Benchmarks trade flat in morning session

Indian equity benchmarks traded flat in morning session, digesting the developments coming in from the White House as well as higher crude prices. US President Donald Trump pulled United States out of an international nuclear deal with Iran, raising the risk of conflict in West Asia, upsetting European allies and casting uncertainty over global oil supplies. The rupee opened lower against the US dollar. Rising crude prices have been one of the biggest factors dragging the rupee lower. A survey showed that touching a four-year low, optimism level among Chief Financial Officers about the country’s financial and macro-economic conditions for the second quarter of this year has declined nearly 18%. The composite CFO Optimism Index declined 17.8%, on a quarter-on-quarter basis, to 96.2 for the second quarter of 2018. Separately, as per Grant Thornton’s quarterly global business survey, at a time when business optimism is at an all-time high globally with the index at net 61%, in India, business sentiment has been at the weakest in four years. India slipped to the 6th position globally in the business optimism index for the first quarter of this year. With a score of 89, India is at the sixth place in the index.

The street shrugged off the International Monetary Fund (IMF) report which reaffirmed that India will be the fastest growing major economy in 2018, with a growth rate of 7.4% that rises to 7.8% in 2019 with medium-term prospects remaining positive. The IMF’s Asia and Pacific Regional Economic Outlook report said that India was recovering from the effects of demonetization and the introduction of the Goods and Services Tax and the recovery is expected to be underpinned by a rebound from transitory shocks as well as robust private consumption. Investors took note that the Finance Ministry is looking at an idea to relieve banks of the burden of non-performing loans and allow them to focus on the core issue of financial intermediation by issuing provisional ‘shore-up certificates’ (PSCs) against their stressed assets to shore up their capital.

Select power companies stocks were under pressure as the Reserve Bank of India rejected the government’s demand to relax the guidelines on resolution of stressed assets for power companies, pushing over 20,000 MW projects closer to liquidation. The regulator has said it was difficult to give any special treatment to any one sector and has said such issues must be addressed by the concerned ministries. Separately, a private report showed that India has ranked fourth out of 25 nations in the Asia-Pacific region on an index that measures their overall power, with the country being pegged as a giant of the future but trails behind in indicators of defence networks and economic relationships. Select tea stocks were buzzing on report that Indian tea industry has recorded the highest ever production as well as exports in FY18. The total tea production was 1325.05 million kgs, an increase of 74.56 million kgs as compared to 2016-17.

Meanwhile, mixed reactions were witnessed in FMCG stocks on CRISIL report that with a revenue growth of Rs 3.4 lakh crore, the Fast Moving Consumer Goods (FMCG) sector is seen rising by around 300-400 basis points  to 11-12% in FY19 compared to 8% in FY18. The optimism comes from revival in rural demand and new product launches, which will further lead to a significant improvement in operating performance of FMCG companies and benefit their credit profiles. Some sugar stocks were under pressure after ICRA in its report highlighted that the overall outlook for sugar remained weak even when the government’s cane subsidy might marginally improve operational profitability of the mills. The report added that in in-spite of the expected marginal improvement in operating profitability, the overall profitability outlook for the sugar sector remained weak for FY19.

Traders were seen piling position in IT, Consumer Durables and TECK stocks, while selling was witnessed in Oil & Gas, Energy and PSU sector stocks. In scrip specific developments, Kajaria Ceramics was trading in red after the company reported a fall of 6.69% in its net profit at Rs 65.68 crore for the quarter ended March 31, 2018 as compared to Rs 70.39 crore for the same quarter in the previous year. The total income of the company decreased by 7.22% at Rs 710.27 crore for quarter under review as compared to Rs 765.54 crore for the quarter ended March 31, 2017.

On the global front, Asian markets were trading mixed. Japanese workers’ inflation-adjusted real wages rose for the first time in four months in March, in a sign of a gradual increase in salaries that should help stimulate consumer spending. Back home, the BSE Sensex and NSE Nifty were trading above the psychological 35,200 and 10,700 levels, respectively. The market breadth on BSE was positive in the ratio of 1162:1004, while 102 scrips remained unchanged.

The BSE Sensex is currently trading at 35227.49, up by 11.17 points or 0.03% after trading in a range of 35134.20 and 35246.22. There were 19 stocks advancing against 12 stocks declining on the index.

The broader indices were trading mixed; the BSE Mid cap index was down by 0.32%, while Small cap index was up by 0.19%.

The gaining sectoral indices on the BSE were IT up by 0.83%, Consumer Durables up by 0.74%, TECK up by 0.66%, Metal up by 0.61%, Capital Goods up by 0.35% while, Oil & Gas down by 1.08%, Energy down by 0.73%, PSU down by 0.69%, Realty down by 0.31%, Utilities down by 0.25% were the losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 1.17%, Yes Bank up by 1.15%, Tata Steel up by 1.03%, TCS up by 0.96% and Tata Motors - DVR up by 0.90%.

On the flip side, SBI down by 1.24%, Maruti Suzuki down by 0.80%, HDFC down by 0.71%, Mahindra & Mahindra down by 0.58% and Adani Ports & Special Economic Zone down by 0.46% were the top losers.

Meanwhile, the government will release a producers’ price index (PPI) for ten services on trial basis in June 2018. The move will help track inflation in services including telecom, railways, ports, postal, insurance, banking, transportation and air travel. PPI measures the average movements of prices received by domestic producers for goods and services sold on the domestic or/and on the export markets.

Presently, wholesale price index (WPI) and consumer price index (CPI) are used for tracking price movement. The WPI measures price movement of goods in wholesale markets, while the CPI tracks inflation at retail level and also includes certain services. While the incidence of taxes are accounted for in WPI and CPI, the PPI would reflect the cost at producers point sans taxes.

In case of railways, price movement would be tracked for freight tariff and passenger fares. On the other hand, the index of banking would include direct services and fees. The PPI for services assumes importance the sector contributes about 60 percent in India’s gross domestic product (GDP) growth.

The CNX Nifty is currently trading at 10715.00, down by 2.80 points or 0.03% after trading in a range of 10689.85 and 10726.10. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Titan Co up by 2.16%, Bharti Infratel up by 1.42%, Hindalco up by 1.30%, HCL Tech up by 1.23% and Yes Bank up by 1.22%.

On the flip side, BPCL down by 3.22%, HPCL down by 2.95%, Indian Oil Corporation down by 2.73%, Ultratech Cement down by 1.73% and SBI down by 1.28% were the top losers.

The Asian markets were trading mixed; Taiwan Weighted increased 27.77 points or 0.26% to 10,719.15, Jakarta Composite increased 45.56 points or 0.79% to 5,820.28 and Hang Seng increased 129.64 points or 0.43% to 30,532.45.

On the other hand, Nikkei 225 decreased 135.84 points or 0.6% to 22,372.85, KOSPI Index decreased 5.84 points or 0.24% to 2,443.97 and Shanghai Composite decreased 0.24 points or 0.01% to 3,161.26.

Kuala Lumpur Stock Exchange was closed on account of Election Day holiday.