Post Session: Quick Review

Indian equity benchmarks traded on a lackluster note for most part of the day but buying activity in last hour of trade helped the markets to end with modest gains. The consolidation continued on the indices, with the Nifty hovering around 9650-mark now. Nifty Bank ends at record high for consecutive sessions. HDFC, HDFC Bank Kotak Mahindra Bank hit fresh 52 week high. The equity benchmarks made a weak start in early deals amid number of geopolitical events. UK Theresa May failed to win majority with Britain now has a hung parliament after Labour’s victory in Southampton Test made it impossible for any party to reach the 326 MPs required to achieve an absolute majority in the House of Commons.

The sentiments were under pressure after a survey by the Reserve Bank of India showed that the economy will gradually consolidate growth in the current fiscal. The survey enlightened that real gross domestic product (GDP) and real gross value added (GVA) are expected to grow by 7.4 percent and 7.2 percent, respectively, in 2017-18 and consolidate further by 40 basis points (bps) and 50 bps, respectively in the following year. According to the forecasters, retail inflation is expected to gradually rise to 5 per cent by the fourth quarter of 2017-18. The consumer price inflation was 2.99 per cent in April. Meanwhile, a foreign brokerage firm highlighted that India’s growth is likely to remain unchanged at 7.1 per cent this fiscal, as investments are low and government spending may not remain high given the fiscal consolidation path the country is treading. The report said the output gap in the country is likely to remain negative for longer period of time. The report said that investment still remained low in the country, while urban wages are growing but at multi-year lows. Separately, stressing that non-performing assets (NPAs) of the banks are a complex issue, the industry body, the Associated Chambers of Commerce of India (ASSOCHAM) has urged the Government and Reserve Bank of India to take flexible and pragmatic approach to deal with them, pointing that NPAs of banking sector are among the biggest road blocks for the economic growth as evident from latest data of GDP.

On the global front, Asian markets closed mixed, with Japan stocks closed in green as gains in the Insurance, Fishery and Banking sectors led shares higher. A board member of South Korea’s central bank said the nation’s potential annual growth rate will stay below 3 percent due to a shrinking workforce and the high-level of household debt among the elderly. European markets were trading in green as investors shrugged off hung parliament in the UK’s General Election. Manufacturing and industrial production in the UK rose less than expected in April, underlining concern over the British economy despite breaking three straight months of declines.

Back home, liquor stocks continued its yesterday’s run with stocks like Pioneer Distilleries, Tilaknagar Industries, Ravi Kumar Distilleries and Empee Distilleries closed in green after the Kerala state government relaxed 2014 liquor ban. Majority of IT stocks closed under pressure as the domestic sentiments were dampened following a report that the much-celebrated co-founders of Infosys are exploring a sale of their entire 12.75% stake in the company worth about Rs 28,000 crore. The promoters however denied the news.

The BSE Sensex ended at 31259.78, up by 46.42 points or 0.15% after trading in a range of 31087.28 and 31289.99. There were 14 stocks advancing against 16 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.30%, while Small cap index was up by 0.49%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 2.60%, Metal up by 1.71%, Basic Materials up by 1.00%, Auto up by 0.90% and Consumer Disc up by 0.59%, while FMCG down by 0.82%, IT down by 0.69%, TECK down by 0.56%, Consumer Durables down by 0.50% and Utilities down by 0.36% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Maruti Suzuki up by 3.06%, Tata Steel up by 1.51%, HDFC Bank up by 1.49%, Tata Motors up by 1.36% and Asian Paints up by 0.98%. (Provisional)

On the flip side, GAIL India down by 2.11%, ITC down by 1.85%, Wipro down by 1.66%, Sun Pharma down by 0.97% and Lupin down by 0.83% were the top losers. (Provisional)

Meanwhile, the Department of Industrial Policy and Promotion (DIPP) will soon be announcing the standard operating procedure (SOP) for clearance of foreign investments proposals, as the 25-year old Foreign Investment Promotion Board (FIPB) has been abolished. In this regard the DIPP has prepared a draft SOP and is circulating it to different departments including the economic affairs to seek opinion.

The finance ministry had recently stated that the DIPP, in consultation with the administrative ministry, would come out with detailed guidelines for processing of the FDI proposals and ensuring a consistency of treatment and uniformity of approach. The FIPB portal would be linked with the e-biz portal. DIPP will now be the administrative body to manage the portal which will provide guidance on foreign direct investment. Besides, the website’s focus will be more on facilitation than approvals. The Department of Economic Affairs (DEA) will clear proposals of financial services which are not regulated by a regulator or where there is more than one regulator or there is a doubt about the regulator.

The government had recently abolished the FIPB to attract more FDI by providing quick approvals under a single-window clearance system. The move is expected to improve the ease of doing business in India. Besides, FDI approval decisions in majority of the sectors have been relegated to concerned ministries and those relating to private security agencies would be decided by the Ministry of Home Affairs.

The CNX Nifty ended at 9667.15, up by 19.90 points or 0.21% after trading in a range of 9608.15 and 9676.25. There were 26 stocks advancing against 25 stocks declining on the index. (Provisional)

The top gainers on Nifty were Vedanta up by 4.14%, Maruti Suzuki up by 3.11%, Hindalco up by 2.17%, Tata Steel up by 1.60% and HDFC Bank up by 1.53%. (Provisional)

On the flip side, Tech Mahindra down by 2.49%, GAIL India down by 1.96%, ITC down by 1.89%, Wipro down by 1.63% and Tata Power down by 1.58% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 61.24 points or 0.82% to 7,511.22, Germany’s DAX increased 64.9 points or 0.51% to 12,778.48 and France’s CAC increased 27.16 points or 0.52% to 5,291.40.

Asian equity markets made a mixed closing on Friday as investors largely shrugged off political uncertainty in the UK and looked ahead to the Federal Reserve meeting due next week. British Prime Minister Theresa May's decision to call a snap general election backfired as the Conservatives fell short of 326 needed to command a parliamentary majority. Meanwhile, investors showed little reaction to ECB President Mario Draghi's surprisingly cautious tone in his post-meeting statement and the public testimony of former FBI Director James Comey about his relationship with President Donald Trump and the circumstances that led to his firing. Japanese shares ended higher as index-heavyweight SoftBank soared more than 7 percent after its unit agreed to buy US robotics firm Boston Dynamics from Alphabet. Also, the yen remained weak against the dollar after Bank of Japan Governor Haruhiko Kuroda said there is still a long way to go until the inflation target of 2 percent is achieved. The main reason for the delay in reaching the inflation target is subdued inflation expectations, he noted. Further, Chinese shares rose slightly despite inflation data painting a mixed picture of the world's second-largest economy. Consumer prices in China rose an annual 1.5 percent in May, the National Bureau of Statistics said. That was in line with expectations and up from 1.2 percent in April. The bureau also said that producer prices advanced an annual 5.5 percent, down from 6.4 percent in the previous month.