Post Session: Quick Review

Indian equity benchmarks traded choppy in a range bound session and ended with modest gains on Friday. Buying at the end of the session pulled the benchmarks above neutral line. Indian equity benchmarks made a cautious start and traded lower in early deals. The sentiments remained under pressure going by the minutes of the Monetary Policy Committee (MPC) which showed that an increase in interest rates might just be round the corner. The common concern is the impact on inflation of the proposed increase in minimum support prices, the fiscal situation, and the delayed impact of house rent allowances mandated by the pay panel. Furthermore, all members of the committee acknowledge some revival in economic activity, which potentially could enhance inflationary pressures. Investors took note of former finance minister Yashwant Sinha’s statement that the cash crunch at ATMs in some parts of the country is a case of complete mismanagement on the part of both the RBI and the government. He said the magnitude of the crisis is huge and the Reserve Bank did not have a backup plan to deal with such a situation. Separately, all India Bank Employees Association (AIBEA), representing the banking industry said that concrete action is required by the Reserve Bank to address the cash crunch and warned of a protest on the issue.

Meanwhile, banking stocks were under pressure after S&P Global Ratings said that Indian banks’ results for the fiscal year ended March 2018 are likely to be weak. It added that the central bank’s recently announced change to the recognition of restructured loans will probably foster early recognition and higher provisions across the banking sector. Realty sector closed in red on a private report that housing prices fell by an average of 7 percent in the first quarter of 2018 as realtors cut property rates to rope in fence sitters even as the number of new project launches jumped by 48 percent across top nine cities with real estate developers aligning themselves to RERA regulations and migrating to GST compliances.

However, some support came with the private report that PE investments witnessed a robust 46 per cent jump in deal values at $1.3 billion in March, taking the total tally for the first quarter of 2018 to $4 billion, up 76 per cent over the same period a year ago. The report added that there were 59 PE transactions worth $1.3 billion in March this year, while in the corresponding period last year it stood at $888 million by way of 70 deals. Also another private report showed that India has been recording the highest growth rate amongst the Brazil, Russia, India, China and South Africa (BRICS) economies. The report highlighted that in spite of some reformative steps that slowed the growth momentum in the first quarter of FY18, the economy is likely to grow at 7.4 per cent in 2018 -- higher than the advanced economies and the world -- which are at 2 per cent and 3 per cent respectively.

On the global front, Asian markets closed in red. Confidence among Japanese manufacturers worsened for a third straight month in April to a level unseen since early last year, the poll showed, as rises in the yen and crude oil prices threaten to undermine corporate profits. The European markets were trading mostly in green as investors monitored a fresh batch of corporate earnings and economic data. BoE policymaker Michael Saunders said that the Bank of England should raise interest rates gradually, not glacially, and no longer needs to keep its foot firmly on the accelerator at a time of rising domestic inflation pressure.

Back home, Information Technology (IT) stocks were buzzing in today’s trade amid rupee touching 13-month low against the US dollar due to appreciation of the US currency overseas. TCS was the biggest gainer after reporting healthy growth in quarterly earnings. The Tata Group firm has reported consolidated profit at Rs 6,904 crore for the quarter ended March 2018, registering a 5.7 percent growth compared to Rs 6,531 crore in previous quarter and 4.5 percent growth over year-ago period.

The BSE Sensex ended at 34466.87, up by 39.58 points or 0.11% after trading in a range of 34311.29 and 34473.15. There were 11 stocks advancing against 20 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index was down by 0.39%, while Small cap index was up by 0.04%. (Provisional)

The only gaining sectoral indices on the BSE were IT up by 4.88%, TECK up by 3.95%, Telecom up by 0.55% and Auto up by 0.23%, while Realty down by 1.16%, Utilities down by 0.96%, Bankex down by 0.83%, Capital Goods down by 0.79% and Power down by 0.75% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were TCS up by 7.16%, Infosys up by 4.09%, Coal India up by 3.25%, Wipro up by 2.19% and Bharti Airtel up by 1.48%.  (Provisional)

On the flip side, Yes Bank down by 2.75%, Tata Steel down by 2.18%, ICICI Bank down by 2.13%, SBI down by 1.85% and HDFC down by 1.58% were the top losers. (Provisional)

Meanwhile, expressing need for more reform measures in the banking sector or in other sectors, International Monetary Fund (IMF) Chief Christine Lagarde has said that India is unlikely to carry on same speed of major economic reforms in an election year. However, she noted that the country has started to implement major reforms that the IMF had recommended and advocated for a long time.

Lagarde further appreciated the recently implemented reform measures such as Goods and Service Tax (GST) and the bankruptcy law, highlighting that they are good reforms. She also said that these reforms will help the country to reap the benefit of the upswing, continue to develop its internal markets and generate this excellent growth rate of 7.4 per cent, which is one of the highest in the emerging market economies.

Few days before, acknowledging structural reforms undertaken by the government in recent years, the IMF in its latest World Economic Outlook (WEO) had maintained its forecast for India’s gross domestic product (GDP) growth at 7.4 per cent for 2018 and 7.8 per cent for 2019.

The CNX Nifty ended at 10578.05, up by 12.75 points or 0.12% after trading in a range of 10527.45 and 10579.70. There were 18 stocks advancing against 32 stocks declining on the index. (Provisional)

The top gainers on Nifty were TCS up by 7.09%, Tech Mahindra up by 5.01%, Infosys up by 4.07%, HCL Tech up by 3.87% and Coal India up by 3.30%. (Provisional)

On the flip side, Yes Bank down by 2.89%, Tata Steel down by 2.32%, ICICI Bank down by 2.19%, SBI down by 1.79% and Bajaj Finance down by 1.69% were the top losers. (Provisional)

The European markets were trading mostly in green; UK’s FTSE 100 increased 23.76 points or 0.32% to 7,352.68, France’s CAC increased 6.76 points or 0.13% to 5,398.40, while Germany’s DAX decreased 7.04 points or 0.06% to 12,560.38.

Asian equity markets ended in red on Friday, led by losses in technology stocks amid falling demand for smartphones and a downward revision in revenue target by the world's largest contract chipmaker Taiwan Semiconductor Manufacturing Company. Japanese shares ended lower as worries about slower smartphone demand hit technology shares, while financial stocks rallied thanks to higher US yields. Further, Chinese shares ended down, due largely to heavy selling in telecom and software stocks.