Bulls tighten grip on Dalal Street ahead of Karnataka polls

Bulls tightened their grip on Dalal Street on Friday with frontline gauges surpassed their crucial 10,800 (Nifty) and 35,500 (Sensex) levels, ahead of the Karnataka Assembly elections. The southern state will vote on Saturday and the poll outcome will be known on May 15. Markets started the session on positive note with traders taking support from External Affairs Ministry Spokesperson Raveesh Kumar’s statement that India was closely monitoring the situation arising out of Trump’s announcement to pull the US out of the Iran deal. India will take necessary measures to offset any adverse impact on its interests due to US President Donald Trump’s decision to dump the Iran nuclear deal. Traders shrugged off report highlighting that continuing fall in the rupee will push trade deficit up to a four-year high of $178.1 billion or 6.4 per cent of GDP this fiscal year. The estimate comes amid a depreciation in the rupee against the dollar, wherein it has shed over 5 per cent to breach the Rs 67-mark to the dollar.

Markets extended rally in last leg as traders took some support from a private report which highlighting that India Inc’s mergers and acquisitions (M&As) tally rose eight-fold to $19.1 billion with 40 transactions in April, making it the highest monthly deal value recorded after March 2017. The report added that relative easing of regulatory ecosystem and consolidation across sectors has significantly driven the deal activity in April this year, sealing deals (M&A and PE) worth $21 billion across 119 deals. Adding to the optimism, the MSME ministry is in talks with the Reserve Bank of India (RBI) to explore ways to improve credit flow to micro, small and medium enterprises across the country. The ministry is looking at measures to address issues pertaining to decline in exports. Additionally, a parliamentary panel headed by veteran BJP leader Murali Manohar Joshi has decided to study the recovery of black money and performance of public sector banks among a host of subjects.

On the global front, European markets were trading mostly in red despite a survey showing that a record number of German companies believe economies in foreign markets where they do business will improve despite rising political and trade risks. Asian markets closed mostly higher as risk appetite got a boost from soft US inflation, helping alleviate worries of faster rate hikes by the Federal Reserve, while investors also cheered US-North Korean steps to further ease tensions on the Korean Peninsula

Back home, select auto stocks were buzzing in today’s trade after Society of Indian Automobile Manufactures’ (SIAM) report highlighted that the automobile industry took off on a strong note in April registering an overall growth of 17.44% in April 2018 to more than 23.79 lakh units from the year earlier period. Select non-banking finance companies (NBFC) stocks were buzzing with India Ratings’ report highlighting that as the banks are moderating their real estate lending growth due to issues related with asset quality and capitalization, the market share of NBFCs and HFCs would continue to expand in the real estate financing space. However, telecom stocks remained under pressure after Reliance Jio launched a new postpaid plan starting at Rs 199 per month that will redefine postpaid services in the country.
Finally, the BSE Sensex surged 289.52 points or 0.82% to 35,535.79, while the CNX Nifty was up by 89.95 points or 0.84% to 10,806.50.

The BSE Sensex touched a high and a low of 35,596.15 and 35,262.06, respectively and there were 23 stocks on gaining side as against 8 stocks on losing side on the index.

The broader indices ended mixed; the BSE Mid cap index gained 0.40%, while Small cap index was down by 0.12%.

The top gaining sectoral indices on the BSE were Metal up by 1.56%, Bankex up by 1.13%, Oil & Gas up by 1.07%, Capital Goods up by 1.00% and FMCG was up by 0.98%, while Telecom down by 4.25%, Consumer Durables down by 1.19%, Healthcare down by 0.78%, Realty down by 0.60% and Power was down by 0.39% were the top losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 6.17%, Tata Steel up by 2.17%, Larsen & Toubro up by 1.69%, Yes Bank up by 1.52% and HDFC up by 1.50%. On the flip side, Bharti Airtel down by 6.44%, Sun Pharma down by 5.05%, Tata Motors - DVR down by 1.69%, Tata Motors down by 0.78% and Hero MotoCorp down by 0.74% were the top losers.

Meanwhile, the Ministry of External Affairs’ (MEA) spokesperson Raveesh Kumar has said that India will take necessary steps to offset any adverse impact on its interests due to withdrawal of the United States from a multinational nuclear agreement with Iran. Talking about whether the US sanctions would hit the Chabahar port project, he said that it was too early to analyse and come up with conclusions about implications of the US decision on India.

Kumar has stated that there have been apprehensions that the US decision may adversely impact New Delhi's oil import from the Persian Gulf nation as well as Chabahar port project. He noted that Iran is India’s third-largest crude oil supplier after Iraq and Saudi Arabia. He also said that countries having financial dealings with Iran are expected to be hit by the comprehensive sanctions regime announced by the Trump administration after withdrawal from the nuclear deal.

Further, MEA spokesperson has said that India has called on all parties to engage constructively to resolve all contentious issues. He also mentioned that India and Iran have robust economic and commercial ties covering many sectors though it has traditionally been dominated by the import of Iranian crude oil by India. According to the MEA, India and Iran had a bilateral trade of $12.89 billion during the fiscal year 2016-17. India imported $10.5 billion worth of goods, mainly crude oil, and exported commodities worth $2.4 billion.

The CNX Nifty traded in a range of 10,812.05 and 10,724.45. There were 38 stocks in green as against 12 stocks in red on the index.

The top gainers on Nifty were Asian Paints up by 5.53%, HPCL up by 3.52%, Vedanta up by 2.57%, BPCL up by 2.49% and Indiabulls Housing Finance up by 2.38%. On the flip side, Bharti Airtel down by 6.32%, Sun Pharma down by 5.33%, Titan Company down by 1.55%, Tata Motors down by 0.87% and Hero MotoCorp down by 0.82% were the top losers.

The European markets were trading in red; Germany’s DAX decreased 32.95 points or 0.25% to 12,989.92 and France’s CAC declined 18.28 points or 0.33% to 5,527.67, while UK’s FTSE 100 was up by 4.47 points or 0.06% to 7,705.44.

Asian equity markets ended mostly higher on Friday, with higher commodity prices and easing rate hike fears helping underpin investors’ sentiments. While the dollar index eased somewhat after the release of tepid US inflation data, oil prices hovered near multi-year highs reached the previous session. Geopolitical developments also remained in focus after US President Donald Trump said he had high hopes of ‘doing something very meaningful’ to curtail North Korea's nuclear ambitions at a summit in Singapore in June. Japanese shares hit a three-month high as chip-related shares advanced and several companies posted strong earnings.  However, Chinese shares fell, but posted their best weekly performance in almost three months, as interest towards Chinese blue-chips has been steadily building ahead of MSCI’s A-share inclusion next month. Meanwhile, Malaysian markets were closed for a holiday as Mahathir Mohamad was sworn in as the nation's seventh prime minister after a stunning election comeback.