Post Session: Quick Review

Indian equity benchmarks traded on a volatile note throughout the day and ended with cut of around quarter percent. The market breadth was in favour of declines with one stock advancing against three declining ones. The street was eyeing the outcome of the Karnataka Assembly elections which will have larger implications for the way the capital markets will view the future of reforms. Indian equity benchmarks made an optimistic start and traded in fine fettle in early deals amid firm global cues. The sentiments were upbeat with India Ratings’ statement that the Indian economy is gradually coming out of the twin shock of demonetization and GST which temporarily derailed growth. The ratings agency, however, cautioned on the possible widening of the current account deficit (CAD) due to rising oil prices which was creating pressure on the currency. It added that on the monetary side, areas of concern are rising bond yields which indicate potential slippages on the fiscal front. 

Investors took note of FICCI President Rashesh Shah’s statement that industry chambers must transform their role from being advocacy groups to ensuring that the country’s expectations are translated into reality. Shah said India is at a fascinating stage of economic growth and it needs lot of investments to create jobs and boost growth and for that savings need to be channelized. Separately, Commerce Secretary Rita Teaotia has said that India is not expecting any major shift in trade with Iran following the US decision to re-impose trade sanctions against the Islamic nation. The bilateral trade between India and Iran has increased to $12.9 billion in 2016-17 from $9 billion in the previous fiscal. Additionally, Rita Teaotia said that the commerce ministry is working with different ministries to formulate separate plans for 12 services sector, including IT, tourism and logistics, with a view to boost growth in these segments.

However, the markets trimmed their gains and entered into red terrain as investors turned cautious with the industry chamber Associated Chambers of Commerce and Industry of India (ASSOCHAM) stating that President Donald Trump’s move to withdraw the US from the Iran nuclear deal will exert pressure on fuel prices and affect the Indian economy on the downside. Meanwhile, International Monetary Fund (IMF) in its report highlighted that in India, given increased inflation pressure, monetary policy should maintain a tightening bias. The advice came at a time when oil poses an upside risk to the inflation. Earlier, the Monetary Policy Committee (MPC) had raised several areas of concerns, including high and volatile crude prices. The other areas were an increase in minimum support prices for farmers, house rent allowance (HRA) revision and volatile crude oil prices, indicating a tightening of the policy regime in the coming months.

Meanwhile, select companies in renewable energy space were buzzing after RK Singh, Minister of Power and new and renewable energy, said that India is making quick progression in the field of renewable energy and the government is committed to achieving the said target by 2022. In the run up to India’s target of achieving 175 GW of renewable energy capacity addition, the government said that the country has already achieved 70 GW project capacity while an additional 38 GW is under implementation, as per data available till March 31, 2018.

On the global front, Asian markets closed mostly higher. China’s producer inflation picked up for the first time in seven months in April, bolstered by surging commodities prices and suggesting its industrial demand remains resilient even as trade tensions ratchet up with the United States. The European markets were trading mostly in red. Output in the UK manufacturing sector fell by 0.1% in March, according to figures published by the Office for National Statistics. The consensus expectation had been for a decline of 0.2%. On an annualized basis, manufacturing production rose 2.9% in March.

Back home, aviation company stocks were under pressure despite Airports Authority of India’s (AAI) report enlightening that Tier-II cities have seen a sharp jump in international aircraft movement in recent months, with the city of Varanasi recording an impressive growth of 98.6 percent in March this year as compared to 2017. The growth rate of Delhi and Mumbai airports stood at 5.6 percent and 7.3 percent, respectively, even as both the airports continue to face capacity constraint, thus limiting the growth of traffic movement.

The BSE Sensex ended at 35239.24, down by 80.11 points or 0.23% after trading in a range of 35203.85 and 35500.76. There were 8 stocks advancing against 23 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 1.57%, while Small cap index was down by 1.38%. (Provisional)

The only gaining sectoral indices on the BSE were Energy up by 0.70% and Oil & Gas up by 0.55%, while Realty down by 2.14%, Healthcare down by 1.69%, Power down by 1.51%, Utilities down by 1.40% and Industrials down by 1.30% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were ONGC up by 2.87%, Bharti Airtel up by 2.11%, HDFC Bank up by 0.56%, Reliance Industries up by 0.48% and IndusInd Bank up by 0.47%. (Provisional)

On the flip side, Dr. Reddy’s Lab down by 3.90%, Tata Motors down by 2.30%, Sun Pharma down by 1.92%, Bajaj Auto down by 1.78% and Power Grid down by 1.75% were the top losers. (Provisional)

Meanwhile, with improving major macro parameters like manufacturing, capital goods production, non-food credit and consumption, the credit rating agency, India Ratings and Research (Ind-Ra) has said that the Indian economy is gradually recovering from note ban and Goods and Service Tax (GST) shocks, which temporarily derailed growth.

The rating agency noted that the country may grow at 7.4% in the current financial year, if things continue to improve like they are improving now and the policy remains conducive. It further said that it was unlikely that the government would go ahead with big bang reforms due to the 2019 Lok sabha elections.

However, Ind-Ra expressed concern over the possible widening of the current account deficit (CAD), on the back of rising oil prices which was creating pressure on the currency. It also said that if the CAD remained within 3%, then it would not be alarming for the economy provided capital inflows were in excess of outflows caused by high oil import bill and the rupee will have an appreciating bias.

The CNX Nifty ended at 10710.05, down by 31.65 points or 0.29% after trading in a range of 10705.00 and 10785.55. There were 15 stocks advancing against 35 stocks declining on the index. (Provisional)

The top gainers on Nifty were ONGC up by 2.82%, Bharti Airtel up by 2.00%, Eicher Motors up by 1.43%, Tech Mahindra up by 1.33% and BPCL up by 1.18%. (Provisional)

On the flip side, Dr. Reddy’s Lab down by 3.63%, Indiabulls Housing down by 2.54%, Tata Motors down by 2.47%, Cipla down by 2.36% and Power Grid down by 1.86% were the top losers. (Provisional)

The European markets were trading mostly in red; UK’s FTSE 100 decreased 18.65 points or 0.24% to 7,643.87, France’s CAC decreased 3.74 points or 0.06% to 5,530.88, while Germany’s DAX increased 64.94 points or 0.50% to 13,008.00.

Asian equity markets ended mostly higher on Thursday as rallying oil prices helped lift energy stocks and US President Donald Trump said he would announce the site for a summit with North Korean leader Kim Jong Un within three days. Japanese shares ended higher on improved risk appetite as crude oil prices surged and investors digested a raft of local economic data. Further, Chinese shares ended higher after official data showed the country's consumer price inflation eased to a three-month low in April on weak food price growth, while producer price inflation increased for the first time in seven months on commodity prices. Consumer prices in China were up 1.8 percent on year in April. That was beneath expectations for 1.9 percent and down from 2.1 percent in March. Producer prices advanced an annual 3.4 percent - matching forecasts and up from 3.1 percent in the previous month. Meanwhile, Indonesian and Malaysian markets remained closed for holidays.