Post Session: Quick Review

Indian equity benchmarks traded on a weak note for most part of the day and ended with modest gains. Buying during the second half pulled benchmarks above neutral line with Nifty surpassing 10,500 mark. The earnings and macroeconomic data will dictate markets trend this week. Apart from on-going geopolitical concerns and on-going earnings seasons, markets will now keep an eye on upcoming Karnataka State elections. Indian equity benchmarks made a pessimistic start in early deals on Monday. The sentiments were under pressure in early trade as US on early Saturday launched air strikes on Syria in a combined operation with France and Britain in response to a suspected poison gas attack that killed dozens of people last week. Russian President Vladimir Putin told Iranian President Hassan Rouhani that further attacks by Western allies in Syria would inevitably lead to chaos in international relations.

Separately, India’s exports crossed $300 billion mark after a gap of two years in FY18 even as shipments declined in March and higher imports pushed the trade deficit for the full year to a five-year high. India’s trade deficit widened to $156.8 billion in 2017-18 compared with $108.5 billion in FY17 amid rising global trade tensions. Imports were up 7.2% to $42.8 billion in March, yielding a traded deficit of $13.7 billion against $10.7 billion in March last year. Investments through Participatory notes (P-notes) plunged to nearly nine-year low of Rs 1.06 lakh crore in the capital market at March-end amid stringent norms put in place by the regulator SEBI to check misuse of these instruments. According to the SEBI data, total value of P-note investments in Indian markets -- equity, debt, and derivatives -- slumped to a low of Rs 1,06,403 crore at March-end from Rs 1,06,760 crore at the end of the preceding month. Prior to that, the figure was Rs 1.19 lakh crore.

Meanwhile, select banking stocks were under pressure in today’s trade as the Non-performing assets (NPAs) or bad loans in the banking sector are set to shoot up by at least Rs 8,000 crore as advances to the scam-hit Gitanjali Gems group have turned bad during the quarter ended March 31. Banks will have to make provisioning of Rs 8,000 crore for Gitanjali alone. A consortium of 21 banks led by Allahabad Bank had first extended working capital loan to it in 2010-11. In 2014, ICICI Bank became the lead banker as it had highest exposure of about Rs 900 crore. Separately, UCO Bank tanked as the Central Bureau of Investigation (CBI) has filed a case against a former chairman of state-run bank and several business executives alleging criminal conspiracy that caused a loss of Rs 621 crore ($95.17 million). Majority of sugar stocks closed in red on report that the government is unlikely to give any export subsidy to sugar mills even as it has asked mills to give priority to clear sugar arrears to farmers, which has mounted to more than Rs 18,000 crore. A food ministry official said that at present there is no proposal by the government to give any export subsidy to sugar mills.

However, buying crept in with report highlighting that India’s inflation on wholesale level softened slightly in the month of March, in line with easing retail inflation, aided by fall in prices of food articles, mainly pulses and vegetables. According to the latest data released by the government, Wholesale Price Index (WPI) stood at 2.47% (provisional) for the month of March, 2018 (over March, 2017) as compared to 2.48% (provisional) for the previous month and 5.11% during the corresponding month of the previous year.  Some support came with Asian Development Bank (ADB) stating that India will be able to attain a growth of 8% in a significant manner if the country is able to reframe its investment parameter and make its exports competitive. Efforts will also have to be made to rationalize agriculture marketing as this is the area where there is scope for more reforms. Additionally, with more than half of India’s population under the age of 27, the World Economic Forum (WEF) President Borge Brende said that the country can play a pivotal role in shaping the global fourth industrial revolution. He also said that India can lead the fourth industrial revolution and simultaneously enhance the quality, equity and sustainability of its own growth and development outcomes.

On the global front, Asian markets closed mixed amid Syria fallout. Investors were keeping a wary eye on Japanese politics after a survey showed support for Japanese Prime Minister Shinzo Abe had fallen to 26.7%, the lowest since he took office in late 2012. A private poll showed that China likely carried most of its strong economic momentum from last year into the first quarter of 2018, with government crackdowns on financial risks and industrial pollution dragging less on activity than earlier expected. The European markets were trading mostly in green as tensions eased in the Middle East. 

