Domestic equities continue to trade in green

Domestic equities continued their trade in green in morning session, with Sensex and Nifty gaining around 120 and 40 points, respectively. Traders remained optimistic with a report from ICRA stating that the GDP growth rate is expected to improve to 7.4% in Q4 FY2018 from 7.2% in Q3 FY2018, exceeding the implicit forecast of 7.1% embedded in the CSO’s Second Advance Estimate of National Income for 2017-18. Investors took note of 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. Traders overlooked a SBI report stating that rising crude oil prices may worsen the current account deficit (CAD) to 2.5% of the GDP in the current financial year. Meanwhile, India’s gems and jewellery exports have declined 22% to $2.6 billion in April on account of demand slowdown in major markets including the UAE. Exports in April 2017 stood at $3.31 billion.

On the global front, Asian markets were trading mostly in red. Investors took note of the report stating that China’s government said that it cannot guarantee that renewed trade tension with Washington can be avoided after US Treasury Secretary Steven Mnuchin declared a temporary truce in a spiralling dispute that prompted worries of a chilling of global commerce.  Back on domestic turf, banking sector stocks remained in limelight, despite a private report stated that there has been 450% rise in gross Non-Performing Assets (NPAs) of these banks as figures shows bad loans rose from Rs 19,800 crore at the end of financial year 2013-2014 to Rs 109,076 crore at the end of March 2018.

The BSE Sensex is currently trading at 34735.56, up by 119.43 points or 0.35% after trading in a range of 34550.22 and 34754.60. There were 18 stocks advancing against 13 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.59%, while Small cap index was up by 0.64%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.31%, Industrials up by 1.01%, Healthcare up by 0.94%, Consumer Durables up by 0.87% and Auto was up by 0.82%, while IT down by 0.38%, Oil & Gas down by 0.26%, TECK down by 0.23% and Energy was down by 0.04% were the top losing indices on BSE.

The top gainers on the Sensex were Bajaj Auto up by 2.68%, Dr Reddy’s Lab up by 1.88%, Larsen & Toubro up by 1.74%, Sun Pharma up by 1.43% and Coal India was up by 1.37%. On the flip side, Adani Ports & SEZ down by 1.17%, TCS down by 0.96%, Asian Paints down by 0.73%, SBI down by 0.71% and Mahindra & Mahindra was down by 0.59% 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 is currently trading at 10556.85, up by 40.15 points or 0.38% after trading in a range of 10490.55 and 10558.60. There were 32 stocks advancing against 18 stocks declining on the index.

The top gainers on Nifty were Bajaj Finserv up by 3.11%, Bajaj Finance up by 2.98%, Bajaj Auto up by 2.62%, Dr Reddys Lab up by 2.01% and Indiabulls Housing Finance was up by 1.89%. On the flip side, Ultratech Cement down by 2.58%, Bharti Infratel down by 1.80%, Indian Oil Corporation down by 1.67%, HPCL down by 1.42% and Adani Ports & SEZ was down by 1.28% were the top losers.

Asian markets were trading mostly in red, Nikkei 225 slipped 25.07 points or 0.11% to 22,977.30, Shanghai Composite declined 12.73 points or 0.4% to 3,201.11, Taiwan Weighted fell 7.04 points or 0.06% to 10,959.16 and FTSE Bursa Malaysia KLCI was down by 2.91 points or 0.16% to 1,850.67.

On the other side, Jakarta Composite was up by 76.46 points or 1.33% to 5,810.32.