Post Session: Quick Review

Indian equity benchmarks extended their losing streak for fifth straight session and ended with losses of more than half a percent, as the political situation in Karnataka clouded the outlook for general elections next year and left markets uneasy. Bears took full control on Dalal Street in later part of the day with Nifty slipping below 10,550 mark and Sensex drifting below 34,700 mark. Markets started the session on an optimistic note as traders took some support from economic affairs secretary Subhash Chandra Garg’s statement that India's growth trajectory continues to be stable with strong macroeconomic fundamentals, despite a continual rise in global oil prices and hardening bond yields. 

However, key indices were unable to hold on to the gains for long as anxiety spread among the investors on report that even as monsoon is predicted to be normal this year, its uneven distribution could spike food prices, and inflation is likely to edge further. Sentiments on the street weakened further with a private report stating that Corporate India-especially the chunk comprising over-leveraged companies-is worried about a recent Reserve Bank of India (RBI) circular that says companies with even a day of loan-default can be set on the path of debt resolution and subsequent bankruptcy proceedings. Adding some woes, Niti Aayog CEO Amitabh Kant said that achieving 9-10% growth rate in the next 30 years would be a challenge for India, even though the country is expanding at 7.5% growth rate per annum. 

On the global front, Asian markets closed mostly higher, after U.S. Treasury Secretary Steven Mnuchin said that the U.S. trade war with China is 'on hold' as the world's two largest economies work on a wider trade agreement. The European markets were trading mostly in green in early deals on Monday, as easing trade war worries lifted the dollar, supporting exporters.

Back home, banking stocks remained under pressure despite report that the finance ministry is expecting banks to write back more than Rs 1 lakh crore after the resolution of all 12 NPA cases referred to insolvency proceedings by the RBI it its first list. Stocks related to steel and aluminium counters too edged lower despite report that India has told the WTO that it proposes to raise duties by up to 100 per cent on 20 products such as almonds, apple and specific motorcycles imported from the US from next month, if Washington does not roll back high tariffs on certain steel and aluminium items. Besides, Indostar Capital Finance made a decent debut on the bourses and ended with a gain of around two and a half percent.

The BSE Sensex ended at 34619.95, down by 228.35 points or 0.66% after trading in a range of 34595.58 and 34973.95. There were 8 stocks advancing against 23 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 1.60%, while Small cap index was down by 2.22%. (Provisional)

The top gaining sectoral indices on the BSE were PSU up by 0.59%, Oil & Gas up by 0.26%, Energy up by 0.15%, IT up by 0.11% and TECK up by 0.02%, while Realty down by 3.25%, Healthcare down by 2.62%, Industrials down by 2.04%, Auto down by 1.98% and Consumer Durables down by 1.89% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were SBI up by 2.47%, Coal India up by 1.37%, TCS up by 1.33%, ICICI Bank up by 1.20% and ONGC up by 0.49%. (Provisional) 

On the flip side, Sun Pharma down by 4.77%, Dr. Reddys Lab down by 4.05%, Yes Bank down by 3.37%, Tata Motors down by 2.74% and Tata Motors - DVR down by 2.52% were the top losers. (Provisional)

Meanwhile, the economic affairs secretary Subhash Chandra Garg has said that the constant rise in global oil prices and hardening bond yields will not have any impact on the economic growth of India. He also said that the fiscal deficit programme has been going on very smoothly and there has been no reason to believe that there will be any greater impact. He added that the growth parameters are very sound, macroeconomic parameters also continue to be very sound and inflation is within the range.

Garg has said that the country’s growth continues to be stable with strong macroeconomic fundamentals. He said that the spurt in oil prices will push up the oil import bill by $25 billion to $50 billion under different scenarios and impact current account deficit (CAD), but inflation is under control and the fiscal deficit scenario is not worrisome either. Besides, India spent around $72 billion on oil imports last year. Moreover, crude oil prices has touched $80 per barrel, the highest since November 2014, giving rise to risk of higher inflation and petrol diesel prices across nations.

Economic affairs secretary further said that currency in circulation has come down in the last four days but situation is completely normal now. He also said that some outflows in the bond and equity markets have been seen but it is not alarming. Regarding the possibility of an excise duty cut on petrol and diesel, Garg said the government is not considering a tax cut at the moment. He said one needs to ‘watch what is happening’.

The CNX Nifty ended at 10515.00, down by 81.40 points or 0.77% after trading in a range of 10505.80 and 10621.70. There were 12 stocks advancing against 38 stocks declining on the index. (Provisional)

The top gainers on Nifty were SBI up by 2.41%, BPCL up by 1.92%, Bharti Infratel up by 1.53%, TCS up by 1.29% and Coal India up by 1.29%. (Provisional)

On the flip side, Sun Pharma down by 4.64%, Dr. Reddys Lab down by 4.40%, UPL down by 3.57%, Yes Bank down by 3.34% and Cipla down by 2.80% were the top losers. (Provisional)

The European markets were trading mostly in green; France’s CAC increased 41.68 points or 0.74% to 5,656.19, UK’s FTSE 100 surged 69.68 points or 0.9% to 7,848.47, while Germany’s DAX decreased 36.89 points or 0.28% to 13,077.72.

Asian equity markets ended mostly higher on Monday after the US and China agreed to put the trade war on hold and set up a framework for addressing trade imbalances in the future. Chinese stocks rose after the US and China made meaningful progress in two days of high-level talks. Japanese shares ended higher as the dollars’ rise against the yen supported some exporters after news of easing US-China trade tensions. Further, a solid trade balance data also helped lift Japanese shares. Japan posted a merchandise trade surplus of 625.977 billion yen in April, the Ministry of Finance said - up 30.9 percent on year. The headline figure exceeded expectations for a surplus of 440.0 billion yen following the downwardly revised 797.0 billion yen surplus in March (originally 797.3 billion yen).