Post Session: Quick Review

Indian equity benchmarks traded on a lackluster note in a narrow range and ended the session near neutral line as participants trimmed their positions. The market breadth was mildly in favour of advances, while the Pharma index gained for third session after a 10 days fall. The equity benchmarks made a sluggish start and traded slightly in red in early deals on reports that India’s economy grew by 7.1% in the fiscal year 2016-17, in line with the official estimate, slowing from 8% in 2015-16, while for the fourth quarter of FY17, gross domestic product (GDP) slowed sharply to 6.1%, down from 7% in the previous quarter. As per Central Statistics Office (CSO) data, real GDP at constant (2011-12) prices for the year 2016-17 is estimated at Rs 121.90 lakh crore, showing a growth rate of 7.1% over the year 2015-16 of Rs 113.81 lakh crore. In terms of gross value added (GVA), which excludes indirect taxes, the growth came in even lower at 6.6% over the GVA for 2015-16. Separately, the growth of eight core sectors, which contribute 38% to the total industrial production, slowed down to a three month low of 2.5% in April 2017 as against 8.7% in April 2016, mainly due to lower coal, crude oil and cement productions. According to the data released by the ministry of Commerce and Industry, the combined Index of eight core industries coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity stood at 118.6 in April, 2017, which was 2.5% higher compared to the index of April, 2016.

The downside was however limited on report that the Narendra Modi government’s decision to unveil the budget early seems to have paid off with spending having picked pace in the first month of the financial year itself. The government spent 11.3% of the budgeted expenditure in April, with capital expenditure topping the overall spending. Fiscal deficit in fiscal 2017 was 3.5% of GDP, in line with the budget projection, reflecting the government’s commitment to the process of fiscal consolidation. In fiscal 2016, the deficit was 3.9% of GDP. India’s per capita income grew by 9.7% to Rs 1,03,219 in 2016-17 from Rs 94,130 a year ago. In 2015-16, the rate of growth of the country’s per capita net income stood at 7.4%. In real terms (at 2011-12 prices), per capita income in 2016-17 rose 5.7% to Rs 82,269, against Rs 77,803 a year ago. Separately, Chief Economic Adviser Arvind Subramanian said that GDP growth is expected to further pick up by 0.75 per cent this fiscal on the back of policy support including macroeconomic measures. He said that demonetization had made a temporary impact on the economy but it should get better as remonetisation progresses.

On the global front, Asian markets closed mixed, with Nikkei closing in green after manufacturing surveys showed a gain in Japan. Japanese companies picked up the pace of their investment in plant and equipment in January-March, highlighting a nascent return to the level of business spending needed to drive economic recovery and put a decisive end to deflation. Shanghai Composite closed in red after China’s manufacturing activity unexpectedly contracted in May for the first time in 11 months and companies shed more jobs as demand weakened and shrinking factory prices dented profits. European markets were trading in green despite mounting uncertainty over the outcome of the upcoming UK general elections.

Back home, automobile stocks showed mixed trend on announcing the sales figure for month of May. Shares of state-run oil marketing companies such as Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL) and Indian Oil Corporation (IOC) closed in negative zone despite a hike in petrol and diesel prices.

The BSE Sensex ended at 31149.05, up by 3.25 points or 0.01% after trading in a range of 31062.02 and 31213.12. There were 15 stocks advancing against 15 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.47%, while Small cap index was up by 1.02%. (Provisional)

The top gaining sectoral indices on the BSE were FMCG up by 1.18%, Healthcare up by 1.14%, Capital Goods up by 0.98%, Industrials up by 0.84% and Consumer Durables up by 0.72%, while Oil & Gas down by 1.63%, Energy down by 1.10%, Metal down by 0.99%, PSU down by 0.67% and Bankex down by 0.46% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Adani Ports & Special Economic Zone up by 3.67%, Hindustan Unilever up by 2.69%, Larsen & Toubro up by 1.86%, Sun Pharma up by 1.52% and Coal India up by 1.03%. (Provisional)

On the flip side, ICICI Bank down by 2.02%, ONGC down by 1.72%, GAIL India down by 1.67%, Bharti Airtel down by 1.55% and Tata Steel down by 1.20% were the top losers. (Provisional)

Meanwhile, India’s manufacturing sector growth slipped to a three-month low in May due to softer expansions in new orders and production. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ Index (PMI)-a composite single-figure indicator of manufacturing performance- was down to 51.6 in May from 52.5 in April. However, the reading signaled an expansion for the fifth consecutive month, remaining above the no-change mark of 50.0.

As per the survey, while a further upturn in new business supported output growth, incoming new work rose at the weakest pace since February with slowdowns evident in the consumer and intermediate goods categories.  The spending patterns remained varied with employment down but quantities of purchases up from April.
The survey said that holdings of finished goods decreased in May as companies sought to fulfill orders from stocks. Besides, international demand for Indian-manufactured goods deteriorated in the reported month, as signaled by a decline in new export orders. The contraction was only slight, but ended a three-month sequence of growth.

On inflation front, the survey said that the rate of inflation softened to the slowest in eight months. However, factory gate charges increased at a slightly quicker pace than in April. Besides, cost burdens facing Indian goods producers continued to rise in May with chemicals, metals, paper and plastics all reported to be up in price. While, degree of optimism climbed to a six-month high, business confidence improved in May, with firms expecting new product launches, machinery acquisitions and marketing campaigns to support output growth in the year ahead.

The CNX Nifty ended at 9616.65, down by 4.60 points or 0.05% after trading in a range of 9589.90 and 9634.65. There were 24 stocks advancing against 27 stocks declining on the index. (Provisional)

The top gainers on Nifty were Adani Ports & Special Economic Zone up by 3.45%, Bharti Infratel up by 2.78%, Hindustan Unilever up by 2.71%, Bosch up by 2.45% and Larsen & Toubro up by 2.06%. (Provisional)

On the flip side, Indian Oil Corporation down by 3.60%, Vedanta down by 3.23%, ICICI Bank down by 2.01%, Hindalco down by 1.57% and Tata Steel down by 1.48% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 23.08 points or 0.31% to 7,543.03, Germany’s DAX increased 39.84 points or 0.32% to 12,654.90 and France’s CAC increased 34.46 points or 0.65% to 5,318.09.

Asian equity markets made a mixed closing on Thursday, with Chinese shares starting the month on a bearish note after a private business survey showed manufacturing activity unexpectedly contracted in May, fuelling worries that the economy may be cooling more rapidly than expected. The latest survey from Caixin revealed a manufacturing PMI score of 49.6, down from 50.3 in April and missing forecasts for a score of 50.1. Other regional manufacturing reports painted a mixed picture, with activity in Japan's manufacturing sector expanding at a faster rate in May and Australia's manufacturing sector expanding at a slower pace, while South Korea's manufacturing activity remained in contraction. Investors keenly awaited Friday's US non-farm payrolls numbers as a positive report could pave the way for a rate hike in mid-June. Traders also awaited US President Donald Trump's decision on whether the US will pull out of the historic Paris climate accord. Meanwhile, Japanese shares snapped a four-day losing streak, lifted by upbeat domestic data.