Indian benchmarks settle with moderate losses

Indian equity benchmarks carried forward their southward journey for yet another session on Wednesday, as market participants waited for minutes of a June policy meet by the Reserve Bank of India (RBI) to gauge the direction of interest rates in the months ahead. Today's session largely remained characterized by choppiness as the aimless indices moved only sideways in a tight band lacking triggers for most part of the day. Sentiments remained downbeat with the inclusion of Chinese mainland stocks to the MSCI index, which could lead to hundreds of billions of dollars worth of share purchases, shrinking shares of other emerging markets, including India.

Some concerns also came with CARE Ratings' latest report that the fiscal deficit estimate for 2017-18 is set to rise to 3.35% from present 3.24% of GDP, impacted by Rs 17,780 crore shortfall in non-tax revenue (NTR) target from telecom services. Besides, muted trend in other Asian markets following a renewed slump in oil prices to seven-month lows also weighed the sentiment. However, losses remained capped with the report that India's farm sector is poised for a boom as monsoon's biggest threat, the El Nino phenomenon, has been completely ruled out and heavy showers in the key agricultural regions of Punjab, Haryana and Uttar Pradesh have created the right conditions for crop planting. The widely respected Australian weather office had formally withdrawn its El Nino alert and said that outlook for the phenomenon was inactive. Meanwhile, India has witnessed a whopping 30% rise in the foreign exchange earnings from the tourism sector in the month of May, as compared to the same period in the last two years and a 19% increase in tourist footfalls. According to the Reserve Bank of India's credit data of Travel Head from Balance of Payments, foreign exchange earnings (FEEs) during the month of May 2017 were Rs 12,403 crore as compared to Rs 10,260 crore in May 2016 and Rs 9,505 crore in May 2015.

On the global front, Asian markets ended mostly lower on Wednesday, tracking losses on Wall Street overnight, after crude oil futures tumbled into negative territory. Investors reaction was muted to news that US index provider MSCI has decided to add Chinese A-shares into its benchmark Emerging Markets Index. MSCI will add 222 China A shares in the index starting in June 2018. Geopolitical tensions also took center stage after US President Donald Trump tweeted that efforts by China to rein in North Korea have not worked. Trump's warning came exactly a day before US and Chinese officials are to meet in Washington to talk about North Korea. Japanese shares lost ground as a stronger yen as well as falling oil prices sapped investors' appetite for risk. Further, Japan's Nikkei share average declined after a slightly stronger yen sapped risk appetite, while mining stocks underperformed on the back of weaker oil prices.

Back home, shares of aviation companies continued their northward journey for second consecutive day, with all the three airliners SpiceJet, InterGlobe Aviation and Jet Airways ending higher in the range of 1% to 3% on the BSE after good growth in passenger traffic and lower crude oil prices. However, Oil explorers such as Oil & Natural Gas Corporation (ONGC) declined after global oil prices hit seven-month lows. The market breadth remained pessimistic, as there were 1266 shares on the gaining side against 1366 shares on the losing side, while 185 shares remained unchanged.

Finally, the BSE Sensex declined 13.89 points or 0.04% to 31283.64, while the CNX Nifty was down by 19.90 points or 0.21% to 9,633.60. 

The BSE Sensex touched a high and a low of 31336.44 and 31193.61, respectively and there were 15 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 0.05%, while Small cap index was up by 0.11%.

The top gaining sectoral indices on the BSE were FMCG up by 0.73%, Realty up by 0.51%, Power up by 0.19% and Capital Goods up by 0.06%, while Metal down by 1.20%, Oil & Gas down by 0.86%, PSU down by 0.68%, Auto down by 0.66% and IT down by 0.50% were the top losing indices on BSE.

The top gainers on the Sensex were Hindustan Unilever up by 2.52%, Kotak Mahindra Bank up by 0.85%, Sun Pharma up by 0.80%, Wipro up by 0.73% and Maruti Suzuki up by 0.71%. On the flip side, Tata Motors down by 2.11%, ONGC down by 2.10%, Lupin down by 1.63%, Adani Ports & SEZ down by 1.58% and TCS down by 1.45% were the top losers.

Meanwhile, Commerce Secretary Rita Teaotia has said in a bid to boost India’s shipments, leading exporters and industry associations have sought incentives such as credit at affordable rates from the government. She added that Federation of Indian Export Organisations (FIEO) also raised certain issues related with Goods and Services Tax (GST) and urged the government to extend 5 percent benefit to the exporters of branded products.

In addition, the Commerce Secretary has said that exporters flagged the issue of facilitation of e- commerce trade from more number of ports and ‘how the refund process for the e-commerce would be treated under the new tax regime. She also said that many export promotion councils (EPCs) have sought additional support through the Merchandise Exports from India Scheme (MEIS), enhanced interest subvention. Therefore, she noted that many of the comments and inputs were focused on exports, which has started showing positive growth. Though, she said exporters would need support in order to continue to grow over the next few years. Under MEIS, the government provides duty benefits at 2 percent, 3 percent and 5 percent, depending upon the product and country.

Meanwhile, India’s merchandise exports grew by 8.32 percent to $24014.62 million in May 2017 on the back of robust performance by sectors such as petroleum, chemicals, engineering goods as well as gems and jewellery. However, the overall trade deficit shot up to nearly 30-month high of $13841.72 million in May as against $6272.90 million in the year-ago period, driven by a sharp uptick in gold imports.

The CNX Nifty traded in a range of 9,650.45 and 9,608.60. There were 17 stocks in green as against 34 stocks in red on the index.

The top gainers on Nifty were Hindustan Unilever up by 3.11%, Reliance Industries up by 1.09%, Maruti Suzuki up by 1%, Kotak Mahindra Bank up by 0.86% and Sun Pharma up by 0.85%. On the flip side, ONGC down by 2.66%, Hindalco down by 2.62%, Bosch down by 2.08%, GAIL India down by 1.92% and Tata Motors down by 1.90% were the top losers.

The European markets were trading in red; UK’s FTSE 100 decreased 24.6 points or 0.33% to 7,448.11, Germany’s DAX decreased 84.89 points or 0.66% to 12,729.90 and France’s CAC decreased 54.75 points or 1.03% to 5,238.90.

Asian equity markets ended mostly in red on Wednesday, tracking losses on Wall Street overnight, after US crude futures fell more than 2 percent to enter into bear market territory on concerns about oversupply amid indications of rising production in Nigeria and Libya. A decision by US index provider MSCI to add mainland China-listed shares to its widely followed stock indexes failed to boost investors' risk appetite. Geopolitical tensions also took center stage after US President Donald Trump tweeted that efforts by China to rein in North Korea have not worked. Trump's warning came exactly a day before US and Chinese officials are to meet in Washington to talk about North Korea. Japanese shares lost ground as a stronger yen as well as falling oil prices sapped investors' appetite for risk.