Benchmarks trade lower in early deals

Extending their previous session downfall, Indian equity benchmarks made a pessimistic start and are trading in red in early deals on Friday amid higher crude oil prices and a weak rupee. Traders remained concerned with private report stating that Reserve Bank of India is likely to keep policy rates unchanged in the forthcoming monetary policy review, but will have a hawkish tone on concerns over inflation and as crude oil prices remain elevated. The Reserve Bank will announce its second bi-monthly monetary policy on June 6. Traders shrugged off UN’s report that India’s economy is projected to grow 7.6% in fiscal year 2018-19, remaining the fastest growing economy in the world, as robust private consumption and benefits from past reforms help the country’s GDP gain momentum but sustained recovery in private investment remains a crucial challenge. Market participants failed to get any sense of relief with Niti Aayog CEO Amitabh Kant’s statement that crony capitalism in India will come to an end with the new bankruptcy code though it was facing some teething troubles.

On the global front, Asian markets are trading mostly in green at this point, but with marginal gains as investors kept a cautious watch on the second round of trade talks between the U.S. and China. Blaming the trade policies of previous administrations, U.S. President Donald Trump said that China has become very spoiled and expressed doubts about whether the trade talks would be successful. The US markets ended lower on Thursday, as traders expressed some uncertainty about the second round of trade talks between the U.S. and China.

Back home, aviation stocks are flying higher on report that the Civil Aviation Ministry is likely to approach the GST Council soon for bringing aviation turbine fuel (ATF) under the tax regime. Currently, jet fuel or ATF is not under the GST ambit and the levy on it varies from state to state. In scrip specific developments, Central Bank of India surged despite reporting net loss of Rs 2,113.51 crore in Q4 and Quess Corp strengthened on receiving nod to make further investments in two entities.

The BSE Sensex is currently trading at 35019.49, down by 129.63 points or 0.37% after trading in a range of 34961.78 and 35163.11. There were 10 stocks advancing against 19 stocks declining on the index, while 2 stocks remained unchanged.

The broader indices were trading in red; the BSE Mid cap index was down by 0.16%, while Small cap index down by 0.27%.

The top gaining sectoral indices on the BSE were Energy up by 0.68%, Oil & Gas up by 0.60%, PSU up by 0.25%, Power up by 0.05% and Metal was up by 0.04%, while Capital Goods down by 0.84%, Industrials down by 0.54%, Healthcare down by 0.50%, TECK down by 0.44% and IT was down by 0.42% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 1.62%, ONGC up by 1.46%, Yes Bank up by 0.61%, Kotak Mahindra Bank up by 0.61% and Coal India up by 0.52%. On the flip side, Wipro down by 1.60%, Bharti Airtel down by 1.35%, Asian Paints down by 1.34%, Larsen & Toubro down by 1.30% and ICICI Bank down by 1.22% were the top losers.

Meanwhile, with robust private consumption, a slightly more supportive fiscal stance and benefits from past reforms, the United Nations (UN) in its mid-2018 report has projected Indian economy to grow at 7.6% in the fiscal year 2018-19. It added that the country will remain the fastest growing economy in the world. But, it also said that although capital spending has shown signs of revival, a more widespread and sustained recovery in private investment remains a crucial challenge in the nation. For fiscal year 2017-18, it said that gross domestic product (GDP) growth is expected to climb to 7.5% from 6.7% growth registered in FY17.

The report titled World Economic Situation and Prospects (WESP) stated that growth in the world economy is surpassing expectations and global GDP is now expected to expand by more than 3% this year and in 2019, reflecting strong growth in developed countries and broadly favourable investment conditions. However, it said that rising trade tensions, heightened uncertainty over monetary policy, increasing debt levels and greater geopolitical tensions can potentially thwart progress. World economic growth is now forecast to reach 3.2% both in 2018 and 2019, an upward revision by 0.2 and 0.1 percentage points, respectively.

As per the report, this revised outlook reflects further improvement in the growth forecast for developed economies due to accelerating wage growth, broadly favourable investment conditions, and the short-term impact of a fiscal stimulus package in the US. World trade growth has also accelerated, reflecting a widespread increase in global demand. Many commodity-exporting countries will also benefit from the higher level of energy and metal prices. While the modest rise in global commodity prices will exert some upward pressure on inflation in many countries, the report noted that inflationary pressures remain contained across most developed and developing regions.

The report further highlighted that the trade tensions that has been building among many of the world’s largest economies. Major trade agreements such as NAFTA have undergone prolonged renegotiation, and a range of tariff and trade barriers have been put forward by major economies. In addition to these measures taken outside the auspices of the World Trade Organisation, a rising number of disputes have been raised within the WTO in recent months, including cases involving Australia, Canada, China, India, Pakistan, South Korea, Russia, Ukraine, the UAE, the US and Vietnam. It added that a move towards a more fragmented international trade landscape could reverse recent improvement in the global economy.

The CNX Nifty is currently trading at 10652.45, down by 30.25 points or 0.28% after trading in a range of 10631.15 and 10674.95. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were ONGC up by 1.59%, Bajaj Auto up by 1.58%, HPCL up by 1.46%, Reliance Industries up by 0.83% and Bajaj Finance up by 0.78%. On the flip side, Wipro down by 1.90%, GAIL India down by 1.77%, Bharti Airtel down by 1.71%, Cipla down by 1.63% and Ultratech Cement down by 1.57% were the top losers.

Asia markets are trading in mostly in green; FTSE Bursa Malaysia KLCI rose 5.03 points or 0.27% to 1,859.47, KOSPI Index increased 6.17 points or 0.25% to 2,454.62, Taiwan Weighted gained 7.45 points or 0.07% to 10,841.26, Shanghai Composite advanced 8.69 points or 0.28% to 3,162.97, Jakarta Composite jumped 19.58 points or 0.34% to 5,835.50, Hang Seng added 53.57 points or 0.17% to 30,995.72 and Nikkei 225 up by 92.15 points or 0.4% to 22,930.52. 

On the flip side, Straits Times down by 13.93 points or 0.40% to 3,522.83.