Benchmarks end on quiet note on Tuesday

Indian equity benchmarks ended the volatile day of trade on quiet note on Tuesday, as traders remained on sidelines ahead of Karnataka elections whereby the market participants expect a victory for the BJP in the upcoming elections. Markets started the session on an optimistic and traded firmly for most part of the day as traders took some encouragement from 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. Some support also came with Reserve Bank of India reportedly intervening 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. Meanwhile, 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.

Sentiments remained positive with finance ministry’s statement that World Bank will provide a $200 million loan to help the government achieve its goal of reducing stunting in children 0-6 years of age from 38.4 per cent to 25 per cent by the year 2022. However, markets pared almost all of their gains and turned volatile 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. Traders also remained worried 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, European markets were trading mostly in red with 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. Asian markets ended mostly in green with China’s exports rebounding 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.

Back home, select power sector stocks edged higher 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. Some of the metal stocks gained 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.

Finally, the BSE Sensex rose 8.18 points or 0.02% to 35,216.32, while the CNX Nifty was up by 2.30 points or 0.02% to 10,717.80.

The BSE Sensex touched a high and a low of 35,259.81 and 34,977.74, respectively and there were 24 stocks on gaining side as against 7 stocks on losing side on the index.

The broader indices ended mixed; the BSE Mid cap index slipped 0.10%, while Small cap index was up by 0.10%.

The top gaining sectoral indices on the BSE were Bankex up by 1.32%, Realty up by 1.06%, PSU up by 0.80%, Oil & Gas up by 0.36% and Utilities was up by 0.26%, while Capital Goods down by 0.85%, Consumer Durables down by 0.81%, TECK down by 0.57%, IT down by 0.53% and Auto down by 0.42% were the top losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 6.86%, SBI up by 1.42%, Axis Bank up by 1.18%, Power Grid Corporation up by 1.14% and Tata Motors - DVR up by 0.74%. On the flip side, Mahindra & Mahindra down by 2.26%, Indusind Bank down by 1.78%, Larsen & Toubro down by 1.70%, Infosys down by 1.52% and Yes Bank down by 1.19% were the top losers.

Meanwhile, in order to discuss ways to promote exports, Commerce and Industry Minister Suresh Prabhu has called a meeting of various departments, including finance and textiles. The meeting would deliberate upon ways on sectoral export promotion strategy. The meeting assumes importance as India's merchandise exports in March fell after a gap of four months.

The outbound shipments increased by 9.78 percent to $302.84 billion in 2017-18 from $275.85 billion in the previous fiscal, but in March, exports contracted by 0.66 percent to $29.11 billion. Besides, petroleum products, carpet, jute items, readymade garments, gems and jewellery, iron, ore, meat, dairy and poultry products, oil meals and oil seeds were among the products that witnessed a decline in March. To boost the country’s exports, the commerce ministry is taking appropriate steps such as involving states and promoting ease of doing business. States such as Maharashtra, Tamil Nadu, Gujarat and Karnataka contribute significantly to the exports.

Further, officials from different ministries and departments including petroleum, civil aviation, agriculture, pharmaceutical, MSME, telecommunication, skill development, mines and electronics and information technology would participate in the meeting.

The CNX Nifty traded in a range of 10,758.55 and 10,689.40. There were 25 stocks in green as against 25 stocks in red on the index.

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 State Bank of India up by 1.54%. On the flip side, Mahindra & Mahindra down by 2.30%, Larsen & Toubro down by 1.75%, Infosys down by 1.31%, BZEE Entertainment Enterprises down by 1.18% and HDFC down by 1.17% were the top losers.

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.