Indian equity indices end a lackluster session with small cut

Indian equity benchmarks showed a volte-face on Wednesday as what started on a promising note ended as a dismal show. The optimism in local markets petered out completely by the end of trade and the benchmarks drifted into the negative territory despite getting off to a gap-up opening. Sentiments remained subdued on the report that Global agency Fitch Ratings retained the 'BBB-' sovereign rating-the lowest investment grade-on India as weak public finances continue to constrain India's ratings. The rating agency said that India's sovereign ratings balance a strong medium-term growth outlook and favourable external balances with a weak fiscal position and difficult business environment. Further, many investors remained on the sidelines and refrained from any buying activity ahead of the US Federal Reserve's policy outcome, due later today. The Fed is widely expected to stand pat on interest rates, but the post meet statement of the Fed chair Janet Yellen may offer hints on the possibility of a rate hike in June. Traders are largely indulging in stock specific activity, tracking quarterly earnings reports, sales and shipments data of automobile and cement companies, and other corporate news. Meanwhile, market participants got some comfort with the report that Prime Minister Narendra Modi is reviewing the progress of the government's agenda to curb black-money and tax evasion as well as the roll out of the Goods and Services Tax (GST). The government intends to implement the GST from July 1, 2017. Further, Asian Development Bank's (ADB's) Chief Economist Yasuyuki Sawada said the reforms like the GST and the new bankruptcy law will make it easier to do business in India.

On the global front, Asian equity markets ended mixed on Wednesday, as strong earnings and manufacturing data boosted risk appetite, while expectations that the Federal Reserve will signal a June rate increase later in the session kept investors on their toes. The US central bank is expected to hold rates steady amid signs of softening inflation, but its commentary will be scrutinized for new clues as to the Fed's views on the economy and interest rates. Chinese shares edged lower, with investors turning cautious on lingering worries about the country's tougher regulations and a shift toward tighter policy. Meanwhile, European markets were trading lower in early trade, as investors turned cautious ahead of the May 7 vote in the country to elect the new president. Trading sentiment was dampened after reports emerged that the U.K. could be facing a Brexit bill from the European Union of up to 100 billion euro.

Back home, the benchmark got off to a positive start in the morning trade as investors were largely influenced by the supportive leads from Asian and US markets. However, the indices dropped into the red terrain sooner than later, lacking any significant upside cues. Thereafter, the indices kept oscillating in a narrow range through the day's trade. Eventually, the NSE's 50-share broadly followed index Nifty, suffered a moderate cut of around two points to settle above the crucial 9,300 support level, while Bombay Stock Exchange's Sensitive Index-Sensex- slipped around twenty-six points and closed below the psychological 29,900 mark. On the BSE sectoral space, Healthcare index remained the top laggard in the space and settled with around a percent laceration followed by the Oil & Gas and Consumer Durable pockets, which went home with around half a percent cuts. However, the high beta Realty along with export driven software and technology counters remained the top gainers in the space with gains of around a percent.

The market breadth remained pessimistic, as there were 1360 shares on the gaining side against 1485 shares on the losing side, while 161 shares remained unchanged.

Finally, the BSE Sensex decreased 26.38 points or 0.09% to 29894.80, while the CNX Nifty was down by 1.85 points or 0.02% to 9,311.95. 

The BSE Sensex touched a high and a low of 30020.59 and 29846.57, respectively and there were 13 stocks on gainers side as against 17 stocks on the losers side on the index.

The broader indices ended mixed; the BSE Mid cap index declined 0.30%, while Small cap index was up by 0.07%.

The top gaining sectoral indices on the BSE were Realty up by 1.54%, IT up by 1.40%, TECK up by 0.94%, Basic Materials up by 0.37% and Power up by 0.29%, while Healthcare down by 0.98%, Oil & Gas down by 0.67%, Consumer Durables down by 0.50%, Capital Goods down by 0.49% and Industrials down by 0.44% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 2.58%, TCS up by 1.98%, Infosys up by 1.59%, Coal India up by 1.49% and Bajaj Auto up by 0.64%. On the flip side, Lupin down by 3.09%, ICICI Bank down by 1.16%, Tata Motors down by 1.11%, Tata Steel down by 1.03% and Adani Ports & SEZ down by 0.95% were the top losers.

Meanwhile, NITI Aayog Vice Chairman Arvind Panagariya has said that India needs to work simultaneously on both manufacturing sector leg and services sector leg, but more emphasis should be given to manufacturing sector as it creates jobs in large numbers.

Observing that companies like Maruti in India still employs large number of workers, Panagariya has said that there were perception that robots are going to steal jobs. He also said that deployment of robots by companies need not be a big anxiety as the exercise won’t take away jobs, at least not in the next 20 years. Adding further, he said that they have to use all instruments at their disposal.

On setting of quality standards for products, he pointed out that in an economy like India’s, where there is a large informal sector, the imposition of safety standards is going to be very difficult for several informal sectors and also from regulation point of view, to implement the regulation becomes very difficult. Citing the example of Indian carpet industry, he said that unless it is housed in larger factory organisation, it will be difficult to implement safety and labour regulations as the bulk of the Indian carpet industry is spread out.

The CNX Nifty traded in a range of 9,346.30 and 9,298.40. There were 25 stocks in green as against 26 stocks in red on the index.

The top gainers on Nifty were Bharti Infratel up by 2.48%, Power Grid up by 2.45%, Ultratech Cement up by 2.27%, TCS up by 2.07% and Coal India up by 1.82%. On the flip side, Lupin down by 2.98%, Aurobindo Pharma down by 2.04%, Tata Power down by 1.79%, Hindalco down by 1.60% and Zee Entertainment down by 1.31% were the top losers.

European markets were trading in red; Germany’s DAX decreased 21.21 points or 0.17% to 12,486.69, UK’s FTSE 100 slipped 18.88 points or 0.26% to 7,231.17 and France’s CAC was down by 16.42 points or 0.31% to 5,287.73.

Asian equity markets ended mixed on Wednesday as Apple posted a surprise fall in iPhone sales in the second quarter and investors waited for cues from the Federal Reserve meeting. The US central bank is expected to hold rates steady amid signs of softening inflation, but its commentary will be scrutinized for new clues as to the Fed's views on the economy and interest rates. French politics also remained in focus ahead of the May 7 vote in the country to elect the new president. Moody's Investors Service said the escalation of tensions between the North Korean regime and the new US administration broadens the nature of geopolitical risk for South Korea, which is the most salient event risk for the sovereign and a constraint on the rating. Chinese shares ended lower, with investors turning cautious on lingering worries about the country's tougher regulations and a shift toward tighter policy. Markets in Hong Kong and South Korea were closed for the Buddha's birthday, while Japanese financial markets remain closed for the rest of the week for the Golden Week holiday.