Weak trade prevails in late morning session

Indian equity benchmarks continued their weak trade in late morning session on account of selling in front line blue chip counters 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 rupee depreciated against dollar in early trade after ex-FBI James Comey address to US Congress did not offer any new detail on Russia’s alleged meddling with US presidential elections last year and his investigation into a Trump’s aide.

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.

Traders were seen piling up position in Realty, Healthcare and Metal stocks, while selling was witnessed in IT, TECK and Oil & Gas stocks. In scrip specific development, Infosys was trading in red on reports that the much-celebrated co-founders of the company are exploring a sale of their entire 12.75% stake in the company worth about Rs 28,000 crore. This stunning move is said to have been triggered by the promoters’ unhappiness over the manner in which the company has been run since their exit three years ago. GVK Power & Infrastructure and Lanco Infratech were trading in red on report that investments made by them in Australian coal projects have resulted in financial mess. While GVK’s yet-to-be-developed mine would require investments of another $500 million just to set up railway infrastructure, Lanco’s production has virtually collapsed with lenders taking over the project.

On the global front, Asian shares were trading mostly in red, as investors eyed UK poll results. 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. Back home, the NSE Nifty and BSE Sensex were trading below the psychological 9,650 and 31,200 levels respectively. The market breadth on BSE was positive in the ratio of 1098:1016, while 122 scrips remained unchanged.

The BSE Sensex is currently trading at 31178.33, down by 35.03 points or 0.11% after trading in a range of 31087.28 and 31200.59. There were 10 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.02%, while Small cap index was up by 0.36%.

The top gaining sectoral indices on the BSE were Realty up by 0.70%, Healthcare up by 0.33%, Metal up by 0.29%, Consumer Disc up by 0.24% and Energy up by 0.17%, while IT down by 0.92%, TECK down by 0.74%, Oil & Gas down by 0.37%, FMCG down by 0.32% and Consumer Durables down by 0.30% were the losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 1.30%, Reliance Industries up by 0.91%, Power Grid up by 0.73%, Mahindra & Mahindra up by 0.57% and HDFC up by 0.52%.

On the flip side, Infosys down by 2.12%, GAIL India down by 1.83%, Adani Ports & Special Economic Zone down by 1.41%, Wipro down by 1.03% and Lupin down by 0.83% were the top losers.

Meanwhile, expressing anxiety over mounting protectionism in global markets, Chief Economic Adviser Arvind Subramanian has said that India now has a much bigger role in ensuring that world markets remained open in order to sustain 8-10 percent economic growth. He also said that the country seen fastest growth during the period when exports were the highest.

Subramanian has stated that middle income countries have been the greatest beneficiaries of the open market policy or globalisation and the continuation of that framework is in their interest. However, he noted that the idea of protectionism gained momentum recently after Donald Trump becomes the President of the United States and the UK decided to leave the European Union. He said that recently, the Trump administration has indicated that it wants to relook at trade agreements with countries where the United States buys more than it sells, including China, Japan, South Korea and Germany. He added that Britain has also started the process of exit from European Union.

CEA further said that although India has liberalised its FDI rules in a number of sectors, there was still need to open the economy further. He also said that the country has already done a lot to attract foreign direct investments (FDI) and would continue to do more. Talking about ultra-loose monetary policies adopted by various developed countries, he said that they were much less worried than the early indications of a pullout by the U.S. for a number of important but obvious reasons.

The CNX Nifty is currently trading at 9633.35, down by 13.90 points or 0.14% after trading in a range of 9608.15 and 9644.10. There were 19 stocks advancing against 32 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 1.49%, Indiabulls Housing Finance up by 1.19%, Maruti Suzuki up by 1.11%, Reliance Industries up by 0.84% and Mahindra & Mahindra up by 0.73%.

On the flip side, Tech Mahindra down by 2.67%, Infosys down by 2.12%, GAIL India down by 1.87%, Adani Ports & Special Economic Zone down by 1.45% and Ultratech Cement down by 1.37% were the top losers.

The Asian markets were trading mostly in red; Hang Seng decreased 78.02 points or 0.3% to 25,985.04, Jakarta Composite decreased 13.57 points or 0.24% to 5,689.35, Taiwan Weighted decreased 7.41 points or 0.07% to 10,218.37 and Shanghai Composite decreased 0.22 points or 0.01% to 3,150.12.

On the other hand, FTSE Bursa Malaysia KLCI increased 3.64 points or 0.2% to 1,789.21, KOSPI Index increased 19.51 points or 0.83% to 2,383.08 and Nikkei 225 increased 70.66 points or 0.35% to 19,979.92.