Benchmarks eke out slender gains

Snapping five days losing streak, Indian equity benchmarks ended the volatile day of trade with modest gains on Tuesday. After making a cautious start, key gauges gained traction as traders took some encouragement with ICRA expecting the Gross Domestic Product (GDP) growth to improve to 7.4% in January-March 2017-18 from 7.2% in the third quarter, on account of good rabi crop harvest and improved corporate earnings. The Central Statistics Office (CSO) is scheduled to come out with GDP estimate for the fourth quarter (Q4) of fiscal 2017-18 and provisional annual estimates for the year 2017-18 on May 31. Some support also came with NITI Aayog’s vice-chairman Rajiv Kumar exuding confidence that Indian economy will achieve 9% growth rate on sustained basis by 2022 on the back of reforms like GST, demonetisation and the Insolvency and Bankruptcy Code (IBC). Some relief also came with report that the central government’s capital expenditure (capex) in April 2018 saw a jump of 48% compared with the same month last year, the consequence of a second consecutive year of an advanced budget. The biggest gainers as a result of this capex boost were ministries of defence, railways and road transport.

However, gains remained capped as anxiety remained among the traders with a foreign brokerages’ report stating that rise in oil prices may lead to inflationary trends in the country, forcing the Reserve Bank of India (RBI) to hike rates by 0.25% in the August policy review. It further noted that the apex bank, however, may opt for a status quo in rates at the forthcoming review in June. Some concerns also came with SBI’s Ecowrap report stating that India’s current account deficit is expected to widen to 2.5% of the GDP in the financial year 2018-19, on the back of rise in the crude oil prices.

On the global front, the European markets were trading mostly in green in early deals on Monday, as an easing of pressure on Italian markets coincided with China’s latest move to open up its giant economy to the rest of the world. Asian markets ended mostly in red, with some skepticism over the China-US trade deal seeping in, while oil prices pushed higher after Washington flagged harsh sanctions on key producers Iran and Venezuela.

Back home, majority of IT stocks closed in green on a report that IT Ministry may finalise a package of measures to boost electronics exports as early as June this year. These set of measures that are expected to precede the new overarching national electronics policy currently being crafted will aim at improving the ease of doing business and removing impediments faced by companies in exporting to overseas markets. Select stocks related to Gems and jewellery space edged higher on report that India’s gems and jewellery exports declined 22% to $2.6 billion in April on account of demand slowdown in major markets including the UAE.

Finally, the BSE Sensex rose 35.11 points or 0.10% to 34,651.24, while the CNX Nifty was up by 20.00 points or 0.19% to 10,536.70.

The BSE Sensex touched a high and a low of 34,754.60 and 34,550.22, respectively and there were 19 stocks on gaining side as against 12 stocks on losing side on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.65%, while Small cap index was up by 0.65%.

The top gaining sectoral indices on the BSE were Auto up by 1.73%, Metal up by 1.58%, Realty up by 1.26%, Healthcare up by 1.13% and Industrials was up by 1.10%, while Oil & Gas down by 0.41%, Energy down by 0.28%, FMCG down by 0.10% and Utilities was down by 0.09% were the few losing indices on BSE.

The top gainers on the Sensex were Dr. Reddy’s Lab up by 6.30%, Bajaj Auto up by 3.86%, Tata Motors up by 3.78%, SBI up by 3.69% and Coal India up by 3.23%. On the flip side, TCS down by 1.40%, Asian Paints down by 1.27%, Axis Bank down by 1.27%, Indusind Bank down by 1.19% and ITC down by 1.17% were the top losers.

Meanwhile, State Bank of India’s (SBI) research report Ecowrap has stated that India’s current account deficit is expected to widen to 2.5 percent of the Gross Domestic Product (GDP) in the financial year 2018-19, on the back of rise in the crude oil prices. It also said that CAD, difference between inflow and outflow of foreign exchange, is currently estimated at 1.9 percent for 2017-18.

According to the report, every $10 per barrel increase in the price of oil results in additional import bill of $8 billion. It pointed out that this will, in turn, decrease the GDP by 16bps, increase the fiscal deficit by 8bps, CAD by 27 bps and inflation by 30 bps and added that these are just model estimates and the actual figures could vary. Besides, it said that the exports (both services and merchandise) need further push to keep the external metrics stable. It indicated that the exports grew at 9.78 percent during 2017-18. It also highlighted that April 2018 exports recorded 5.17 percent growth, which shows that the outbound shipments from India have still not overcome the GST implementation issues.

SBI Ecowrap further said that crude price rise by $17 in the span of a year has been reflected in the imports, showing a growth of 19.59 percent. It also said that crude prices are expected to rise further during this year and the imports are likely to grow by at least 14 percent, which will worsen the trade deficit and have a negative impact on rupee value.

The CNX Nifty traded in a range of 10,558.60 and 10,490.55. There were 31 stocks in green as against 18 stocks in red, while one stock remained unchanged on the index.

The top gainers on Nifty were Dr. Reddy’s Lab up by 5.87%, Bajaj Finserv up by 4.84%, SBI up by 4.60%, Tata Motors up by 4.09% and Bajaj Auto up by 3.51%. On the flip side, Indian Oil Corporation down by 3.54%, Ultratech Cement down by 2.63%, Bharti Infratel down by 1.76%, Indusind Bank down by 1.56% and Asian Paints down by 1.33% were the top losers.

The European markets were trading mostly in green; UK’s FTSE 100 increased 13.57 points or 0.17% to 7,872.74 and Germany’s DAX gained 19.78 points or 0.15% to 13,097.50, while France’s CAC was down by 3.47 points or 0.06% to 5,634.04.

Asian equity markets ended mostly lower on Tuesday as a strengthening dollar sapped demand for emerging market assets and investors kept an eye on Italian politics after the country's two populist parties announced a joint agreement naming Giuseppe Conte, 53, as the next prime minister. Japanese shares fell from 3 1/2-month highs reached the previous day, with financials leading declines as bond yields peaked after hitting a three-year high last week. Chinese shares ended on a flat note as gains in healthcare and telecom stocks were offset by declines in real estate firms. Meanwhile, markets in South Korea and Hong Kong are closed for holidays.