Indian bourses continue to trade under pressure

Indian bourses continued their weak trade in early afternoon session, on account of selling witnessed in front line blue chip stocks. The mood of the markets remained impacted by a 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 overlooked UN’s latest 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. Except FMCG, all the indices were trading in red on the BSE with Capital Goods being the top loser with losses of 1.21%. In the currency front, rupee dropped sharply by 26 paise to 67.94 per dollar in early trade amid gains in the US currency in global markets. In scrip specific development, Sunteck Realty surged by over 1% on planning to raise funds up to Rs 2000 crore either by way of QIP, FPO, ADR, GDR, rights issue, debt issue, preferential issue, FCCB etc. or any other method for issue of fund in two manners.

On the global front, Asian market were trading mostly in green, with modest gains as investors kept a cautious watch on the second round of trade talks between the US and China. Back home, the BSE Sensex is currently trading at 34976.19, down by 172.93 points or 0.49% after trading in a range of 34961.78 and 35163.11. There were 8 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index was down by 0.58%, while Small cap index was down by 0.62%.

The only gaining sectoral index on the BSE was FMCG up by 0.99%, while Capital Goods down by 1.21%, Industrials down by 1.13%, Metal down by 1.12%, Healthcare down by 1.04% and Basic Materials down by 0.90% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 1.85%, ITC up by 1.52%, Hindustan Unilever up by 1.26%, Kotak Mahindra Bank up by 0.85% and Indusind Bank up by 0.56%. On the flip side, ICICI Bank down by 2.47%, Sun Pharma down by 2.45%, Tata Motors down by 2.35%, Wipro down by 2.04% and Adani Ports & SEZ down by 1.81% 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 10632.65, down by 50.05 points or 0.47% after trading in a range of 10629.10 and 10674.95. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Bajaj Finance up by 2.69%, Tech Mahindra up by 2.40%, Bajaj Auto up by 1.99%, ITC up by 1.86% and Hindustan Unilever up by 1.30%. On the flip side, ICICI Bank down by 2.65%, Sun Pharma down by 2.62%, Tata Motors down by 2.51%, Ultratech Cement down by 2.34% and Cipla down by 2.30% were the top losers.

Asian market were trading mostly in green, FTSE Bursa Malaysia KLCI increased 4.3 points or 0.23% to 1,858.74, KOSPI Index was up by 12.2 points or 0.5% to 2,460.65, Jakarta Composite added 16.93 points or 0.29% to 5,832.85, Shanghai Composite surged 28.97 points or 0.92% to 3,183.25, Nikkei 225 increased 91.99 points or 0.4% to 22,930.36 and Hang Seng rose 169.97 points or 0.55% to 31,112.12.

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