Post Session: Quick Review

Stock markets on Monday went on a roller-coaster ride as traders remained on sidelines ahead of the upcoming expiry of May derivative contracts. Prevailing caution ahead of the US Fed move and its subsequent impact on movement of the dollar, also kept the price gains in check at D-street. Markets started off with a gap-up opening but lost momentum gradually to enter into red in noon deals as traders remained concerned with Reserve Bank of India (RBI) Governor Raghuram Rajan’s statement that India should restrain itself from being “too ambitious” at a time when the world is full of uncertainties and instead focus on sensible policies to ensure a sustainable economic growth. Rajan has also said that Indian economy has certainly picked up pace in growth, but certain sectors are still under stress, making the economic recovery uneven.

Markets once again showed some strength but rally got fizzled out in dying hour of trade to end markets lower with a cut of around quarter a percent, breaching their crucial 7,750 (Nifty) and 25,300 (Sensex) levels. However, losses remained capped with private report that India’s net FDI flows are expected to rise further this fiscal to $38 billion on emergence of some ‘positive signs’ such as regulatory easing in select sectors and reform measures initiated by the government. Net FDI flows in 2015-2016 stood at around $36 billion as against $31 billion for 2014-2015.

Firm trend in Asian markets too provided some support to domestic markets with most of the Asian indices ended in green. However, Japan’s Nikkei stock index extended losses, shedding around half a percent on worrying economic data and reports that Japan’s sales tax increase would proceed as planned. European counters were trading marginally in red in early deals.

Back home, rupee rallied on increased selling of the US currency by exporters and banks. On the sectoral front, Aviation stocks flied high, as the Directorate General of Civil Aviation (DGCA) has reported that the number of passengers flown by the Indian airlines stood at 81.09 million in the January-December period last year, a jump of 20.34 percent from 67.38 million they had flown in 2014.

On the flip side, stocks related to Information Technology, which traded jubilantly for most part of the day, turned lower despite Union minister Ravi Shankar Prasad stating that the Centre will continue to take up the issue of hike in visa fees for Indian software professionals working in the US at the highest level with that government. Auto stocks too reversed gear in last leg of trade despite Union Transport Minister Nitin Gadkari stating that the draft of the much-awaited policy is ready and would be put in public domain soon, he believes it will help raise turnover in the industry to Rs 20 lakh crore from Rs 5 lakh crore at present.  

The NSE’s 50-share broadly followed index -- Nifty -- declined by around twenty points to end below the psychological 7,750 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex -- dropped by over seventy points to finish below the psychological 25,300 mark. Gains in broader markets also got erased in last leg of trade and Mid Cap and Small Cap indices ended lower by around one third of a percent.

The market breadth remained in the favour off decliners, as there were 1,083 shares on the gaining side against 1,500 shares on the losing side while 176 shares remain unchanged. (Provisional)

The BSE Sensex ended at 25230.36, down by 71.54 points or 0.28% after trading in a range of 25207.78 and 25519.26. There were 7 stocks advancing against 23 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.29%, while Small cap index down by 0.38%. (Provisional)

The top gaining sectoral indices on the BSE were FMCG up by 2.12%, Telecom up by 0.82%, Utilities up by 0.39%, Power up by 0.30% and Consumer Durables up by 0.25%, while Capital Goods down by 0.91%, Healthcare down by 0.84%, IT down by 0.83%, Realty down by 0.71% and Oil & Gas down by 0.68% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were ITC up by 5.53%, Adani Ports & Special up by 1.86%, Bharti Airtel up by 0.99%, Hindustan Unilever up by 0.99% and Coal India up by 0.43%. On the flip side, Lupin down by 3.31%, Tata Steel down by 2.74%, ONGC down by 2.47%, Bajaj Auto down by 2.28% and Cipla down by 2.22% were the top losers. (Provisional)

Meanwhile, with an aim to mobilise additional resources to fund the construction of highways, the government has come up with a plan to raise up to Rs 60,000 crore, over the next six months, by offering as many as 104 existing tollable projects on lease to private players including global funds with patient capital.

The ministry of road transport and highways has already sent the proposal to lease highway projects via the toll-operate-transfer (TOT) route to the Prime Minister’s Office for approval and the proposal is likely to be considered by the Cabinet soon. Once the Cabinet gives its nod, global tenders would be floated to lease out the projects. Around 20 global funds with long-term capital including Nomura, Macquarie and Abu Dhabi Investment Authority have shown interest in these projects, but as they are unlikely to invest in a single project, proposal has been made to bunch 5-6 projects, together valued at around $150 million.

Under the proposed model, bidders will make an upfront payment to the government and recoup their investments and returns by collecting toll over a 20-year lease period. After the lease tenure expires, these projects would return to the government’s fold. Furthermore, the investors will have the opportunity to borrow funds for the upfront payment by securitising the toll.

The 104 projects identified for the plan fetch a combined toll revenue of Rs 4,000-5,000 crore annually and the entire money generated from the TOT plan would be ploughed back for development and re-development of highways.

The CNX Nifty ended at 7731.05, down by 18.65 points or 0.24% after trading in a range of 7722.20 and 7820.60. There were 19 stocks advancing against 32 stocks declining on the index. (Provisional)

The top gainers on Nifty were ITC up by 4.99%, Power Grid up by 2.31%, Ambuja Cement up by 1.80%, Tata Power up by 1.80% and Adani Ports &Special up by 1.77%. On the flip side, Tata Steel down by 2.82%, Lupin down by 2.64%, Bank of Baroda down by 2.41%, ONGC down by 2.32% and Cipla down by 1.91% were the top losers. (Provisional)

European markets were trading in red; France’s CAC decreased 12.44 points or 0.29% to 4,341.46, UK’s FTSE 100 slipped 2.48 points or 0.04% to 6,153.84 and Germany’s DAX was down by 0.99 points or 0.01% to 9,915.03.

Asian equity markets ended mostly higher on Monday, even as worries about impending interest rate hikes by the Federal Reserve continued to reverberate through markets. Chinese shares ended higher despite worries about slowing growth and fading hopes for more policy easing. Japanese shares fell, with renewed strength in yen, weak exports data and fears the government will proceed with sales tax hike weighing on sentiment. Japanese exports dropped 10.1 percent year-over-year in April, worse than March's 6.8 percent slide, reflecting sluggish demand from China, the emerging markets and the US. Separately, the latest flash survey from Markit Economics showed that activity in Japan's manufacturing sector deteriorated at the steepest pace in over three years in May.