas, NBCC, Page Industries, Take Solutions, Tata Chemicals, Thermax, Texmaco Rail, Uco Bank and UltraTech Cement among others.
With inputs from Reuters & other agencies
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