Markets snap the volatile session in red despite late hour recovery

Thursday proved another very volatile day of trade for the Indian markets like the previous one, however the fate reversed with benchmarks making a soft closing and losing some of their last session’s gains. The trading sentiment was impacted by the weakness in other global markets and trading participants largely overlooked the domestic developments. Rising bond yields in the US and Europe has kept the markets across the globe on tenterhooks for last couple of days. On the domestic front the IT pack came under pressure after the rupee firmed up on sustained selling of greenback by banks and exporters due to weakness of dollar in the overseas market. 

Earlier, the US markets made mostly a flat closing  as traders kept a close eye on the bond market following the release of disappointing retail sales data. Retail sales were virtually unchanged in April, inching up by 0.1 percent. Following the cues the Asian markets made mostly a lower start. On the other hand European markets after making a soft start bounced back but were witnessing some profit booking, though markets of Switzerland, Sweden and Denmark remained closed for a holiday.

Back home, the Indian markets though made a positive start, extending their gains of last session but the upmove was only momentary and afterwards the major benchmarks kept struggling for most part of the day and were unable to enter the green even once, all the attempts of recovery were sold out on profit taking. Traders took heart from the approval for various reform proposals on the last day of the Budget Session of the parliament and moved higher in opening deals but overlooked the continued decline in WPI inflation to record low of -2.65% in April as compared to -2.33% witnessed in March, their sixth straight fall, mainly on the back of plunging oil prices. In the final hours there was some recovery with traders expecting some policy rates announcements by the RBI. Though, governor Rajan talked about the board suggestion of an IT subsidiary to look after cyber security and legislative changes needed to take financial sector forward.  Telecom companies came off day’s high following reports that the Supreme Court has rejected their license extension plea. The telecom companies had filed a plea for extension of expiring licenses by 10 years after the government's decision to reject their applications. Bharti Airtel was up by 0.78%, Idea cellular gained 2.44% and RCom was higher by 1.56%. In non sectoral gauges fertilizer showed a mixed trend impacted by the government’s approval of the new urea policy which aims to maximize indigenous urea production and promote energy efficiency in units to reduce the subsidy burden on the government. The policy is expected to raise urea production by 20 million tonnes and reduce imports. RCF was down by 0.17%, NFL lost 1.19% on the other hand Chamble Fertilizers was up by 0.39% and Coromandel gained 0.10%.

The NSE’s 50-share broadly followed index Nifty lost over 10 points but managed to hold the crucial 8,200 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex ended down by 45 points,   below the 27,250 mark. Broader markets however outperformed the benchmarks and traded with traction throughout the trade, ending the session with a gain of around a percentage point. The market breadth remained in favour of advances, as there were 1,470 shares on the gaining side against 1,209 shares on the losing side, while 113 shares remained unchanged.

Finally, the BSE Sensex declined by 45.04 points or 0.17% to 27206.06, while the CNX Nifty lost 11.25 points or 0.14% to 8,224.20.

The BSE Sensex touched a high and a low of 27293.99 and 26948.62, respectively. The BSE Mid cap index was up by 0.89%, while Small cap index up by 0.92%.

The top gainers on the Sensex were Hindalco up by 2.92%, SBI up by 2.37%, Bajaj Auto up by 1.87%, Mahindra & Mahindra up by 1.71% and Tata Steel up by 1.70%. On the flip side, Vedanta down by 1.65%, Sun Pharma down by 1.12%, Infosys down by 1.09%, Wipro down by 1.04% and HDFC down by 0.92% were the top losers.

 The gaining sectoral indices on the BSE were PSU up by 1.19%, Realty up by 1.07%, Oil & Gas up by 1.02%, Auto up by 0.85% and Metal up by 0.76% while, IT down by 0.71%, Consumer Durables down by 0.41%, TECK down by 0.34%, Capital Goods down by 0.17% and Healthcare down by 0.15% were the losing indices on BSE.

Meanwhile, the government has cleared two major policy initiatives to give a fresh thrust to the highways sector and bring the private sector back on board. The Cabinet Committee on Economic Affairs (CCEA) has given the go-ahead to a comprehensive exit policy for developers aimed at improving the availability of funds in the market and also authorised the National Highways Authority of India (NHAI) to intervene in projects that are near completion but stuck due to a lack of funds.

The government has extended the relaxed exit policy for highway developers to public-private partnership (PPP) projects awarded before 2009. The exit policy would help unlock equity from completed projects making it potentially available for investment in new projects, harmonising conditions uniformly across all concessions signed prior to 2009 with the policy framework for post-2009 contracts which permit divestment of equity up to 100 per cent two years after completion of construction.

The CCEA has also approved fund infusion by National Highways Authority of India (NHAI) as loans in PPP projects which are at advanced stages of completion, but stuck due to lack of additional equity or lenders’ reluctance to provide more loans. The loan was to be recovered along with interest from the toll receipts immediately after the completion of construction. The NHAI has been directed to develop a robust mechanism to determine eligibility of the project as also the extent of funds required to complete projects, in a time bound manner.

The CNX Nifty touched a high and low of 8,236.25 and 8,137.30 respectively.

The top gainers on Nifty were Asian Paints up by 4.26%, Punjab National Bank up by 3.49%, Hindalco Industries up by 3.07%, Bharat Petroleum Corporation up by 2.87% and State Bank of India up by 2.62%. On the flip side, Lupin down by 3.17%, Vedanta down by 1.60%, Power Grid Corporation of India down by 1.24%, HCL Technologies down by 1.23% and Sun Pharmaceuticals Industries down by 1.20% were the top losers.

Most of European Markets were trading in the green; France's CAC was up by 0.01% and Germany's DAX was up by 0.04%, while UK’s FTSE was down by 0.05%.

The Asian markets ended mostly in green, while Indonesia stock exchange was closed on account of ‘Ascension Day’ holiday. Indonesia’s finance ministry plans to tighten a tax regulation to ensure firms’ have sufficient cash buffers against the amount of debt they take in a bid to better manage their foreign debt exposure and boost the government’s tax revenue. Bank Indonesia Governor Agus Martowardojo stated that Indonesia will ease restrictions on property and auto loans and allow foreigners to buy apartments as it looks to boost economic activity. The Governor added that the central bank may cut the loan-to-value ratio for property and auto loans as soon as this month, allowing banks to finance buyers with lower down payments. The National Bureau of Statistics data showed that the value of new home sales continued to fall slowly in China in the first four months of this year. Nationwide, over 1.49 trillion yuan ($240 billion) worth of new homes, excluding government-subsidized affordable housing, were sold in China between January and April, an annual drop of 2.2 percent. Japan’s M2 Money Stock remained unchanged at a seasonally adjusted 3.6% compared to the preceding month.