Back home, IT stocks closed in red dragged by the index heavyweight Infosys. Shares of Infosys fell as the company lowered its margin guidance to 22-24 per cent for FY19 from 23-25 per cent in FY18. The company gave FY19 revenue guidance of 6-8 per cent in constant currency terms and 7-9 per cent in dollar terms which just met Street expectation.

The BSE Sensex ended at 34314.57, up by 121.92 points or 0.36% after trading in a range of 33899.34 and 34341.46. There were 21 stocks advancing against 10 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.37%, while Small cap index was up by 0.55%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 1.78%, Healthcare up by 1.13%, FMCG up by 0.96%, Basic Materials up by 0.86% and Power up by 0.81%, while IT down by 0.73%, TECK down by 0.63%, Telecom down by 0.46%, Consumer Durables down by 0.22% and Oil & Gas down by 0.18% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Hero MotoCorp up by 2.00%, Kotak Mahindra Bank up by 1.96%, NTPC up by 1.75%, HDFC up by 1.60% and Mahindra & Mahindra up by 1.55%. (Provisional)

On the flip side, Tata Motors down by 4.67%, Tata Motors - DVR down by 4.59%, Infosys down by 2.84%, Wipro down by 1.12% and SBI down by 0.76% were the top losers. (Provisional)

Meanwhile, in line with easing retail inflation, India’s inflation on wholesale level also softened slightly in the month of March, aided by fall in prices of food articles, mainly pulses and vegetables. The wholesale price index (WPI) declined for the fourth straight month. According to the latest data released by the government, WPI stood at 2.47% (provisional) for the month of March, 2018 (over March, 2017) as compared to 2.48% (provisional) for the previous month and 5.11% during the corresponding month of the previous year. Build up inflation rate in the financial year so far was 2.47% compared to a build up rate of 5.11% in the corresponding period of the previous year.

Component wise, primary articles index having weight of 22.62%, dropped 0.5% to 127.4 (provisional) from 128 (provisional) for the previous month. Among the primary articles, the index for ‘Food Articles’ group declined by 0.4% to 137.2 (provisional) from 137.8 (provisional) for the previous month, the index for ‘Non-Food Articles’ group was down by 0.3% to 120.2 (provisional) from 120.6 (provisional) for the previous month, the index for ‘Minerals’ group declined by 2.0% to 119.7 (provisional) from 122.2 (provisional) for the previous month and the index for ‘Crude Petroleum & Natural Gas’ group was down by 0.5 percent to 80.2 (provisional) from 80.6 (provisional) for the previous month.

Fuel & Power index having weight of 13.15%, decreased by 0.1% to 98.0 (provisional) from 98.1 (provisional) for the previous month, on the back of declining mineral oils prices.

Manufactured Products constituting the major portion of the index with weight of 64.23% rose by 0.4% to 115.7 (provisional) from 115.2 (provisional) for the previous month. The index for ‘Manufacture of Food Products’ group increased by 1.0% to 127.7 (provisional) from 126.4 (provisional) for the previous month, the index for ‘Manufacture of Beverages’ group gained 0.4% to 119.8 (provisional) from 119.3 (provisional) for the previous month, the index for ‘Manufacture of Textiles’ group was up by 0.4% to 114.1 (provisional) from 113.7 (provisional) for the previous month, The index for ‘Manufacture of Wood and of Products of Wood and Cork ‘ group increased by 0.6% to 131.7 (provisional) from 130.9 (provisional) for the previous month and the index for ‘Manufacture of Paper and Paper Products’ group rose by 0.8% to 120.9 (provisional) from 120.0 (provisional) for the previous month.

