Indian equities decline for second straight session

Indian stock markets have prolonged the weakness for second straight day and finished the session on a dull note, below the neutral lines, as investors booked profits in index heavyweights such as ITC, HDFC, HDFC Bank and Bharati Airtel, after a strong week and ahead of a long weekend. Sentiments remained dismal with the report that private equity investments in the first quarter of this year fell to nearly 3-year low of $2.1 billion in the absence of big ticket deals. According to the report, there was a decline both in terms of value as well as volume of deals and PE investment values dropped to the lowest level in the last 11 quarters. There were 192 PE deals worth $2.1 billion in the January-March quarter, as against 284 such transactions worth $3.02 billion in the year ago period. Leads from the Asian & European counterparts remained highly unsupportive giving no significant direction to the domestic indices, while decline in international crude oil prices too failed to enthuse the local sentiments. Caution also prevailed as market participants were not keen to raise bets at the prevailing record levels despite the start of May F&O series in the derivatives segment. However, losses remained capped with the International Monetary Fund Managing Director's statement that the Goods and Services Tax to be implemented from July 1 would help raise India's medium-term growth to above eight percent, as it will enhance production and the movement of goods and services across Indian states. Meanwhile, people in Uttar Pradesh and in neighbouring Uttarakhand are facing a shortage of cash in banks and ATMs, six months after the old currency notes of Rs 1,000 and 500 were demonetised in the country.

On the global front, Asian markets ended mostly lower on Friday amid renewed jitters over North Korea and conflicting signals from President Donald Trump about US trade policy. Japan's Nikkei share average ticked down further from recent five-week highs as a relief rally driven by fading political worries in Europe fizzled ahead of Golden Week holidays next week. Investors also digested a raft of local economic data, including weak industrial output data. Japan's industrial output fell 2.1 percent in March from the previous month after a 3.2% gain in February, government data showed. Further, first-quarter gross domestic product data out of Britain, France and the United States, are due later in the day. While European markets opened lower, surprisingly strong inflation figures in the region sent the euro and government bond yields climbing. The market-friendly result of the first round of elections in France helped the region's equities start the week strongly, but stocks have given back some of their gains as the week comes to an end.

Back home, after getting a weak start, the local benchmarks continued to trade below neutral line for the entire part of session, but some final hour buying help the indices to end above day's lows. The NSE's 50-share broadly followed index - Nifty plunged by over quarter percent to settle just above the crucial 9,300 support level, while Bombay Stock Exchange's Sensitive Index - Sensex took over hundred points cut and closed above the psychological 29,900 mark. However, broader markets showed some resilience by outclassing their larger peers by a big margin as investors carried forward their value hunting in beaten down shares from the midcap and small cap space.

The market breadth remained pessimistic, as there were 1396 shares on the gaining side against 1472 shares on the losing side, while 133 shares remained unchanged.

Finally, the BSE Sensex decreased 111.34 points or 0.37% to 29918.40, while the CNX Nifty was down by 38.10 points or 0.41% to 9,304.05. 

The BSE Sensex touched a high and a low of 30067.64 and 29848.21, respectively and there were 19 stocks on gainers side as against 11 stocks on the losers side on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.18%, while Small cap index was up by 0.61%.

The top gaining sectoral indices on the BSE were Metal up by 1.50%, PSU up by 1.24%, Auto up by 0.65%, Consumer Disc up by 0.44% and Basic Materials up by 0.43%, while Realty down by 1.76%, FMCG down by 1.22%, Telecom down by 0.86%, TECK down by 0.73% and IT down by 0.68% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 3.76%, SBI up by 2.66%, Maruti Suzuki up by 2.42%, ICICI Bank up by 1.62% and Asian Paints up by 1.62%. On the flip side, ITC down by 2.28%, HDFC down by 1.93%, HDFC Bank down by 1.60%, TCS down by 1.27% and Hindustan Unilever down by 1.23% were the top losers.

Meanwhile, auto makers association, Society of Indian Automobile Manufacturers (SIAM) has filed a petition in the Supreme Court pleading for a review of the judgement issued in the case of BS III Vehicles. SIAM said that the review petition has pointed out certain facts that were not covered in the Judgment, which go to the root of the matter and had influenced the Court to pass such an Order.

According to the industry association, the Supreme Court has erroneously construed an office memorandum from the Ministry of Road Transport and Highways dated March 3, 2017 to be an office memorandum dated March 3, 2015, i.e. two years earlier in holding that the government had sent a clear message to the manufacturers to stop production of BS-III vehicles before April 1, 2017. SIAM has said that according to the government assurance given three weeks before the judgment, the unsold stocks of BS-III vehicles manufactured before April 1 would be permitted to be sold and registered even after the deadline as was done when BS-II and BS-III norms were implemented. It also said that two-wheeler manufacturers and commercial vehicle makers were hit the hardest by the ruling.

In the review petition, SIAM highlighted that the staggered phase-in of BS IV emission norms for vehicles was not done to help the auto industry as mentioned in the judgment. It also pointed out that this staggering was done to ensure that adequate capacities for the BS IV fuel supply get established to expand the coverage of fuel availability to other parts of the country as per the roadmap agreed with the oil industry.

SIAM elaborated that the Supreme Court has further based its judgment on an assumption that there will be 80 per cent reduction in emissions of PM (particulate matter) between BS III and BS IV standards. Though, it noted that it may be true for only heavy vehicles, but such reduction is much less in other categories of vehicles. In its petition, SIAM also stated that the auto industry has invested Rs 25,000 crore to upgrade vehicle technologies to BS IV level and was therefore an equal contributor in ensuring the improvement in the environment.

The CNX Nifty traded in a range of 9,342.65 and 9,282.25. There were 28 stocks in green as against 23 stocks in red on the index.

The top gainers on Nifty were ONGC up by 3.88%, Bank of Baroda up by 3.45%, SBI up by 2.41%, Maruti Suzuki up by 2.15% and Hindalco up by 2.13%. On the flip side, ITC down by 2.8%, Bharti Infratel down by 2.74%, HDFC down by 1.88%, Tech Mahindra down by 1.81% and Ambuja Cements down by 1.87% were the top losers.

The European markets were trading mostly in green; Germany’s DAX increased 6.94 points or 0.06% to 12,450.73, France’s CAC increased 7.02 points or 0.13% to 5,278.72, while UK’s FTSE 100 decreased 22.14 points or 0.31% to 7,215.03.

Asian equity markets ended mostly lower on Friday, reacting to a mixed bag of US earnings and US President Donald Trump's warning of a ‘major, major conflict’ between the US and North Korea weighing on markets. Trump said a major conflict with North Korea was possible over its nuclear and ballistic missile programs, but he would prefer a diplomatic outcome to the dispute. A slew of US earnings released after the closing bell on Thursday have been less inspiring. While Google parent Alphabet and Amazon reported better-than-expected quarterly earnings and revenue, Intel and Microsoft reported lower-than-expected quarterly revenue. Starbucks' same-store sales also failed to meet Wall Street expectations. Japanese shares lost ground as investors digested a barrage of economic data. Japan's industrial output fell 2.1 percent in March from the previous month after a 3.2 percent gain in February, government data showed. The jobless rate held steady at 2.8 percent in the month, household spending fell more than expected and consumer price inflation remained stagnant at 0.2 percent, while retail sales raised more than expected, separate reports showed. Meanwhile, Chinese shares ended higher, but posted worst month of the year on fears that regulators will step up their latest crackdown on riskier types of financing and speculation, and on lingering worries over economic growth.