Weak trade prevails in late morning session

Indian equity benchmarks continued their weak trade in late morning session on account of selling in frontline blue chip counters. The rupee sank to a 13-month low against the dollar, hit by rising crude prices and fiscal deficit worries. The rapid surge in global crude oil prices has already had an adverse impact on India’s import bill and can further hit the country’s fiscal arithmetic. The sentiments were 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 back up plan to deal with such a situation.

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 were trading under pressure 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.

The street shrugged off 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.

Traders were seen buying in IT, TECK and Telecom stocks, while selling was witnessed in Metal, PSU and Realty sector stocks. 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 is 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. In scrip specific development, Eveready Industries India and Indo National tanked on the bourses after fair trade regulator Competition Commission of India (CCI) imposed a total fine of Rs 215 crore, on Eveready, Indo National, industry grouping AIDCM and their officials for cartelization in pricing of zinc carbon dry cell batteries.

On the global front, Asian markets were trading 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. Back home, the BSE Sensex and NSE Nifty were trading below the psychological 34,400 and 10,550 levels, respectively. The market breadth on BSE was negative in the ratio of 957:1343, while 99 scrips remained unchanged.

The BSE Sensex is currently trading at 34355.56, down by 71.73 points or 0.21% after trading in a range of 34336.06 and 34453.71. There were 8 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.75%, while Small cap index was down by 0.17%.

The few gaining sectoral indices on the BSE were IT up by 3.66%, TECK up by 2.96% and Telecom up by 0.10%, while Metal down by 2.08%, PSU down by 1.22%, Realty down by 1.20%, Basic Materials down by 1.15% and Bankex down by 1.11% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 6.09%, Infosys up by 3.44%, Wipro up by 1.92%, Tata Motors up by 1.84% and Tata Motors - DVR up by 0.97%.
On the flip side, Yes Bank down by 3.08%, Tata Steel down by 2.47%, SBI down by 1.97%, Asian Paints down by 1.93% and Bajaj Auto down by 1.41% were the top losers.

Meanwhile, Chief Economic Adviser (CEA) Arvind Subramanian has said that the relationship between India and the United States (US) have been extremely well on the strategic and defence fronts but it needs stronger economic bond in order to achieve full potential. He said “I was a great supporter of the US-India Free Trade Agreement (FTA) idea some time ago. Of course, we all have to recalibrate our notions and expectations and so on.” He added that there is need to start thinking more creatively about how to maintain this relationship. 

Subramanian has noted that India has benefited from open international trading system in the past and in the long run, its economic fortune depends on an open trading system. Therefore, he said that it was terribly important for India and the US to work towards sustaining this open relationship. He expressed hopes that the nation will ride out the current problems of attitudes to the trading relationships, but in the medium run, it’s up to countries like India, many middle-income countries like India, medium-sized countries to sustain an open international trading environment.

Asserting that the Indo-Pacific is and is going to continue to be the world’s economic center of gravity for a very long time, CEA said that India has to be well-positioned in order to both contribute to and take advantage of this kind of opportunity. Calling the Trans-Pacific Partnership (TPP) ‘one of the big developments’, he expressed hopes that the US will reconsider its decision about the multilateral agreement for economic, geo-strategic, and geopolitical reasons. He noted that there is now a real opportunity for India and the US to cooperate on coal.

The CNX Nifty is currently trading at 10534.50, down by 30.80 points or 0.29% after trading in a range of 10530.25 and 10564.00. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were TCS up by 5.95%, Infosys up by 3.28%, HCL Tech up by 2.54%, Tech Mahindra up by 2.41% and Tata Motors up by 2.08%.

On the flip side, Hindalco down by 3.53%, Yes Bank down by 3.11%, Tata Steel down by 2.79%, Bajaj Finance down by 2.63% and Vedanta down by 2.15% were the top losers.

The Asian markets were trading in red; Taiwan Weighted decreased 191.84 points or 1.75% to 10,779.38, Hang Seng decreased 167.43 points or 0.55% to 30,541.01, Shanghai Composite decreased 43.34 points or 1.39% to 3,074.04, Jakarta Composite decreased 34.15 points or 0.54% to 6,321.75, Nikkei 225 decreased 13.61 points or 0.06% to 22,177.57, KOSPI Index decreased 10.38 points or 0.42% to 2,475.72 and FTSE Bursa Malaysia KLCI decreased 5.89 points or 0.31% to 1,889.29.