Weak trade prevails in late morning session

Indian equity benchmarks continued their weak trade in late morning session mirroring a weak trend in other Asian bourses. The benchmarks began the May derivatives series on a sluggish note as caution prevailed over US-South Korea free trade pact. The rupee opened higher against the dollar on Friday amid fresh selling of the greenback by banks and exporters. Foreign portfolio investors stood net sellers in the domestic equity market on Thursday, as they sold shares worth Rs 64.29 crore with gross purchases and gross sales of Rs 5,441.78 crore and Rs 5,506.07 crore, respectively. Traders failed to draw any support from 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 per cent, as it will enhance production and the movement of goods and services across Indian states. Investors took note of the analysis of growth projections by the International Monetary Fund (IMF) which highlighted that India will overtake Germany in 2022 as the world’s fourth-largest economy and push Britain out of the top five. But the challenges the South Asian nation must surmount to get there are many. These include executing a wide-ranging overhaul of the tax system, sorting out the biggest pile of distressed assets among major economies, reviving lackluster productivity, substantially increasing employment opportunities, encouraging corporate investment and overcoming a significant infrastructure shortfall.

Traders were seen piling position in Metal, Basic Materials and PSU stocks, while selling was witnessed in Realty, FMCG and Telecom stocks. Some buying activity was witnessed in Gems and Jewellery stocks on account of Akshaya Tritiya. Exports of gems and jewellery from the country increased by about 10 per cent in FY2017 and stood at $43.156 billion from $39.286 billion in FY2016. In scrip specific development, Biocon was trading in red after its consolidated net profit dropped 58 per cent to Rs 148.4 crore in the quarter ended on March 31, 2017, compared to year ago period. The company had reported a consolidated net profit of Rs 354.4 crore in the quarter ended on March 31, 2016. Financial markets will remain closed on May 1 on account of Maharashtra Day.

On the global front, Asian shares were trading mostly in red, as investors took profits after a strong week, while the Korean won weakened after US President Donald Trump said he would renegotiate or terminate a trade deal with South Korea. Japan’s industrial output fell 2.1 percent in March from the previous month, in a sign of a temporary slowdown in production. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 9,350 and 30,000 levels respectively. The market breadth on BSE was positive in the ratio of 1207:1089, while 100 scrips remained unchanged.

The BSE Sensex is currently trading at 29910.43, down by 119.31 points or 0.40% after trading in a range of 29876.35 and 30067.64. There were 16 stocks advancing against 14 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.32%, while Small cap index was up by 0.29%.

The top gaining sectoral indices on the BSE were Metal up by 2.64%, Basic Materials up by 0.97%, PSU up by 0.56%, Auto up by 0.31% and Consumer Disc up by 0.28%, while Realty down by 1.91%, FMCG down by 1.01%, Telecom down by 0.80%, TECK down by 0.57% and IT down by 0.48% were the losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 2.32%, ONGC up by 1.73%, Maruti Suzuki up by 1.39%, ICICI Bank up by 1.08% and Axis Bank up by 1.04%.

On the flip side, ITC down by 2.16%, Bharti Airtel down by 1.61%, HDFC down by 1.48%, HDFC Bank down by 1.42% and TCS down by 1.22% were the top losers.

Meanwhile, the International Monetary Fund (IMF) in its report has said that the adoption of the landmark goods and services tax (GST) from July 1 will help to raise India’s medium-term gross domestic product (GDP) growth to over 8 per cent as it will create a single national market for enhancing the efficiency of the movement of goods and services across Indian states.

Talking on the reforms undertaken by the government, Tao Zhang, Deputy Managing Director of the IMF has stated that the government has made significant progress on important economic reforms that will support strong and sustainable growth in future. He also said that they are extremely impressed by the work that is being done and expects that it will pay off in terms of higher growth in the future.

Observing that India is the ‘fastest growing emerging market economy’ in a region that remains the strongest-growing in the world, Zhang has said that the country is going to continue to grow at a fast pace, with a projected 6.8 per cent rate for FY17 and 7.2 per cent in FY18. He further said that the currency exchange initiative led to a slowdown in economic activity. However, he clarified that there are initial signs of recovery as the currency exchange has been progressing well. 

Highlighting some key factors, the deputy managing director has said that lower global oil prices have enhanced economic activity and helped lower inflation. In addition, he said that fiscal and monetary policies have also helped foster economic stability. He noted that labour market reforms should take priority as India persists with its strong reform efforts. He also observed that these would facilitate greater and better quality jobs, raise female labour force participation and enhance the impact of recent product market reforms.

The CNX Nifty is currently trading at 9302.25, down by 39.90 points or 0.43% after trading in a range of 9290.25 and 9342.65. There were 26 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Hindalco up by 3.46%, Tata Steel up by 2.49%, ONGC up by 1.93%, Bank of Baroda up by 1.87% and Grasim Industries up by 1.61%.

On the flip side, ITC down by 2.36%, Bharti Airtel down by 1.54%, Indian Oil Corporation down by 1.52%, HDFC Bank down by 1.51% and HDFC down by 1.46% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 119.05 points or 0.48% to 24,579.43, Nikkei 225 decreased 75.48 points or 0.39% to 19,176.39, Jakarta Composite decreased 11.35 points or 0.2% to 5,695.68, Shanghai Composite decreased 10.61 points or 0.34% to 3,141.57, Taiwan Weighted decreased 7.56 points or 0.08% to 9,853.06 and KOSPI Index decreased 3.98 points or 0.18% to 2,205.48.

On the other hand, FTSE Bursa Malaysia KLCI increased 1.62 points or 0.09% to 1,769.54.