Sensex Ends 318 Points Lower; Auto and Metal Stocks Witness Selling

Thu, 18 Jul Closing

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India share markets continued to witness selling pressure during closing hours and ended their day on a negative note.

At the closing bell, the BSE Sensex stood lower by 318 points (down 0.8%) and the NSE Nifty closed down by 90 points (down 0.8%).

The BSE Mid Cap index ended the day down 1.2%, while the BSE Small Cap index ended the day down 1.1%.

Sectoral indices ended on a negative note with stocks in the auto sector and metal sector witnessing most of the selling pressure.

The rupee was trading at 68.96 against the US$.

Asian stock markets finished on a negative note. As of the most recent closing prices, the Hang Seng was down by 0.46% and the Shanghai Composite was down by 1.04%. The Nikkei 225 was down 1.97%.

European markets were also trading on a negative note. The FTSE 100 was down by 0.39%. The DAX was trading down by 0.81%, while the CAC 40 was down by 0.40%.

Market participants were tracking Rallis share price, Colgate share price, and Cyient share price ahead of their June quarter results to be announced today.

You can also read our recently released Q1FY20 results: Infosys, TCS, IndusInd Bank, DCB Bank, Bajaj Consumer Care, Mindtree, Wipro.

In the news from the banking sector, Punjab & Sind Bank share price was in focus today as the lender reported fraud by Bhushan Power & Steel to Reserve Bank of India (RBI).

In its BSE filing, the bank said that on the basis of Forensic Audit Investigation findings and CBI filing FIR, on suo moto basis, against Bhushan Power & Steel and its directors, alleging diversion of funds from the banking system, a fraud of Rs 2.38 billion is being reported by the bank to RBI.

In the accounts of the company, the bank has already made provisions amounting to Rs 1.89 billion, as per prescribed prudential norms.

Punjab & Sind Bank further said the company has misappropriated bank funds, manipulated books of accounts to raise funds from consortium lender banks.

At present, the case is at NCLT which is in advance stage and the bank expects a good recovery in the account.

It would be interesting to see how this pans out. Meanwhile, we will keep you updated on all the developments from this space.

Speaking of banks, in one of the editions of The 5 Minute WrapUp Tanushree Banerjee shares an interesting observation she is witnessing in the banking sector.

Here's what she wrote...

• After the IL&FS debacle, the NBFC sector is in a liquidity crisis. The housing finance regulator, National Housing Bank, has also restrained some entities from lending.
  
  So, the quantum of funds as well as the cost of loans have both shot up.
  
  Smaller public sector banks are struggling to keep themselves afloat.
  
  The few good quality private sector banks are only lending to retail clients, most cautiously.

This is evident in the chart below:

Banks are Lending Only to the Aam Aadmi

No wonder funding to corporates for capex has come to a standstill.

Amid this it is difficult to expect Indian companies to increase their capacities. Thus, their earnings may not grow at a fast clip.

And sooner than later their valuations will also succumb to a reality check.

But according to Tanushree, there is a silver lining to this cloud. You can read all about it here: The Bitter Pill that Will Lay the Foundation for Sensex 100,000

Moving on to the news from the commodity space, crude oil witnessed selling pressure today. Losses were seen after official data showed US stockpiles of products like gasoline rose sharply last week. This suggested weak demand during the peak driving season and weighed on prices.

As per the data, US domestic crude supplies fell for a fifth straight week. According to data released by the US Energy Information Administration (IEA), US crude inventory for the week ended July 12 fell 3.11 million barrels to 455.88 million barrels.

US gasoline inventories were up 3.57 million barrels last week to 32.75 million barrels. Distillate stocks surged 5.69 million barrels to 136.2 million barrels, the highest since early March.

Meanwhile, losses were also seen on the back of ongoing geopolitical tensions in the Middle East.

Iran yesterday said that a small oil products tanker missing in the Strait of Hormuz was in its territorial waters. This stoked fraught relations with Iran's neighbors and the West over threats to shipping in the key oil chokepoint.

This came at a time when the US Secretary of State Mike Pompeo said earlier this week that Iran was prepared to negotiate with the US over its missile program.

US President Donald Trump underscored Pompeo's comments, saying progress has been made with Iran and that the US was not looking for a regime change in Tehran.

Note that tensions between Tehran and Washington have escalated since last year when the Trump administration withdrew from a nuclear agreement with the Middle Eastern country and tightened sanctions against the country last May.

How this all pans out remains to be seen. Meanwhile, we will keep you updated on all the developments from this space.

Speaking of crude oil, in the video below, Vijay Bhambwani explains how trading in crude oil is an evergreen strategy. As per him, trading in crude oil offers excellent opportunities in nearly all market conditions due to its unique standing within the world's economic and political systems.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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