Benchmarks extend southward journey for second straight session

Extending previous session’s southward journey, Indian equity benchmarks ended the dismal day of trade with a cut of over half a percent on Friday. Sentiments remained downbeat since morning as markets after a negative start never looked confident and extended their southward journey to end below their crucial 35,000 (Sensex) and 10,650 (Nifty) levels. The domestic sentiments remained cautious with a report stating that bank deposit growth falls to a five-decade low to 6.7 percent in the fiscal year ended March 2018. Bankers said the reversal from the huge deposits post demonetisation and the steady movement of savings away from bank deposits has hit growth. Anxiety also remained on the street with the credit ratings agency, ICRA’s latest report that the high quantum of non-performing asset (NPA) will restrict the overall bank credit growth to a moderate 7-8% in fiscal 2018-19, despite recapitalisation of public sector banks (PSBs) and private sector players upping their game with a 25 percent credit growth. It also said that India Inc will borrow more from cheaper sources abroad.

Traders failed to take any sense of relief with report highlighting that private equity and venture capital investments in India reached $7.9 billion across 180 deals in January-March this year, the best first quarter since 2008, mainly driven by large transactions. Market participants shrugged off report that China has removed import duties on as many as 28 medicines, including all cancer drugs, from May 1, a move which would help India to export these pharmaceuticals to the neighbouring country. The investors also paid no heed towards the report stating that activity in India’s services sector grew at the fastest pace in month of April, on the back of greater inflows of new work. 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.

On the global front, European markets have made mostly a positive start after 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. Asian markets ended mostly in red as investors fret about the outcome of Sino-US trade talks and look ahead to the release of US jobs report due later in the day for directional cues. Employment is expected to increase by 192,000 jobs in April after rising by 103,000 jobs in March.

Back home, 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. 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.

Finally, the BSE Sensex declined 187.76 points or 0.53% to 34,915.38, while the CNX Nifty was down by 61.40 points or 0.57% to 10,618.25.

The BSE Sensex touched a high and a low of 35,206.55 and 34,847.61, respectively and there were 9 stocks on gaining side as against 21 stocks on losing side on the index, while 1 stock remained unchanged.

The broader indices ended in red; the BSE Mid cap index declined 0.35%, while Small cap index was down by 0.25%.

The lone gaining sectoral index on the BSE was Consumer Durables up by 1.19%, while Telecom down by 1.24%, Auto down by 1.10%, Healthcare down by 1.05%, Metal down by 1.05% and FMCG was down by 0.83% were the top losing indices on BSE.

The top gainers on the Sensex were Adani Ports up by 2.87%, Hindustan Unilever up by 0.90%, HDFC Bank up by 0.80%, Power Grid Corporation up by 0.68% and Indusind Bank up by 0.58%. On the flip side, Sun Pharma down by 2.95%, Yes Bank down by 2.43%, Bajaj Auto down by 2.42%, ITC down by 2.37% and Axis Bank down by 2.27% were the top losers.

Meanwhile, China has exempted import tariffs on as many as 28 essential medicines, including cancer drugs from May 1. The move is expected to benefit India by exporting these pharmaceuticals to the neighbouring country. That apart, it will help reduce trade imbalance between China and India in the future.

Chinese Ambassador to India Luo Zhaohui has said that China would further improve business environment by halving time required to open a business. He also said that China’s door to the outside world will open wider and Indian businesses are welcome. He noted that India too has sought investments from China. Besides, he said that China has also agreed to set up an industry park in India to increase investments and bridge the trade deficit.

The development assumes importance as India repeatedly asked for greater market access for its goods and services, including IT, pharmaceuticals and agriculture, in the Chinese market to reduce the widening trade deficit. Besides, India's trade deficit with China stood at $36.73 billion during the first seven months of 2017-18 (April-October) compared to $51.11 billion in the financial year 2016-17.

The CNX Nifty traded in a range of 10,700.45 and 10,601.60. There were 11 stocks in green as against 37 stocks in red, while 2 stocks remained unchanged on the index.

The top gainers on Nifty were Adani Ports up by 2.77%, GAIL India up by 2.12%, Tech Mahindra up by 1.54%, Hindustan Unilever up by 1.02% and HDFC Bank up by 0.89%. On the flip side, Sun Pharma down by 3.50%, ITC down by 2.86%, Bajaj Auto down by 2.75%, Vedanta down by 2.34% and Yes Bank down by 2.34% were the top losers.

The European markets were trading mostly in green; UK’s FTSE 100 increased 35.47 points or 0.47% to 7,538.16 and Germany’s DAX was up by 66.37 points or 0.52% to 12,756.52, while France’s CAC was down by 0.42 points or 0.01% to 5,501.24.

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.