Selloff in second half drags benchmarks lower

Wednesday turned-out to be a disappointing day of trade for Indian equity benchmarks, with frontline gauges ending below their crucial 34,400 (Sensex) and 10,450 (Nifty) levels, on the back of high fuel prices and weakness in rupee. Markets started the session on pessimistic note as sentiments remained downbeat on report that fuel prices hit a fresh record high on Tuesday as petrol prices rose 30 paise to Rs 84.70 per litre in Mumbai. Similarly, diesel prices rose 27 paise to Rs 72.48 per litre in Mumbai. Anxiety spread among investors as former Union Finance Minister P Chidambaram criticised the Centre for the fuel price hike and claimed that the rate can be reduced by Rs 25 per litre but the government is not doing it. Traders paid no heed towards Employment Provident Fund Organisation’s (EPFO) latest ‘Overall Payroll Data’ report showing that India created 39.36 lakh new jobs in seven months period till March 2018. As per the report, total 6,13,134 new payrolls were created during March 2018 as against 5,89,034 created in the previous month, registering a growth of 4.09%.

Selling got intensified in second half of the trade after rupee touched fresh 16-month low of 68.29 against US Dollar. The market participants overlooked report that the agriculture ministry released the Model Contract Farming Act, 2018, which lays emphasis on protecting the interests of farmers, considering them as weaker of the two parties entering into a contract. Traders shrugged off private report that an open data ecosystem will impact India’s GDP by $22 billion, or the equivalent of two times the amount raised through the sale of 4G spectrum in 2017. The report claims that an open data ecosystem has the power to double farmers’ income by 2022, provide Universal Health coverage and provide microloans to three million plus micro, small and medium enterprises among other benefits.

Sentiments also dampened after European markets made a weak start amid Italian government uncertainty and souring market sentiment over ongoing trade talks between the world’s two biggest economies. Asian shares ended mostly in red on Wednesday with investors cautious after US President Donald Trump tempered optimism over progress made in trade talks between the world's two largest economic powers.

Back home, shares in state-run oil marketing companies Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation remained under pressure amid concerns that the government may ask them to share the burden of rising petrol and diesel prices. Chemical related stocks edged lower on report that Commerce Ministry’s investigation arm DGAD has said it is terminating its anti-dumping probe into import of a Chinese chemical used in dye industry. The move comes following domestic industry’s request to terminate the probe in the imports of Meta-Phenylene Diamene-4-Sulphonic Acid from the neighbouring nation. However, Select Airline stocks such as SpiceJet and InterGlobe Aviation ended higher on report that Civil Aviation Ministry will urge the Finance Ministry to bring the particular fuel type under the ambit of GST. In this regard, a proposal will be made to the Ministry of Finance to bring air turbine fuel (ATF) under the ambit of GST to contain the rise in jet fuel cost due to high global crude oil prices.

Finally, the BSE Sensex declined 306.33 points or 0.88% to 34,344.91, while the CNX Nifty was down by 106.35 points or 1.01% to 10,430.35.

The BSE Sensex touched a high and a low of 34,668.47 and 34,302.89, respectively and there were 5 stocks on gaining side as against 26 stocks on losing side on the index.

The broader indices ended in red; the BSE Mid cap index declined 0.24%, while Small cap index was down by 0.47%.

The only gaining sectoral indices on the BSE were Consumer Durables up by 0.29% and Capital Goods was up by 0.06%, while Metal down by 3.93%, Oil & Gas down by 3.45%, Energy down by 2.52%, Basic Materials down by 2.11% and Realty was down by 1.26% were the top losing indices on BSE.

The top gainers on the Sensex were SBI up by 3.56%, NTPC up by 0.82%, Larsen & Toubro up by 0.55%, Tata Motors up by 0.49% and Mahindra & Mahindra up by 0.05%. On the flip side, Tata Steel down by 6.57%, ONGC down by 4.75%, Dr. Reddy’s Lab down by 2.92%, Indusind Bank down by 2.80% and ITC down by 1.92% were the top losers.

Meanwhile, following furore over hike in petrol and diesel prices in India, Union minister of state for finance Shiv Pratap Shukla has said that the rise in prices is a result of global crude oil price increase and US sanctions on Iran. Therefore, he highlighted that the government was finding a way out to bring down the prices.

Shukla noted that the government has not failed in controlling the prices of petrol and diesel but it’s due to steep rise in crude prices in international market and breaking of US-Iran pact, which has affected not only India but other countries as well. Besides, he said that Union petroleum minister Dharmendra Pradhan has also suggested bringing petrol under the ambit of Goods and Services Tax (GST) to control prices but imposing the GST will not be possible until a general consensus is drawn by GST council.

Talking on the protest and demonstration on the fuel price issue by the Opposition, the Minister has said that the government is putting efforts to balance and lower the price and they can’t say anything on Opposition protests as it is their work.

The CNX Nifty traded in a range of 10,533.55 and 10,417.80. There were 14 stocks in green as against 35 stocks in red, while one stock remained unchanged on the index.

The top gainers on Nifty were SBI up by 3.76%, Tech Mahindra up by 2.13%, Cipla up by 1.91%, UPL up by 1.26% and L&T up by 0.82%. On the flip side, HPCL down by 8.21%, Vedanta down by 7.21%, Tata Steel down by 6.16%, BPCL down by 5.43% and ONGC down by 5.32% were the top losers.

The European markets were trading in red; Germany’s DAX declined 195.53 points or 1.48% to 12,974.39, France’s CAC decreased 61.3 points or 1.09% to 5,578.80 and UK’s FTSE 100 was down by 53.62 points or 0.68% to 7,823.83.

Asian equity markets ended mostly lower on Wednesday after President Donald Trump raised doubts that a summit with North Korean leader Kim Jong Un planned for June 12 will take place as planned. Japanese shares ended lower, as comments from US President Donald Trump rekindled worries about trade friction, hurting steelmakers and shippers among others. Trump on Tuesday said he was not pleased with recent trade talks between the United States and China, checking hopes that the world’s two biggest economies were on course to hammer out a deal. Further, Chinese shares ended lower, dragged by a slump in coal miners as Beijing intervened to cool the red-hot coal market.