Benchmarks continue weak trade in morning session

Indian equity benchmarks continued their weak trade in morning session on account of selling in frontline blue chip counters. OPEC’s efforts to cut global oil inventories are finally paying off, with Brent crude inching closer and closer to $80 per barrel. The rupee opened down against dollar on account of sustained dollar demand by banks and importers. Foreign Portfolio Investors bought shares worth Rs 822.10 crore (net) in the previous trading session with gross purchases and gross sales standing at Rs 4,777.71 crore and Rs 3,955.61 crore, respectively. The sentiments were dampened on account of weak trend in global stocks, correction in banking stocks after disappointing earnings by PNB and uncertainty over formation of government in Karnataka. The Karnataka Assembly election results threw up an unexpected suspense yesterday as a simple majority eluded BJP and the Congress quickly proclaimed support to third-placed JD(S) to keep the saffron party out of power. All eyes are now on Governor Vajubhai Vala who will have to decide whether to call BJP, the single largest winner of seats, to try to form the government or go with the JD(S)-Congress combine, which together have a clear majority.

Some selling also crept in after trade deficit widened slightly to $13.72 billion in April from $13.25 billion a year ago. Besides, overall trade deficit, taking merchandise and services together, for April-March 2017-18 is estimated at $80.61 billion as compared to $41.79 billion during April-March 2016-17. India’s exports rose by 5.17% year-on-year to $25.9 billion in April, while imports during the month were valued at $39.6 billion, up 4.6% over April 2017. Separately, a private report showed that inflation is set to rise further towards the second half of the fiscal, and could average 5.1% this financial year compared to 3.6% last year. The factors that are likely to impact inflation going forward include higher oil prices, a weaker rupee, higher MSPs and more currency in circulation. The report added that given global factors like rise in oil prices, Fed rate hikes and likely fall in dollar liquidity, will impact India’s macro economy, while domestic factors like higher agriculture Minimum Support Prices (MSPs) threaten to raise inflation.

Traders were seen piling position in Realty and IT sector stocks, while selling was witnessed in PSU, Oil & Gas and Energy sector stocks. In scrip specific developments, Indiabulls Real Estate was trading firm ahead of board meeting to consider share buyback proposal. The meeting of the board of directors will be held on May 18 to consider the proposal of buyback of equity shares. Punjab National Bank (PNB) was trading red after touching 52-week low post weak numbers. The company has reported a net loss of Rs 13,416.91 crore for the fourth quarter ending March 2018. The profit was dragged by a three-fold surge in provisions towards bad loans, which was taken upfront during the quarter.

On the global front, Asian markets were trading mostly in red after Pyongyang called off talks with Seoul, throwing a major US-North Korean summit into question. Japan’s economy shrank for the first time in two years in the first quarter of the year amid weak consumption. The world’s third-largest economy contracted by 0.2% quarter-on-quarter in the January-March period, compared with growth of 0.1% at the end of 2017. Back home, the BSE Sensex and NSE Nifty were trading below the psychological 35,300 and 10,750 levels, respectively. The market breadth on BSE was negative in the ratio of 578:1572, while 104 scrips remained unchanged.

The BSE Sensex is currently trading at 35297.37, down by 246.57 points or 0.69% after trading in a range of 35241.63 and 35452.35. There were 7 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.79%, while Small cap index was down by 0.62%.

The only gaining sectoral indices on the BSE were Realty up by 1.48% and IT up by 0.11%, while PSU down by 1.86%, Oil & Gas down by 1.81%, Energy down by 1.62%, Bankex down by 1.38% and Telecom down by 1.13% were the top losing indices on BSE.

The top gainers on the Sensex were Wipro up by 0.81%, Tata Motors - DVR up by 0.47%, TCS up by 0.43%, Hindustan Unilever up by 0.15% and ITC up by 0.12%.

On the flip side, ICICI Bank down by 3.13%, Hero MotoCorp down by 2.63%, SBI down by 2.59%, Coal India down by 2.20% and Reliance Industries down by 1.50% were the top losers.

Meanwhile, in a bid to promote growth of the global economy, Commerce and Industry Minister Suresh Prabhu has pitched for inclusion of a comprehensive trade facilitation agreement (TFA) on services in the World Trade Organisation (WTO). He noted that WTO will not be doing full justice to the world economic development unless services sectors are taken on board, so they are trying to work on that. He believed that the planned agreement would help professionals move smoothly from one place to another.

Prabhu has stated that India has submitted a detailed proposal to the WTO to negotiate a trade facilitation agreement in services (TFS). He noted that the proposal aims at liberalising rules for movement of professionals and other steps to reduce transaction costs with a view to boost growth of the services sector. He added that it will focus on issues like liberalised visa regime, long-term visas for business community and freer movement of professionals for the greater benefit of both India and the world, among others.

The minister further pointed out that India is pitching for this agreement as the sector contributes about 60 percent to the Gross domestic product (GDP) and 28 percent to the total employment. He also said that the commerce ministry is working on state-wise plan to promote the services sector. He added that India’s GDP is expected to reach a volume of $5 trillion in the coming years and out of this services segment would contribute about $3 trillion.

The CNX Nifty is currently trading at 10714.75, down by 87.10 points or 0.81% after trading in a range of 10699.70 and 10764.80. There were 9 stocks advancing against 41 stocks declining on the index.

The top gainers on Nifty were Lupin up by 1.08%, Wipro up by 0.74%, Tech Mahindra up by 0.47%, TCS up by 0.43% and Titan up by 0.41%.

On the flip side, Cipla down by 3.51%, ICICI Bank down by 3.29%, GAIL India down by 3.00%, Ultratech Cement down by 2.87% and HPCL down by 2.80% were the top losers.

The Asian markets were trading mostly in red; Jakarta Composite decreased 78.11 points or 1.34% to 5,760.00, Nikkei 225 decreased 78.06 points or 0.34% to 22,739.96, Hang Seng decreased 57.58 points or 0.18% to 31,094.45, Shanghai Composite decreased 7.35 points or 0.23% to 3,184.77 and Taiwan Weighted decreased 4.98 points or 0.05% to 10,869.75.

On the other hand, KOSPI Index increased 2 points or 0.08% to 2,460.54 and FTSE Bursa Malaysia KLCI increased 6.33 points or 0.34% to 1,854.53.