Benchmarks end a lackluster session with modest cut; Nifty ends above 8300 mark

Indian benchmark indices finished the week on a sluggish note as the major bourses showcased an unenthusiastic performance on Friday and settled with modes cuts of around a quarter percent.  Sentiments largely remained pessimistic in the local markets with a steady stream of negative news this week in the form of rising Brexit uncertainty and a growing crisis in Italian banks. Further, investors turned jittery after a global financial service major stated that India’s economy may grow at a slightly slower pace of 7.4% this fiscal amid weaker global demand and risk aversion, flagging methodological concerns in computation of official GDP data. However, the downside for the markets was capped with Economic Affairs Secretary Shaktikanta Das’ statement that the Finance Ministry is hoping that the prices of pulses will now be contained and help keep inflation under check due to the higher minimum support price for pulses. Also the government has decided to introduce the GST Bill on the first working day of the monsoon session of Parliament, in what could be a sign of its confidence that it can notch up the numbers for the long-pending legislation. Meanwhile, shares of print media companies gained on reports that the government is planning to raise the foreign direct investment limit in newspapers and periodicals to 49% from 26% at present. On the other hand, Telecom stocks declined after reports suggested that the telecom department is likely to soon send out demand notices to some carriers for under reporting of revenues. Further, stocks of companies involved in oil exploration & production activities came under pressure as global crude oil prices dropped.

On the global front, Asian markets ended lower on Friday, as investors remained cautious after a slump in oil prices overnight on concerns of a gasoline oversupply, worries about the level of non-performing loans at Chinese banks, another terror attack in Bangladesh and a horrifying snipper attack in Dallas, Texas. However, European stock markets were mostly higher in early trade as economic fundamentals returned to the fore, with all eyes on a US jobs report expected to give clues on American interest rate policy. Brexit-related uncertainties continued to weigh on London shares, but the pound regained some ground against the dollar.

Back home, after getting cautious start, the local benchmark indices soon drifted to lowest levels in the session as investors were largely influenced by the daunting sentiments prevailing in Asian markets. However, the psychological 8,300 and 27,100 levels proved as strong support levels for the key gauges as the benchmarks soon recovered from the lows and oscillated in a narrow band but failed to claw back into the green by the end. Finally, the NSE’s 50-share broadly followed index Nifty, suffered a moderate cut of around two tenth of a percent to settle above the crucial 8,300 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex-slipped over seventy points and closed above the psychological 27,100 mark. On the BSE sectoral space, the Capital Goods index remained the top laggard in the space and settled with around a percent cuts followed by the Oil & Gas pocket which too went home with similar losses. On the flipside, Auto stocks hogged the limelight as they settled with good gains on hopes that above normal monsoon would drive demand for two-wheelers and tractors among others, while the IT and Power counters too witnessed good buying interests. The market breadth remained pessimistic as there were 1159 shares on the gaining side against 1550 shares on the losing side, while 151 shares remained unchanged.

Finally, the BSE Sensex ended lower by 74.59 points or 0.27% to 27126.90, while the CNX Nifty dropped 14.70 points or 0.18% to 8,323.20. 

The BSE Sensex touched a high and a low 27294.82 and 27034.14, respectively. The broader indices made a mixed closing; the BSE Mid cap index ended up by 0.11%, while Small cap index was down by 0.17%.

The gaining sectoral indices on the BSE were Auto up by 0.63%, IT up by 0.06% and Power up by 0.02%, while Capital Goods down by 0.99%, Oil & Gas down by 0.98%, PSU down by 0.69%, Metal down by 0.49% and Bankex down by 0.30% were the top losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 2.38%, Tata Motors up by 2.19%, Hero MotoCorp up by 2.15%, Cipla up by 1.27% and Dr. Reddys Lab up by 0.86%. On the flip side, GAIL India down by 2.37%, Bharti Airtel down by 2.28%, Adani Ports &Special down by 1.59%, Larsen & Toubro down by 1.43% and ONGC down by 1.35% were the top losers.

Meanwhile, with Britain deciding to exit from the European Union (EU), the Indian industry body Confederation of Indian Industry (CII), which led its annual delegation to London this week to take stock of ‘The Future of UK-India Economic Relations’ has said that Brexit opened up the possibility of new opportunities as a Free Trade Agreement (FTA) between India and the UK could be easier to accomplish at a bilateral level. CII said that there was “political drive and willingness” on both the sides and the Brexit will be the best era for Indian industries to collaborate.

The industry body pointed that India had been negotiating a Free Trade Agreement with the EU for over nine years, but was stuck due to various issues. Now these issues will instantly go away between India and the UK and the agreement would be beneficial for both the sides. CII said that “India-UK relations will sustain with or without Britain’s relationship with the EU and will only thrive and prosper in the years ahead.”

CII further said that the both countries share a number of complementarities and there are lower sensitivities, entering into an FTA with Britain will now be faster than with the entire bloc. Sectors such as automobile will not be sensitive in an FTA with the UK as the UK is not into manufacturing of too many small cars. Similarly, products such as textile from India could gain easier access to the UK. Besides, there is lot of export opportunities for Indian companies in sectors including garments and textiles in Britain.

The CNX Nifty traded in a range of 8,353.30 and 8,287.55. There were 23 stocks advancing against 27 decliners on the index.

The top gainers on Nifty were Tata Motors up by 2.45%, Hero MotoCorp up by 2.33%, Asian Paints up by 2.31%, Indusind Bank up by 1.92% and Aurobindo Pharma up by 1.85%. On the flip side, Idea Cellular down by 2.63%, GAIL India down by 2.48%, Bharti Airtel down by 2.30%, Bank of Baroda down by 2.24% and BHEL down by 1.46% were the top losers.

European markets were trading mostly in green, France’s CAC was up by 30.96 points or 0.75% to 4,148.81, Germany’s DAX increased by 92.02 points or 0.98% to 9,510.80, UK’s FTSE 100 was marginally down by 7.31 points or 0.11% to 6,526.48.

Asian markets ended lower in a cautious trade on Friday, as investors awaited the all-important US jobs report due tonight for clues on the trajectory of US interest rates. A slump in oil prices overnight on concerns of a gasoline oversupply, worries about the level of non-performing loans at Chinese banks, another terror attack in Bangladesh and a horrifying snipper attack in Dallas, Texas, also weighed on investor sentiment. After the dismal May jobs report in which only 38,000 jobs were added, today's report is expected to show an increase of about 180,000 jobs in June. A stronger-than-expected report on the labor market following two straight months of disappointing job growth would restore investor confidence in the health of the world's largest economy. At the same time, a surprisingly weak reading in light of continued uncertainties surrounding Brexit might force the Federal Reserve to cut rates rather than increase them. Chinese shares fell, as a weak yuan spurred fears of more capital outflows and the focus returned to emerging risks from non-performing loans at China's banks. Investors shrugged off central bank data showing a surprise increase in June foreign exchange reserves. Japanese shares fell sharply, as investors contended with a stronger yen and disappointing readings on labor cash earnings as well as nominal wage growth. Also, Japan's current account surplus shrank for the first time in 22 months in May as a firming yen curbed gains from investment overseas. The Taiwanese market was closed due to Typhoon Nepartak, while the Indonesian market remained closed for Eid-ul-Fitr.