Post Session: Quick Review

Indian equity benchmarks traded below their neutral line throughout the day and ended with cut of around half a percent with Sensex and Nifty breaching their crucial 35,000 and 10,650 mark, respectively. Indian equity benchmarks made a pessimistic start as sentiments were downbeat after ICRA’s report highlighted that the high quantum of impaired assets will restrict the credit growth for fiscal 2018-19 to 8 percent, and India Inc will borrow more from cheaper sources abroad. The report enlightened that despite recapitalization of the state-run lenders and private sector players upping their game with a 25 percent credit growth, the overall system credit expansion will come at 7-8 percent. Additionally, a RBI data showed that bank deposit growth fell to a five-decade low in FY18 as the demonetization bonanza withered away and banks faced competition from other savings instruments such as mutual funds and insurance. RBI data showed that aggregate deposits in the banking system grew a mere 6.7% in 2017-18, the lowest since fiscal 1963.

Meanwhile, the street shrugged off the report that India tops the list of the fastest growing economies in the world for the coming decade and is projected to grow at 7.9 percent annually, ahead of China and the US. It said that India’s productive capabilities far exceed expectations for its current income level, which contributes to the projection of rapid growth for the coming decade. Besides, maintaining expansion mode for the second straight month, activity in India’s services sector grew at the fastest pace in month of April, on the back of greater inflows of new work. Easing inflationary pressures along with favourable demand conditions also helped bolster business activity. However, outstanding business continued to increase at service providers during reported month.

Traders failed to get any sense of relief with report that private equity and venture capital investments in India reaching $7.9 billion across 180 deals in January-March this year, the best first quarter since 2008, mainly driven by large transactions. This was also the second best quarter ever since $8.7 billion in the third quarter of 2017. Traders also failed to take note of a report from the union cabinet that they have approved the continuation of the Agri-umbrella programme, ‘Green Revolution Krishonnati Yojana’ for two more years with an outlay of Rs 33,000 crore. The programme merged 11 schemes for a holistic and scientific approach towards agriculture with an aim to double farmers’ income by 2022.

On the global front, Asian markets closed mostly in red. Growth in China’s service sector picked up in April as new business and employment grew at a faster rate, a private survey showed, signaling a solid rise in a sector that Beijing is counting on to maintain economic growth. The European markets were trading mostly in green. A survey showed that euro zone business growth faded again in April but the picture still remained relatively bright as new business stayed strong and firms managed to build up backlogs of work. IHS Markit’s Final Composite Purchasing Managers’ Index, seen as a good overall indicator of euro zone growth, fell to a 15-month low of 55.1 in April from March’s 55.2.

Back home, select gold and jewellery stocks were under pressure taking cues from the World Gold Council’s (WGC) report that India’s demand for gold jewellery slumped by 12% in the first quarter from a year ago, as the rising price of the precious metal discouraged consumers and small jewellers faced issues transitioning to GST. In the first three months of 2018, jewellers sold 87.7 tonnes of gold ornaments worth Rs 24,130 crore, marking the third weakest quarter for gold demand in the country in almost a decade. Mixed reactions were witnessed in sugar stocks after GST council concluded its meeting whereby it deferred decision on levying a sugar cess. The council has also deferred decision on reducing duties on ethanol.

The BSE Sensex ended at 34924.88, down by 178.26 points or 0.51% after trading in a range of 34847.61 and 35206.55. There were 10 stocks advancing against 21 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.36%, while Small cap index was down by 0.24%. (Provisional)

The only gaining sectoral indices on the BSE was Consumer Durables up by 1.44%, while Telecom down by 1.42%, Metal down by 1.07%, Auto down by 1.05%, Healthcare down by 1.03% and Power down by 0.92% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Adani Ports & Special Economic Zone up by 2.73%, HDFC Bank up by 0.91%, Hindustan Unilever up by 0.77%, Power Grid up by 0.58% and ICICI Bank up by 0.35%. (Provisional)

On the flip side, Sun Pharma down by 2.84%, Bajaj Auto down by 2.56%, Yes Bank down by 2.37%, NTPC down by 2.15% and Axis Bank down by 2.07% were the top losers. (Provisional)

Meanwhile, maintaining expansion mode for the second straight month, activity in India’s services sector grew at the fastest pace in month of April, on the back of greater inflows of new work. Easing inflationary pressures along with favourable demand conditions also helped bolster business activity. However, outstanding business continued to increase at service providers during reported month.

According to the survey report, the seasonally adjusted Nikkei Services Business Activity Index remained above the neutral mark of 50.0 in April, posting reading at 51.4, up from 50.3 in March. The Nikkei India Composite PMI Output Index which measures both manufacturing and services too climbed to 51.9 in April from 50.8 in March.

Besides, the report highlighted that job creation in the services sector accelerated to the sharpest since March 2011, reflecting an uptick in demand and the manufacturing sector also reported a renewed rise in staffing levels but at marginal pace. The report further showed that order book volumes across India’s service sector were marginally higher but saw expansion by accelerating from the preceding month due to strong demand. New orders placed at Indian manufacturers also rose for the sixth successive month during the month of April.

On the price front, input cost inflation in the both services and manufacturing sector softened, coming below their respective historical averages. Besides, output charge inflation too eased, though the firms attempt to pass on their higher cost burdens to the consumers.

The CNX Nifty ended at 10614.00, down by 65.65 points or 0.61% after trading in a range of 10601.60 and 10700.45. There were 14 stocks advancing against 36 stocks declining on the index. (Provisional)

The top gainers on Nifty were Adani Ports & Special Economic Zone up by 2.83%, GAIL India up by 2.12%, Tech Mahindra up by 1.87%, Hindustan Unilever up by 0.99% and HDFC Bank up by 0.89%. (Provisional)

On the flip side, Sun Pharma down by 3.39%, ITC down by 2.84%, Bajaj Auto down by 2.75%, Yes Bank down by 2.40% and Axis Bank down by 2.39% were the top losers. (Provisional)

The European markets were trading mostly in green; UK’s FTSE 100 increased 38.24 points or 0.51% to 7,540.93, Germany’s DAX increased 40.68 points or 0.32% to 12,730.83, while France’s CAC decreased 9.53 points or 0.17% to 5,492.13.

Asian equity markets ended mostly in red on Friday as investors kept a close watch on US-China trade talks and waited for cues from the US jobs report due later in the day. Employment is expected to increase by 192,000 jobs in April after rising by 103,000 jobs in March. The unemployment rate is expected to dip to 4.0 percent from 4.1 percent. Chinese shares ended lower as traders remained focus on the US-China trade talks as well as upcoming US employment data. Further, Hong Kong's shares closed lower after the latest survey from Nikkei showed the private sector in Hong Kong swung to contraction in April. Meanwhile, Japanese markets were closed on Friday for a holiday.