Late hour recovery help benchmarks to end near day’s high

Recovering from day’s lows, Indian benchmark indices completed the last day of the week on optimistic note, as investors showed huge buying interests in Realty, Metal and Auto counters. Sentiments got a boost after Goods and Services Tax (GST) Council constituted 18 sectoral groups like telecom, textiles, gems and jewellery, e-commerce and mining, constituting officers both from the Centre and states to address sector-specific issues and assist in smooth roll-out of the new indirect tax regime from July 1, 2017. Some support also came with UN trade report that despite stagnant foreign direct investment (FDI) inflow of $44 billion in 2016, India will most likely remain most favoured destination due to its attractiveness among MNCs for cross-border mergers and acquisitions. Besides, India Met Department (IMD) has said that a low-pressure area would form in the Bay of Bengal in the next two days, boosting prospects of accelerated progress of the monsoon, also supported the sentiments. However, global market sentiment took a hit after UK elections left no single party with a clear claim to power ahead of talks to exit the European Union (EU), sideswipe investors who had already weathered major risk events in the United States (US). Further, market participants also remained anxious as 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% and 7.2%, 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% by the fourth quarter of 2017-18.

On the global front, 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. Japanese market 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. Further, Chinese shares rose slightly despite inflation data painting a mixed picture of the world's second-largest economy. Meanwhile, European markets were advancing in early trade as oil prices gained traction and after the European Central Bank (ECB) raised its economic growth projections through 2019, and said that it would carry on with its bond purchases at least through December.

Back home, state-owned electric utilities companies such as NHPC and SJVN rallied on reports that the government has decided to provide a Rs 16,000-crore bailout package to the hydropower sector, drowning under a spate of stalled and stressed projects.  The market breadth remained pessimistic, as there were 1391 shares on the gaining side against 1289 shares on the losing side, while 177 shares remained unchanged.

Finally, the BSE Sensex gained 48.70 points or 0.16 % to 31262.06, while the CNX Nifty was up by 21 points or 0.22% to 9,668.25. 

The BSE Sensex touched a high and a low of 31289.99 and 31087.28, respectively and there were 14 stocks on gainers side as against 16 stocks on the losers side on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.28%, while Small cap index was up by 0.50%.

The top gaining sectoral indices on the BSE were Realty up by 2.60%, Metal up by 1.79%, Auto up by 0.99%, Basic Materials up by 0.78% and Consumer Disc up by 0.66%, while IT down by 0.76%, FMCG down by 0.72%, TECK down by 0.59%, Consumer Durables down by 0.55% and Utilities down by 0.22% were the top losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 3.00%, Tata Steel up by 1.47%, Tata Motors up by 1.40%, HDFC Bank up by 1.30% and Asian Paints up by 0.83%. On the flip side, GAIL India down by 1.99%, ITC down by 1.73%, Wipro down by 1.61%, Infosys down by 0.80% and ONGC down by 0.73% were the top losers.

Meanwhile, Reserve Bank of India’s (RBI) latest survey of professional forecasters on macroeconomic indicators, has reported that the Indian economy will gradually consolidate growth in the financial year 2017-18. It also reported that real gross domestic product (GDP) and real gross value added (GVA) are expected to increase by 7.4 percent and 7.2 percent, respectively, in the current fiscal and consolidate further by 40 basis points (bps) and 50 bps, respectively in the next fiscal.

According to the survey, CPI inflation is expected to slowly rise to 5 percent by the fourth quarter of 2017-18, with core inflation (i.e., excluding food & beverages, pan, tobacco and intoxicants and fuel and light) expected to remain sticky at around 4.8 per cent and it reported that the retail inflation stood at 2.99 percent in April. It also reported that WPI inflation is expected to rise moderately till December before declining to 3.0 per cent in the fourth quarter of 2017-18.

On the external front, the survey reported that foreign trade is expected to shed recent sluggishness as there is a greater optimism around growth of both exports and imports than in previous rounds of surveys, which is expected to sustain in 2018-19. It also expects the current account deficit (CAD) to rise in 2017-18 to 1.3 percent of GDP and further to 1.5 percent 2018-19.

The CNX Nifty traded in a range of 9,676.25 and 9,608.15. There were 26 stocks in green as against 25 stocks in red on the index.

The top gainers on Nifty were Vedanta up by 4.14%, Maruti Suzuki up by 3.11%, Hindalco up by 2.19%, Tata Steel up by 1.60% and HDFC Bank up by 1.53%. 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 1.39% were the top losers.

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.