Domestic equities continue to trade in negative territory

Domestic equity benchmarks continued to trade in negative territory in late morning session as sentiments remained pessimistic with India Ratings’ report stating that a weakening rupee, if unhedged, will impact investor returns in bid solar projects in the event of a significant exchange rate variation between the time of bidding and finalisation of module supply agreement. The India Ratings further said that the exchange rate deteriorated 5 per cent year-on-year in May 2018, when the bids were hovering around Rs 2.5 per unit. Sentiments also remained downbeat with a report stating that India's oil imports from Iran surged to 640,000 barrels per day (bpd) in April, its highest level since October 2016, as refiners raised purchases ahead of looming U.S. sanctions against Tehran. The report further said that overall, India imported 4.51 million bpd in April, 2.5 percent higher than a year ago. Traders failed to take any sense of relief from Finance minister Piyush Goyal’s statement that he promised all possible support to the 11 state-run banks that are under the RBI’s Prompt Corrective Action (PCA) framework and expressed confidence that public sector banks will overcome legacy issues very soon.

On the Global front, Asian market were trading mostly in green, as investors took some encouragement from a report which stated that China has offered US President Donald Trump a package of proposed purchases of American goods and other measures aimed at reducing the US trade deficit with China by some $200 billion a year. Back on domestic turf, Aviation stocks were trading mostly in red, despite Directorate General of Civil Aviation stating that Domestic air passenger volume surged 26 percent in April to 11.51 million over the year-ago period driven by the tourist’s season, which began from the previous month. In scrip specific development, Dewan Housing Finance Corporation gained on planning to raise Rs 50,000 crore in FY19. Besides, Central Bank of India surged despite reporting net loss of Rs 2,113.51 crore in Q4. 

The BSE Sensex is currently trading at 35004.34, down by 144.78 points or 0.41% after trading in a range of 34961.78 and 35163.11. There were 11 stocks advancing against 20 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.29%, while Small cap index was down by 0.35%.

The few gaining sectoral indices on the BSE were FMCG up by 0.98%, Consumer Durables up by 0.43%, and Energy was up by 0.01%, while Telecom down by 0.98%, Capital Goods down by 0.90%, Industrials down by 0.80%, Metal down by 0.77% and Healthcare was down by 0.70% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 1.96%, Hindustan Unilever up by 1.79%, ITC up by 1.06%, Indusind Bank up by 0.93% and Yes Bank was up by 0.62%. On the flip side, Bharti Airtel down by 2.39%, ICICI Bank down by 2.35%, Wipro down by 1.91%, Tata Motors down by 1.63% and Tata Motors - DVR was down by 1.32% were the top losers.

Meanwhile, with an aim to bring aviation turbine fuel (ATF) within the ambit of the new tax regime, the Civil Aviation Ministry is likely to approach the Goods and Services Tax (GST) Council soon. At present, jet fuel or ATF is not levied with GST and tax collection on this depends from state to state. Jet fuel plays an important role in the operational amount of an airlines outlay which also impacts the ticket charges for air travel.

Minister of State for Civil Aviation Jayant Sinha has said that his ministry had requested the Ministry of Finance to include aviation turbine fuel in the ambit of the GST regime with full input tax credit at the earliest possible. The long standing demand for a slash in the GST rate in the aviation maintenance, repair and overhaul (MRO) industry was also discussed.

GST is currently levied at 18% on the MRO industry. The MRO Association of India has warned that the industry could face a closure if the GST anomaly is not set right. The association contended that the airlines were finding it cheaper to send their aircraft overseas for maintenance although they cost more. The cost benefit that the MRO industry enjoyed because of low cost of labour in India - $20 to $35 an hour - had been eroded due to the GST burden.

The CNX Nifty is currently trading at 10644.70, down by 38.00 points or 0.36% after trading in a range of 10631.15 and 10674.95. There were 15 stocks advancing against 35 stocks declining on the index.

The top gainers on Nifty were Bajaj Finance up by 3.80%, Tech Mahindra up by 2.21%, Bajaj Auto up by 2.12%, Hindustan Unilever up by 1.67% and ITC was up by 1.08%. On the flip side, Bharti Airtel down by 2.72%, ICICI Bank down by 2.42%, Wipro down by 2.30%, Ultratech Cement down by 2.30% and Tata Motors was down by 1.76% were the top losers.

Asian market were trading mostly in green, FTSE Bursa Malaysia KLCI gained 4.3 points or 0.23% to 1,858.74, Shanghai Composite surged 9.77 points or 0.31% to 3,164.05, KOSPI Index soared 12.36 points or 0.5% to 2,460.81, Jakarta Composite rose by 16.93 points or 0.29% to 5,832.85, Nikkei 225 strengthened 65.83 points or 0.29% to 22,904.20 and Hang Seng was up by 113 points or 0.37% to 31,055.15.

On the other side, Taiwan Weighted was down by 2.97 points or 0.03% to 10,830.84.