Post Session: Quick Review

Indian equity benchmarks traded on a firm note for most part of the day but selling in last hour of trade dragged the markets lower to end in red. The market breath turned in favor of decline in last hour of trade. Gold held steady as investors remained cautious ahead of a two-day US Federal Reserve meeting that is likely to provide hints on the central bank’s interest rate policy for the remainder of the year. The equity benchmarks made a positive start and traded slightly in green in early deals on signs of recovery in the global markets and on getting double dose of good macro data. India’s industrial production grew by 3.1 percent in April 2017, as compared to 2.7 percent in the month of March 2017 and against a drop of 1.2 percent in February 2017. The growth was due to good performance of electricity, mining and manufacturing sectors. The Index of Industrial Production (IIP) for the month of April 2017 stood at 117.9. The cumulative growth for the period April-March 2016-17 over the corresponding period of the previous year stood at 5.0 percent. Consumer inflation fell to its lowest in at least five years in May because of softer food prices, raising hopes the Reserve Bank of India (RBI) may cut rates to boost the struggling industrial sector. Retail inflation declined to 2.1% in May from 2.99% in April. Meanwhile, Union minister of State for Civil Aviation Jayant Sinha said that India's Gross Domestic Product (GDP) is currently growing at 7 to 8 per cent. If it is looked at in the context of purchasing power parity (PPP) India’s economy is worth 9.5 trillion dollars. In the next decade, it will contribute 11 trillion dollars to the world economy.

The street took note of finance ministry official’s statement that food subsidy in the month of April totaled at Rs 63,556 crore, which was more than doubled compared with Rs 29,147 crore in year-ago month. It was impacted due to payment of last year dues by the government. Fuel subsidy during the month totaled at Rs 20,900 crore against nil in corresponding month of last year while fertilizer subsidy stood at Rs 15,715 crore in April against nil in same month last year. A global markets report highlighted that Indian employers expect steady hiring outlook for next three months, but their confidence has dipped to the least optimistic level since 2005 amid uncertainties in global markets. The survey conducted across India indicated that the hiring activity is expected to slow for the sixth consecutive quarter.

On the global front, Asian markets closed mostly in green. Japan stocks closed in red as losses in the Precision Instruments, Electrical/Machinery and Communication sectors led shares lower. A senior central bank official said that the Bank of Japan will continue to pursue necessary monetary policy steps to stabilize prices, while keeping an eye on how they affect its financial health. European markets were trading in green as they recovered from a seven-week low brought on by jitters in the tech industry and looked forward to monetary policy announcements later in the week.

Back home, tyre stocks MRF, Apollo Tyre, Ceat, JK Tyre & industries and Balkrishna Industries closed in red after global rubber body cuts 2017 world supply estimates.

The BSE Sensex ended at 31084.61, down by 11.09 points or 0.04% after trading in a range of 31062.34 and 31260.77. There were 15 stocks advancing against 15 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index was down by 0.12%, while Small cap index was up by 0.29%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 0.71%, Power up by 0.61%, Utilities up by 0.53%, FMCG up by 0.39% and Consumer Durables up by 0.16%, while IT down by 1.05%, Metal down by 0.97%, TECK down by 0.93%, Auto down by 0.58% and Energy down by 0.48% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Lupin up by 1.73%, Power Grid up by 1.55%, HDFC up by 1.37%, NTPC up by 1.27% and Adani Ports & Special Economic Zone up by 0.87%. (Provisional)

On the flip side, Tata Motors down by 1.80%, Wipro down by 1.63%, TCS down by 1.52%, Reliance Industries down by 0.69% and Coal India down by 0.60% were the top losers. (Provisional)

Meanwhile, amidst spreading demand for the farm loan waivers across the country, Finance Minister Arun Jaitley has clarified that the central government will not be part of a state’s fiscal leverage in waiving farm loans. Clearing the air on whether the Centre would financially support states that are offering farm loan waivers, Jaitley categorically said that states which want to go for these kinds of schemes should generate the funds from their own resources. 

Jaitley’s comments came after Maharashtra joined a growing list of states that announced costly bailouts for farmers following widespread protests. Maharashtra government announced a loan waiver for over one crore farmers who have land holdings of less than five acres and this move would cost the state exchequer Rs 30,000 crore.

On the same issue, the Reserve Bank of India (RBI) too had recently expressed concern that rush for such actions may harm the country’s fiscal health and may have inflationary spillovers. It warned that unless there is existing fiscal space in the state budgets, the states should avoid going down the slippery path of farm loan waivers, as it would be risky to tread on that path.

The CNX Nifty ended at 9597.50, down by 18.90 points or 0.20% after trading in a range of 9595.40 and 9654.15. There were 18 stocks advancing against 33 stocks declining on the index. (Provisional)

The top gainers on Nifty were Power Grid up by 1.72%, Lupin up by 1.56%, NTPC up by 1.20%, Bosch up by 1.07% and Bank of Baroda up by 1.04%. (Provisional)
On the flip side, Vedanta down by 2.77%, HCL Tech down by 2.26%, Tata Motors - DVR down by 1.82%, Tata Motors down by 1.70% and Wipro down by 1.64% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 7.25 points or 0.1% to 7,519.12, Germany’s DAX increased 65.65 points or 0.52% to 12,756.09 and France’s CAC increased 19.17 points or 0.37% to 5,259.76.

Asian equity markets ended mostly in green on Tuesday despite weak overnight cues from Wall Street. While the yen held steady against the dollar ahead of a slew of central bank meetings this week, oil prices rose on reports that Saudi Arabia was making significant supply cuts to customers. Chinese shares eked out modest gains despite speculation that the People's Bank of China will likely raise short-term interest rates this week if the Fed raises rates as expected. However, Japanese shares closed marginally lower as a selloff in technology shares ebbed somewhat and the yen held steady ahead of US Attorney General Jeff Sessions' testimony before the Senate Intelligence Committee later today to explain his role in the Russia investigation.