Besides, the index for ‘Printing and Reproduction of Recorded Media’ group increased by 0.8% to 144.6 (provisional) from 143.5 (provisional) for the previous month, the index for ‘Manufacture of Chemicals and Chemical Products’ group was up by 0.2% to 115.2 (provisional) from 115.0 (provisional) for the previous month, the index for ‘Manufacture of Pharmaceuticals, Medicinal Chemical and Botanical Products’ group rose by 0.2% to 121.0 (provisional) from 120.7 (provisional) for the previous month, the index for ‘Manufacture of Rubber and Plastics Products’ group increased by 0.5% to 107.8 (provisional) from 107.3 (provisional) for the previous month and the index for ‘Manufacture of Basic Metals’ group rose by 1.5% to 109.5 (provisional) from 107.9 (provisional) for the previous month.

The index for ‘Manufacture of Fabricated Metal Products, Except Machinery and Equipment’ group was up by 0.4% to 112.2 (provisional) from 111.8 (provisional) for the previous month, the index for ‘Manufacture of Electrical Equipment’ group rose by 0.1% to 109.5 (provisional) from 109.4 (provisional) for the previous month, the index for ‘Manufacture of Machinery and Equipment’ group was up by 0.3% to 110.0 (provisional) from 109.7 (provisional) for the previous month and the index for ‘Manufacture of Furniture’ group surged 2.7% to 123.9 (provisional) from 120.7 (provisional) for the previous month.

On the other hand, the index for ‘Manufacture of Tobacco Products’ group declined by 0.4% to 152.1 (provisional) from 152.7 (provisional) for the previous month, the index for ‘Manufacture of Wearing Apparel’ group was down by 0.9% to 137.8 (provisional) from 139.0 (provisional) for the previous month, the index for ‘Manufacture of Leather and Related Products’ group decreased by 0.9% to 120.5 (provisional) from 121.6 (provisional) for the previous month and the index for ‘Manufacture of other Non-Metallic Mineral Products’ group declined by 0.5% to 113.8 (provisional) from 114.4 (provisional) for the previous month.

The index for ‘Manufacture of Computer, Electronic and Optical Products’ group was down by 0.3% to 110.4 (provisional) from 110.7 (provisional) for the previous month, the index for ‘Manufacture of Motor Vehicles, Trailers and Semi-Trailers’ group declined by 0.1% to 111.0 (provisional) from 111.1 (provisional) for the previous month, the index for ‘Manufacture of Other Transport Equipment’ group fell 1.3% to 110.6 (provisional) from 112.0 (provisional) for the previous month and the index for ‘Other Manufacturing’ group slipped by 2.5% to 104.1 (provisional) from 106.8 (provisional) for the previous month.

The CNX Nifty ended at 10530.70, up by 50.10 points or 0.48% after trading in a range of 10396.35 and 10540.15. There were 34 stocks advancing against 16 stocks declining on the index. (Provisional)

The top gainers on Nifty were Cipla up by 5.32%, Grasim Industries up by 2.90%, Hero MotoCorp up by 2.18%, UPL up by 2.08% and NTPC up by 2.05%. (Provisional)

On the flip side, Tata Motors down by 4.76%, Infosys down by 3.15%, Wipro down by 1.65%, SBI down by 0.78% and Titan down by 0.72% were the top losers. (Provisional)

The European markets were trading mostly in green; Germany’s DAX increased 24.51 points or 0.2% to 12,466.91, France’s CAC increased 0.35 points or 0.01% to 5,315.37, while UK’s FTSE 100 decreased 24.18 points or 0.33% to 7,240.38.

Asian equity markets ended mixed on Monday as worries about slowing growth in China and higher interest rates offset easing concerns about the geopolitical risks over Syria. Investors veered around to the view that weekend missile strikes against Syria by the United States, France and Britain may be a one-off event. US President Donald Trump tweeted ‘Mission Accomplished’ on Saturday, implying that there will not be another strike soon. Hong Kong shares dropped amid worries that slowing credit growth and tightening regulatory requirements in China will hurt the country’s economic growth later in the year. Meanwhile, Chinese shares hit a fresh six-month low on concerns that mounting risks in the financial system will weigh on growth further down the road. Though, Japanese stocks rose modestly on relief that US-led strikes on Syria appeared to be a one-off event but lingering concerns about a trade war had investors flocking to defensive shares. Seoul stocks rose slightly as investors remained optimistic about the upcoming corporate earnings season.