Sensex, Nifty continue sluggish trade; Tata Motors top loser

Indian equity benchmarks continued their sluggish trade in late afternoon session, tracking weak cues from European markets. Anxiety remained on the street amid weak microeconomic data and heavy selling in Consumer Durables, Industrials and Auto stocks. India’s industrial production measured by Index of Industrial Production (IIP) slowed down to 4.4% in the month of March 2018, as compared to 7.1% growth recorded in previous month, while India’s inflation on wholesale level picked up in the month of April due to increase in prices of food and fuel products, snapping four-month easing trend. According to the latest data released by the government, the wholesale price inflation (WPI) climbed to 3.18% in April 2018 from 2.47% in March 2018. Adding some pessimism, a private report noted that the Reserve Bank is expected to begin its rate hike cycle from December quarter, and may go for three rate hikes by 2019 taking the key policy rate to 6.75%.

Some concerns also came with ASSOCHAM’s report stating that whatever the outcome of Karnataka elections, the political-economic narrative of 2018 and early part of 2019 would centre around either the impending polls in states like Madhya Pradesh and Rajasthan or the general Lok Sabha elections, forcing investors to adopt a ‘wait and watch’ stance. Traders also got cautious with Niti Aayog member Bibek Debroy’s statement that 95% of the entrepreneurial attempts fail in the country, doubting whether the Indian education system facilitates entrepreneurship. Besides, in line with sluggish larger peers, the broader markets too rallied under pressure with the losses of around 80% each. Meanwhile, continuing downward trend, the country’s foreign exchange reserves fell by $1.426 billion to $418.940 billion in the week to May 4, due to decrease in foreign currency assets.

On the global front, European markets were trading in red, even though the US and China toned down their trade war rhetoric. Ahead of high stakes trade talks taking place this week, US President Donald Trump has pledged to help Chinese telecom company ZTE Corp to ‘get back into business, fast’. However, Asian markets were trading in green. Back home, in scrip specific development, Mukta Arts traded higher after the company tied up with Navala Production, Rome to co-produce a film on the life of the controversial mystic Osho.

The BSE Sensex is currently trading at 35488.24, down by 47.55 points or 0.13% after trading in a range of 35456.56 and 35642.72. There were 14 stocks advancing against 17 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.80%, while Small cap index was down by 0.81%.

The lone gaining sectoral index on the BSE was Healthcare up by 0.20%, while Consumer Durables down by 2.49%, Industrials down by 0.96%, Auto down by 0.89%, Capital Goods down by 0.85% and Consumer Disc down by 0.76% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddy’s Lab up by 1.77%, NTPC up by 1.64%, SBI up by 1.24%, Hero MotoCorp up by 0.85% and Tata Steel up by 0.77%. On the flip side, Tata Motors down by 2.15%, Mahindra & Mahindra down by 1.84%, Tata Motors - DVR down by 1.72%, Yes Bank down by 1.07% and TCS down by 1.06% were the top losers.

Meanwhile, global rating agency Fitch has said that India’s economic growth is likely to accelerate to 7.3 percent in FY19 and 7.5 percent in FY20 on the back of recovery in money supply to its pre-demonetisation level. Moreover, disruptions related to the rollout of GST have also eased and will support in the growth of Indian economy. The rating agency has said the country’s ratings “balance a strong medium-term growth outlook and favourable external balances against a weak fiscal position and difficult business environment”. However, the business environment is likely to improve gradually on the back of implementation of the government’s structural-reform agenda.

The Indian economy continued making recovery in the last quarter of 2017, growing 7.2 percent. The influence of one-off, policy-related factors, which had been a drag on growth, has now diminished. The money supply recovered to its pre-demonetisation level in mid-2017 and is now growing progressively alike to the previous trend.

The government plans to adopt a ceiling of 40 percent of GDP for central government debt, as recommended by the Fiscal Responsibility and Budget Management Review Committee in January 2017, compared with an estimated 50 percent of GDP for FY18. This would be a positive step towards a more prudent fiscal framework, even if debt is unlikely to fall below the ceiling by FY23, as recommended by the committee.

The Indian government’s last full budget before general elections has left much of the task of addressing the country’s relatively weak public finances to the next government. The budget deficit target for FY19 is set at 3.3 percent of GDP, down from an expected 3.5 percent in FY18, implying fiscal slippage of 0.3 percent of GDP in both FY18 and FY19 relative to last year’s budget targets.

The CNX Nifty is currently trading at 10784.45, down by 22.05 points or 0.20% after trading in a range of 10774.75 and 10834.85. There were 24 stocks advancing against 25 stocks declining, while 1 stock remained unchanged on the index.

The top gainers on Nifty were NTPC up by 1.76%, Dr. Reddy’s Lab up by 1.69%, SBI up by 1.50%, BPCL up by 1.28% and Ultratech Cement up by 1.17%. On the flip side, Titan down by 3.14%, Zee Entertainment down by 2.92%, Tata Motors down by 2.19%, Indiabulls Housing Finance down by 2.01% and Vedanta down by 1.95% were the top losers.

Asian markets were trading mostly in green; Shanghai Composite increased 10.77 points or 0.34% to 3,174.03, FTSE Bursa Malaysia KLCI increased 26.59 points or 1.44% to 1,873.10, Taiwan Weighted increased 93.41 points or 0.86% to 10,952.39, Nikkei 225 increased 107.38 points or 0.47% to 22,865.86 and Hang Seng increased 419.02 points or 1.35% to 31,541.08. On the flip side, Jakarta Composite decreased 42.44 points or 0.71% to 5,914.40 and KOSPI Index decreased 1.6 points or 0.06% to 2,476.11.

All European markets were trading in red; UK’s FTSE 100 decreased 6.04 points or 0.08% to 7,718.51, France’s CAC decreased 4.43 points or 0.08% to 5,537.51 and Germany’s DAX decreased 3.58 points or 0.03% to 12,997.66.