Post Session: Quick Review

Indian equity benchmarks traded firmly for most part of the day but ended flat on Tuesday. The street was eyeing Karnataka elections whereby the market participants expect that a victory for the BJP in the upcoming elections could take the indices even higher. Markets made an optimistic start and traded slightly in green in early deals. The street took note that the Reserve Bank of India reportedly intervened in the currency markets to prevent a further slide in the Indian rupee, which breached the 67 mark to a dollar for the first time in 15 months amid a widening trade gap and runaway import bills fuelled by high crude-oil prices. Some state-owned banks were seen selling dollars aggressively, interventions that market dealers attributed to the central bank’s strategy to stem the decline of the Indian rupee against the US currency. Some support also came with ICRA’s report which highlighted that the estimated surge in states’ borrowings in the first quarter do not reflect a deterioration of their financial health as it is driven more by the changes in central devolution. The report added that the planned increase in SDL (state development loans) issuance in Q1 of FY19 should not be construed as an indicator of a sharp fiscal deterioration of the states’ fiscal health.

Separately, a private report highlighted that India is projected to have a skilled labour surplus of 245 million workers by 2030, mainly on the back of vast supply of working age citizens, even as most of developed and developing economies are expected to grapple with talent crunch at that time. Select power sector stocks were buzzing on World Bank’s report that while the government is currently reporting country’s electrification numbers in low 80s, the actual numbers are much higher. About 85 percent of India’s population has access to electricity. The global body added that about 30 million people received electricity between 2010 and 2016, which is much more than any other country in the world. Additionally, select metal stocks were buzzing on report that India’s total export of finished steel increased by 16.7% and stood at 9.621 million tonnes (MT) in 2017-18. According to data compiled by the Joint Plant Committee (JPC), the country had exported 8.242 MT of finished steel during 2016-17 fiscal.

However, some selling crept in-between on UN’s report that the Goods and Services Tax (GST) as well as protracted issues of corporate and bank balance sheet problems pushed India’s economic growth downward in 2017 but a gradual recovery is expected and the country’s economy is forecast to grow at 7.2 percent in 2018. According to estimates in the UN Economic and Social Commission for Asia and the Pacific’s (ESCAP) flagship publication the Economic and Social Survey of Asia and the Pacific, India’s GDP grew at 6.6% in 2017, down from 7.1% in 2016. Some concerns also came with private report stating that India has said that the US move to impose higher tariffs on steel and aluminium products on grounds of national security are an abuse of global trade provisions that could spiral into a trade war.

On the global front, Asian markets closed mostly higher. China’s exports rebounded more strongly than expected in April after a surprise drop the previous month, suggesting global demand remains relatively resilient and providing a cushion to the economy amid a heated trade dispute with the United States. The European markets were trading mostly in red. British house price growth unexpectedly cooled in April, mortgage lender Halifax said, adding to signs of weakness in the housing market and the consumer economy more broadly.

Back home, mixed reactions were witnessed in gold and jewellery stocks on ICRA’s report that demand for gold jewellery is likely to decline by 2-4 percent this calendar year due to high prices and subdued financing environment. Also, financing to the gems and jewellery sector have been under increased scrutiny in the recent months following reporting of fraud by few lenders on their exposures to the sector.

The BSE Sensex ended at 35211.29, up by 3.15 points or 0.01% after trading in a range of 35136.01 and 35388.87. There were 15 stocks advancing against 16 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index was down by 0.09%, while Small cap index was up by 0.10%. (Provisional)

The top gaining sectoral indices on the BSE were Bankex up by 1.36%, Realty up by 0.92%, PSU up by 0.76%, Oil & Gas up by 0.30% and Utilities up by 0.24%, while Capital Goods down by 0.86%, TECK down by 0.59%, IT down by 0.56%, Consumer Durables down by 0.54% and Auto down by 0.45% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were ICICI Bank up by 6.95%, SBI up by 1.42%, Axis Bank up by 1.30%, Power Grid up by 1.24% and Bharti Airtel up by 0.97%. (Provisional)

On the flip side, Mahindra & Mahindra down by 2.21%, Larsen & Toubro down by 1.76%, Infosys down by 1.48%, Yes Bank down by 1.01% and Tata Motors down by 0.97% were the top losers. (Provisional)

Meanwhile, pointing out the various factors like the recently introduced Goods and Services Tax (GST) as well as protracted issues of corporate and bank balance sheet problems, the United Nations (UN) in its latest report has said that Indian economic growth slowed down in 2017 to 6.6% from 7.1% in 2016, but a gradual recovery is expected and noted that the country is forecast to grow at 7.2% in 2018 and 7.4% in 2019.

UN report also expects revival in private investment as the country’s corporate sector adjusts to GST, infrastructure spending increases and corporate and bank balance sheets improve with government support. Further it said that the government’s reform measures such as new bankruptcy code and the recapitalization package for public sector banks would also support a gradual recovery in private investment ad highlighted that consumption is also strengthened, with faded impacts of note ban.

However, the report also pointed out the issue of rising non-performing assets, saying that bad loans in India have got doubled, and defaults on corporate bonds and syndicated loans have surged in recent years. By mid-2017, distressed bank loans reached a record high of 9.5 trillion rupees ($ 148 billion), but more recent revelations suggest that the actual figure may be higher. In view of this, UN expressed need to address this problem effectively and if it does not happen then India will continue to face weak private investment and modest economic growth.

The CNX Nifty ended at 10714.30, down by 1.20 points or 0.01% after trading in a range of 10689.40 and 10758.55. There were 25 stocks advancing against 25 stocks declining on the index. (Provisional)

The top gainers on Nifty were ICICI Bank up by 6.45%, HPCL up by 2.88%, Eicher Motors up by 2.13%, BPCL up by 1.87% and SBI up by 1.54%. (Provisional)

On the flip side, Mahindra & Mahindra down by 2.30%, Larsen & Toubro down by 1.74%, Infosys down by 1.31%, Zee Entertainment down by 1.18% and Tata Motors down by 1.16% were the top losers. (Provisional)

The European markets were trading mostly in red; Germany’s DAX decreased 70.65 points or 0.55% to 12,877.33, France’s CAC decreased 25.21 points or 0.46% to 5,506.20, while UK’s FTSE 100 increased 8.09 points or 0.11% to 7,575.23. 

Asian equity markets ended mostly higher on Tuesday as Chinese trade data topped forecasts and investors awaited an announcement by US President Donald Trump on whether he would withdraw from a landmark nuclear deal with Iran. Chinese shares ended higher after the release of upbeat trade figures for April. Chinese exports climbed 12.9 percent year-over-year in April, well above the expected rise of 6.8 percent. Imports surged 21.5 percent from a year ago, exceeding economists' forecast for a growth of 15.9 percent. The trade surplus totaled $28.8 billion in April versus the expected surplus of $25.7 billion. Besides, Japanese shares ended modestly higher, as banking stocks rallied while Takeda Pharmaceutical climbed ahead of news the drugmaker had agreed to buy London-listed Shire for $62.42 billion. Furthermore, Hong Kong shares ended higher, as fears of a full-blown trade war eased on reports that talks between Washington and Beijing will continue.