Sensex slips further on weak global cues; oil, steel lose shine 1-sep-2015

Markets have commenced lower tracking weak trend in the global peers over persistent China woes and prospects of a rate hike by the US fed.

Global market: Asian shares fell on Tuesday and the dollar struggled after twin surveys showed China's manufacturing sector in the grip of its worst slump in several years, raising fresh fears about the health of its economy.
China's official Purchasing Managers' Index (PMI) fell to 49.7 in August from the previous month's reading of 50.0, the weakest showing in three years.
Japan’s Nikkei, Straits Times, China’s Shanghai Composite and Hong Kong’s Hang Seng are down between 1-3%.
The early indicator SGX Nifty has slumped 1% at 7,914 levels. Losses on Wall Street also soured Asian sentiment after comments from Federal Reserve Vice Chairman Stanley Fischer heightened fears among investors of a potential US interest hike in September. US stock futures in Asia were down 1.5%.

Rupee
The rupee depreciated 3.6% in August to end at 66.48.
The rupee had ended at 64.14 per dollar on July 31.
This was the second worst fall for the rupee and the last one was recorded in August 2013 when during the month the rupee had depreciated by 8.83%.

Macro-economic data
India's economy grew 7% during the first quarter of the current financial year, slower than 7.5% in the previous quarter but faster than 6.7% in the year-ago quarter.
Growth in the eight core sectors — coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity — slowed to 1.1% in July after a growth of three per cent in June, mainly on account of low expansion in coal output and contraction in steel, crude oil and natural gas production that hinted at a weak industrial recovery.

Profit taking drags Sensex 109 pts, Nifty ends Aug below 8000 31-Aug-2015

Markets are very chooppy and sideways, need to trade cautiously, long term investment prospective is better.

Intraday trading is too much risky, avoid intraday trade.

Recent market turmoil and delay in earnings & economy recovery led brokerages to slash target price. Ambit Capital reduced its FY16 Sensex target from 32000 to 28000 on expected sharp correction in real estate prices and slowdown in reform momentum while Barclays chopped its Nifty target by roughly 6 percent to 9642 on weak demand recovery.


Auto stocks closed lower ahead of August sales data. Nomura expects medium & heavy commercial vehicle and passenger vehicles space may continue to report strong numbers while two-wheeler data may remain weak. Maruti Suzuki, Mahindra & Mahindra and Bajaj Auto declined 0.6-1 percent while Tata Motors and Hero Motocorp were flat. 


Pharma stocks were in the limelight with the CNX Pharma index up more than 2 percent. Lupin, Dr Reddy's Labs and Cipla surged over 3 percent while Sun Pharma gained 1.4 percent. Among others, ICICI Bank, Infosys, Reliance Industries, Bharti Airtel, ONGC, Tata Steel and Hindalco Industries slipped 1-2 percent while Wipro, Coal India, GAIL and Vedanta gained 1.5-2.5 percent.


The rupee plunged 34 paise to close at 66.48 a dollar against Friday's value of 66.14 a dollar due to sustained month-end demand for the American currency overseas.

India can replace China as driver of global growth: Jaitley

Seeing an opportunity in the recent turmoil in global equity and currency markets, Finance Minister Arun Jaitley today said India, with 8-9 per cent growth rate, can replace China as the driver of world economy.

The country has already laid down a "red carpet" for businesses which want to invest here, he said, committing to push ahead with the government's reforms agenda.

"The world needs other engines to carry the growth process. And in a slowdown environment in the world, an economy which can grow at 8-9 per cent, like India, certainly has viable shoulders to provide the support to the global economy," he said.
In an interview to BBC, Jaitley said India is an investor-friendly destination and investors need not fear any retrospective legislations.

"My message to the people wanting to do businesses in India is that there is a red carpet laid down for you. India needs investments, India invites investments and we are going to be one of the more investor-friendly destination," he said, adding that the present government will never resort to retrospective taxation.

Indian economy grew by 7.3 per cent in 2014-15 and is estimated to grow by 8-8.5 per cent in the current fiscal.

"In an environment where there is a relative global slowdown, India seems to be doing reasonably well. We finished last year with 7.3 per cent growth rate, will probably finish this year with a slightly better growth rate than that and next year hopefully will be a little better," Jaitley said.

According to International Monetary Fund (IMF), India will overtake China as the fastest growing emerging economy in 2015-16 by clocking a growth rate of 7.5 per cent.

On the other hand, China will witness a deceleration with growth rate sliding from 7.4 per cent in 2014 to 6.8 per cent in 2015 and 6.3 per cent a year after.

Meanwhile, RBI Governor Raghuram Rajan had yesterday said it will be "a long time" before India can replace China as a growth engine for the global economy, even if it grows at a faster rate.

Jaitley said, "I see this as a great opportunity. The Chinese normal has now changed. It is no longer the 9 per cent, 10 per cent, 11 per cent growth rate". 

An unexpected devaluation of the Chinese yuan triggered a sell-off in their stock markets, that had a rippling effect in markets the world over.

Indian equity market too fell the most in its history on Monday, but has since recovered. Rupee too was hit badly by the global developments.

It is an opportunity and challenge for Indian politics, Jaitley said, adding "if we can continue to reform at a faster pace and really attract global investment, then our ability to provide that shoulder which the world economy needs will be much greater".

The challenge, he said, is always there as the government is required to convince those sections of the society which are yet to benefit from the growth process. "I think the processes could be slower, but its a more stable system."

Talking on the crash in stock markets earlier this week, Jaitley said it had a transient impact.

"When the Chinese economy slowed down a little it didn't impact much. When the devaluation and the currency war started we did get somewhat adversely affected. When global markets fell, we also felt a huge impact in terms of currency and markets. But within a day we had recovered," he said.

On the reforms agenda, he said: "The government has absolute clarity about the direction it has to pursue... Prime Minister Modi's government, almost by the day, is continuing to move and reform in the right direction and slowly but surely the results are showing".

The lower commodity and oil prices are advantageous for India, he said, adding that the money saved on subsidies would be invested on infrastructure development.
He further said although infrastructure is improving, "it is still a far cry from what an ideal infrastructure should be".

Jaitley said the capacity has to expand further, given that the Indian economy is expanding.

Replying questions on bureaucratic delays, he said the procedures are a bit complicated but the government is trying to improve the system.