Post Session: Quick Review

Indian equity benchmarks traded on a lackluster note in a range bound trade throughout the day and ended flat on Wednesday, as traders remained on sidelines eyeing March quarter earnings reports and ahead of Federal Reserve meeting outcome tonight. The market breadth was in favour of declines with one stock advancing against three declining ones. Indian equity benchmarks entered into red terrain in early deals amid weakness in their Asian peers. The street took note of a report highlighting that the growth of eight core infrastructure industries slowed to three-month low of 4.1% in March 2018, as compared to 5.3% in February 2018, on account of weak performance in as many as six sectors including coal, crude oil and natural gas. According to data released by the ministry of Commerce and Industry, the combined Index of eight core industries stood at 138.0 in March, 2018, which was 4.1% higher compared to the index of March, 2017. The core sector would have an impact on the Index of Industrial Production (IIP) data as these eight segments account for about 41 per cent of the total factory output.

However, some buying crept in as the Goods and Services Tax (GST) collections in the month of April crossed Rs 1 lakh crore mark for the first time since the new tax regime was rolled out on July 1 last year. According to the Ministry of Finance, the average monthly collection under the GST regime for the last eight months -- August 2017-March 2018 -- was Rs 89,885 crore. Finance minister Arun Jaitley said that with the improved economic climate, introduction of e-way bill and improved GST compliance, GST collections would continue to show a positive trend. Investors took note of a report stating that India has seen its growth in manufacturing activity thanks to faster expansions in output and new orders. The Nikkei India Manufacturing Purchasing Managers’ Index, or PMI, rose to 51.6 in April from 51.0 in March. The report underlined that business sentiment was at the strongest level seen since the implementation of the Goods and Services Tax in July 2017, driven by expectations that underlying demand will improve further over the next 12 months.

Meanwhile, PSU banking stock were under pressure after Moody’s Investors Service said that the Reserve Bank of India’s (RBI) push to banks to recognize problem assets more accurately will reduce profitability of banks in the near term. This will, however, produce benefits over the longer term. The agency added that increased provisioning will hurt the banks’ profitability, and weaker public sector banks (PSBs) in particular will continue to report losses in the next fiscal year (FY19), adding pressure on their capital ratios. Select auto stocks were buzzing as India’s automobile companies have started the new financial year with a bang, helped by robust sales in April. The trend looks set to continue, the only dark cloud in a sunny future being the increasing fuel prices posing growth challenges.

On the global front, Asian markets closed mostly in red. Growth in China’s manufacturing sector unexpectedly picked up in April as output quickened slightly, a private survey showed, though a decline in export orders reinforced risks to the outlook as firms continued to shed staff while inventories also rose. Activity in Japan’s services sector expanded at the fastest pace in six months in April as new orders picked up, a private survey showed, suggesting the economy got off to a strong start in the second quarter. The European markets were trading in green. Euro zone economic growth slowed as expected at the start of 2018, although economists said temporary factors were partly behind the weakness and that the economy should continue to expand strongly this year.

Back home, Jet Airways and InterGlobe Aviation (IndiGo) closed in red as investors were wary of hike in aviation fuel prices. Effective May 1, Indian Oil Corporation (IOC) has decided to hike jet fuel (aviation turbine fuel) to Rs 65,340/KL, implying a hike of 6.5 percent against Rs 61,450/KL in the previous month. Mixed reactions were witnessed in sugar stocks after the Cabinet Committee approved subsidy for sugar mills. The Cabinet approved a subsidy of around 55 rupees per tonnes of sugarcane sold to the mills. The production-linked subsidy will provide some financial support to the farmers and ease the industry’s burden which has been grappling with excess supply and falling sugar prices.

The BSE Sensex ended at 35164.62, up by 4.26 points or 0.01% after trading in a range of 35072.42 and 35357.15. There were 11 stocks advancing against 20 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index declined 1.08%, while Small cap index was down by 1.09%. (Provisional)

The lonegaining sectoral index on the BSE was Energy up by 0.19%, while Metal down by 3.38%, Basic Materials down by 2.01%, Realty down by 1.72%, PSU down by 1.47% and Consumer Durables down by 1.27% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Kotak Mahindra Bank up by 3.83%, ITC up by 1.83%, Asian Paints up by 1.45%, HDFC up by 1.36% and Axis Bank up by 1.33%. (Provisional)

On the flip side, Tata Steel down by 3.31%, Hindustan Unilever down by 2.60%, ICICI Bank down by 2.48%, SBI down by 2.33% and Sun Pharma down by 2.11% were the top losers. (Provisional)

Meanwhile, signaling a faster improvement in business conditions across the country’s goods-producing sector compared to the previous March month, the Indian manufacturing activity expanded further in April, on the back of faster expansions in output and new orders. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - surged to 51.6 in April from 51.0 in March. Besides, the reading remained above the watershed 50 mark indicating expansion for the ninth consecutive month.

As per the survey report, the output picked-up from March’s five-month low with solid expansion on account of favourable demand conditions but it was slightly below the average for the current nine-month period of expansion. The report further showed that the new business grew for the sixth consecutive month at a modest rate , while the new export orders also rose for the sixth successive month in April, albeit only marginally. It also found that outstanding work rose during April and delayed payments from clients partly led to the latest increase in backlogs.

On the price front, the inflationary pressures continued to ease in the reported month, as input costs and output charges rose at the softer pace and were weakest since September 2017 and July 2017, respectively. Further, payroll numbers also got improved during April on greater production requirements coupled with improved demand conditions, however the growth was marginal.

The CNX Nifty ended at 10716.80, down by 22.55 points or 0.21% after trading in a range of 10689.80 and 10784.65. There were 15 stocks advancing against 35 stocks declining on the index. (Provisional)

The top gainers on Nifty were Kotak Mahindra Bank up by 4.04%, Zee Entertainment up by 2.03%, ITC up by 1.83%, Axis Bank up by 1.46% and Asian Paints up by 1.40%. (Provisional)

On the flip side, Vedanta down by 4.98%, HCL Tech down by 4.50%, Hindalco down by 3.54%, Tata Steel down by 3.39% and Hindustan Unilever down by 2.51% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 41.97 points or 0.56% to 7,562.33, Germany’s DAX increased 159.87 points or 1.27% to 12,771.98 and France’s CAC increased 11.88 points or 0.22% to 5,532.38.

Asian equity markets ended mostly in red on Wednesday, with traders refraining from making big moves ahead of US Federal Reserve's monetary policy statement, due later in the day. Chinese shares ended roughly flat as investors returning from the Labour Day holiday braced for trade talks between US and Chinese officials amid worries about economic health. Further, Japanese shares ended lower amid caution ahead of the Federal Reserve’s policy decision and US jobs data, although the dollar’s rise against the yen and positive sentiments toward tech stocks helped curb some of the losses.