Sensex Crashes 667 Points; Banking and Finance Stocks Bleed

Mon, 3 Aug Closing

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Indian share markets extended losses as the session progressed and ended their day deep in the red, amid a huge selloff in banking and financial services stocks.

Sentiment was weighed down by disappointing factory data and fear of extension of loan moratorium for banks.

Finance Minister Nirmala Sitharaman said the ministry was working with the Reserve Bank of India (RBI) on restructuring of loans and extension of moratorium on term loans.

At the closing bell, the BSE Sensex stood lower by 667 points (down 1.8%). The NSE Nifty closed down by 174 points (down 1.6%).

The SGX Nifty witnessed huge selling pressure and was trading at 10,915, down by 190 points, at the time of writing.

The BSE Mid Cap index ended the day down by 0.3%. Meanwhile, the BSE Small Cap index ended up by 1%.

On the sectoral front, banking stocks and finance stocks were the hardest hit.

Asian share markets ended on a mixed note today as US lawmakers struggled to hammer out a new stimulus plan amid a global surge of new coronavirus cases.

As of the most recent closing prices, the Hang Seng was down by 0.7% while the Nikkei stood higher by 2.2%.

European share markets inched higher today as improvement in Chinese manufacturing data boosted sentiment, but a warning from Europe's biggest lender HSBC over rising bad loans weighed on financials.

The rupee is trading at 75.01 against the US$.

Gold Prices are trading up by 0.1% at Rs 53,830. Domestic gold prices edged higher today, tracking moderate gains in global markets.

The fifth tranche of Sovereign Gold Bond (SGB) Scheme 2020-21 opened today and the issue price has been fixed at Rs 5,334 per gram.

Speaking of gold, note that international gold prices have already rallied by about 20% since the rate cut in March 2020. Gold rallied almost 10% last month. That's a sharp rise by any standard.

However, if you're thinking that gold won't rally anymore next month, then you must look at this chart.

This is the August month performance of international gold prices for the last 20 years. If history is anything to go by, then August is the month to hold gold rather than to exit.

International gold prices moved up in 15 out of the last 20 years. That's a success ratio of 75%. The average monthly gains of gold in August is 2.84% over the last 20 years.

So, history suggests gold is set for a rally this August.

Moving on, Tata Motors was among the top buzzing stocks today.

Shares of the company rallied over 8% intraday after the company on Friday released its June quarter numbers for the fiscal year 2020-21 (Q1FY21).

For the quarter under review, Tata Motors reported a consolidated net loss of Rs 84.4 billion against Rs 37 billion in the corresponding quarter of last year.

The company's total revenue from operations nearly halved to Rs 319.8 billion during the period from Rs 614.7 billion in the previous year quarter.

Apart from Tata Motors, shares of other auto and auto ancillary companies ended with decent gains today after the automakers reported encouraging sales numbers for July.

Shares of Maruti Suzuki advanced over 2.5% today after the company announced it had sold 108,000 units in July, 88.2% more than June 2020, in a clear indication that people were rushing to buy new cars as the coronavirus-induced lockdown eased, and opting for private transport to maintain social distancing.

Mahindra and Mahindra sold 25,678 units of commercial and passenger vehicles in July 2020, indicating a month-on-month growth of 32.64%.

India's largest two wheeler company, Hero MotoCorp registered a sequential growth of 14% over the previous month (June 2020) and reached more than 95% of wholesale dispatch numbers of the corresponding month in the previous year (July 2019).

Moving on to news from the macroeconomic space, Indian manufacturing slowed down in July after slowly mending for two months as lockdowns to contain coronavirus cases weighed on demand and output and raised the chances of a sharper economic contraction.

Output contracted in July as regional lockdown extensions across the country severely held back demand, said the monthly IHS Markit India Manufacturing Purchasing Managers' Index (PMI) survey.

Manufacturing PMI stood at 46 in July, down from 47.2 in June. In PMI parlance, a score above 50 means expansion and below that denotes contraction. PMI fell to a historic low of 27.4 in April, but had been steadily climbing up since.

Businesses collapsed and exports slowed when India was locked down to contain the coronavirus and worldwide economies collapsed. The PMI survey showed manufacturers cut jobs yet again, albeit at a similar pace than June.

New orders fell for the fourth-month running. Similar to the trend for output, the pace of decline accelerated from June, but remained slower than at the height of the current crisis.

However, the PMI survey showed that manufacturers remained optimistic towards the one-year business outlook in July, with sentiment strengthened for the second month to a five-month high.

We will keep you updated on the latest developments from this space. Stay tuned.

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

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