Benchmarks trade in green; Nifty surpasses 10,750 mark

Indian equity benchmarks traded in green in morning session on account of buying in frontline blue chip counters. Oil prices touched multi-year highs on looming US sanctions against major oil producer and Opec-member Iran as it threatened to tip an already tight market into undersupply. A $10 per barrel rise in crude could increase Current Account Deficit (CAD) by 50 basis points and Fiscal Deficit by around 8 basis points as a percentage of GDP, which will reduce the chances of a rate cut in the current financial year besides being an overall negative for growth. The street took support of a private report which highlighted 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.

Separately, a report enlightened that the Centre has made lending norms easier in farmer support schemes like Kisan Credit Card to increase the quantum of funds lent by institutions to small and marginal farmers in the country. According to the revised guidelines, standard security requirements like hypothecation of crops do not apply to loans of up to Rs 1 lakh. This will also be applicable on loans taken through Kisan Credit Card, which helps land-holding farmers meet their immediate credit needs. Investors took note that 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 decided to study the recovery of black money and performance of public sector banks among a host of subjects.

The street shrugged off India Ratings and Research (Ind-Ra), a subsidiary of Fitch Ratings, report that India’s trade deficit will widen to a four-year high of $178.1 billion or 6.4% of Gross Domestic Product (GDP) in 2018-19 (FY19), due to rupee depreciation coupled with higher crude and gold imports. Separately, former Finance Minister Yashwant Sinha has said that the data on economic growth put out by the Central government cannot be trusted.  He questioned the government’s claims about GDP growth and generation of employment. Sinha added that the Centre has been playing with the figures to show that jobs are created in large numbers.

Meanwhile, select auto stocks were buzzing on Society of Indian Automobile Manufactures (SIAM) report 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. Domestic passenger vehicle sales rose 7.5% to 2,98,504 units in April from 2,77,683 units in the same month last year. Domestic car sales were up 4.89% to 2,00,183 units as against 1,90,854 units in April 2017. Telecom companies were trading under pressure after Reliance Jio Infocomm expanded the tariff war to the postpaid segment, launching a plan at almost half the price and with more data than those offered by its rivals. The telecom arm of Mukesh Ambani-controlled Reliance Industries will start offering the Rs 199 a month plan to consumers from May 15.

Traders were seen piling position in Oil & Gas, Metal and Consumer Disc stocks, while selling was witnessed in Telecom, Healthcare and TECK sector stocks. In scrip specific developments, Ujjivan Financial Services was trading in green after touching 52-week high on back of strong March quarter numbers. The company reported a more than three-fold jump in its consolidated net profit at Rs 64.86 crore for the last quarter ended March 2018. The company had posted a net profit of Rs 19.35 crore in the January-March quarter of 2016-17.

On the global front, Asian markets were trading mostly in green 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, the BSE Sensex and NSE Nifty were trading above the psychological 35,300 and 10,750 levels, respectively. The market breadth on BSE was negative in the ratio of 1047:1064, while 110 scrips remained unchanged.

The BSE Sensex is currently trading at 35335.45, up by 89.18 points or 0.25% after trading in a range of 35262.06 and 35389.40. There were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.34%, while Small cap index was up by 0.24%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.66%, Metal up by 0.62%, Consumer Disc up by 0.50%, Basic Materials up by 0.49% and IT up by 0.47%, while Telecom down by 3.12%, Healthcare down by 0.38%, TECK down by 0.06% and Auto down by 0.04% were the only losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 5.80%, ICICI Bank up by 1.21%, Adani Ports & Special Economic Zone up by 0.92%, Dr. Reddy’s Lab up by 0.84% and Kotak Mahindra Bank up by 0.71%.

On the flip side, Bharti Airtel down by 4.75%, Sun Pharma down by 2.10%, Tata Motors - DVR down by 1.36%, Hero MotoCorp down by 0.78% and SBI down by 0.54% 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 is currently trading at 10751.00, up by 34.45 points or 0.32% after trading in a range of 10724.45 and 10762.50. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Asian Paints up by 5.59%, HPCL up by 3.13%, Indian Oil Corporation up by 2.23%, Bajaj Finance up by 1.77% and BPCL up by 1.64%.

On the flip side, Bharti Airtel down by 4.68%, Sun Pharma down by 2.20%, Hero MotoCorp down by 1.02%, Bharti Infratel down by 0.90% and Lupin down by 0.68% were the top losers.

The Asian markets were trading mostly in green; KOSPI Index increased 14.77 points or 0.6% to 2,478.93, Taiwan Weighted increased 99.46 points or 0.92% to 10,859.67, Jakarta Composite increased 108.66 points or 1.84% to 6,016.60, Nikkei 225 increased 214.86 points or 0.96% to 22,712.04 and Hang Seng increased 418.62 points or 1.36% to 31,227.84.

On the other hand, Shanghai Composite decreased 2.51 points or 0.08% to 3,171.90.

Malaysia’s national stock exchange is closed on Friday after Malaysia’s opposition alliance won the general elections on Thursday in a shock victory.