Feeble global cues drag benchmarks lower in early deals

Indian equity benchmarks made a pessimistic start and are trading in red amid feeble global cues as Italy’s political turmoil roiled global markets. Sentiments remained down-beat on report that hardening domestic fuel prices are likely to weigh on the Reserve Bank’s rate setting panel, MPC, at its 3-day meet from June 4. The monetary policy review will take into account the retail inflation, which rose to 4.58% in the month of April 2018, as compared to 4.28% in March 2018 and 2.99% in April 2017, on account of increasing prices of petrol and diesel.Traders failed to get any sense of relief with Ficci’s report that India’s GDP growth is expected at 7.1 per cent for the January-March quarter of the last fiscal and 6.6 per cent for the entire 2017-18. The Central Statistics Office (CSO) is scheduled to release GDP numbers for the fourth quarter as well as the 2017-18 fiscal on May 31. Market participants shrugged off exporters body FIEO’s statement that India’s exports are expected to record a growth of about 15-20 per cent and touch $350 billion in the current fiscal on account of a host of factors including rise in commodity prices.

Global cues remained subdued with most of the Asian counters trading in red at this point of time as the political crisis in Italy took center stage, with investors concerned over its implications for the rest of the euro zone. The US markets moved sharply lower during trading on Tuesday. The sell-off on Wall Street came as traders used concerns about political uncertainty in Italy as an excuse to sell stocks.

Back home, banking stocks edged lower after audits undertaken by the Reserve Bank of India revealed that bad loans at the country’s five biggest state-run banks are about Rs 47,000 crore more than what the lenders had assessed. In scrip specific developments, Fortis Healthcare gained on the buzz of beginning of new bidding process for deal and IRB Infrastructure moved up with arm executing concession agreement with NHAI.

The BSE Sensex is currently trading at 34846.41, down by 102.83 points or 0.29% after trading in a range of 34735.11 and 34876.13. There were 8 stocks advancing against 23 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.12%, while Small cap index was up by 0.14%.

The few gaining sectoral indices on the BSE were Power up by 0.67%, Utilities up by 0.60% and Realty up by 0.10%, while Telecom down by 0.69%, Oil & Gas down by 0.69%, Bankex down by 0.51%, Capital Goods down by 0.37% and Energy was down by 0.33% were the top losing indices on BSE.

The top gainers on the Sensex were Coal India up by 2.39%, Mahindra & Mahindra up by 2.31%, Power Grid Corporation up by 1.69%, Infosys up by 0.46% and HDFC Bank up by 0.40%. On the flip side, ICICI Bank down by 2.05%, Hero MotoCorp down by 1.56%, Tata Motors - DVR down by 1.41%, Wipro down by 1.29% and Adani Ports down by 1.07% were the top losers.

Meanwhile, the Industry body, Federation of Indian Chambers of Commerce and Industry (FICCI) in its latest Economic Outlook Survey has forecasted India’s gross domestic product (GDP) to grow at 7.1% in the fourth quarter of FY18. It also said that for the full year 2017-18 growth is estimated at 6.6%. The survey, based on opinion of economists, projected the annual economic growth for FY19 at 7.4% with a minimum and maximum of 6.9% and 7.5%, respectively.

However, the report also expressed some concerns on external front with median current account deficit forecast pegged at 2.1% of GDP for 2018-19. It added that the surge in oil prices has emerged as a major risk factor and can weigh down heavy on India’s external position and overall growth prospects, and the weakening rupee is further adding strain on the imports.

For FY19, the FICCI said that the median growth forecast for agriculture and allied activities has been put at 3.2%, also industry and services sector are expected to grow by 6.7% and 8.4% respectively. Besides, the median growth forecast for IIP has been put at 6.5% for the year 2018-19, with a minimum and maximum range of 5.0% and 7.0% respectively. On the inflation front, the Consumer Price Index (CPI) has been forecasted at 4.6% and Wholesale Price Index (WPI) has been projected at 3.5%, for FY19.

As per the survey respondents, the rupee might continue to remain under pressure during the remaining part of the year. They also felt that the brewing trade war can impact India indirectly, if not directly, as the country is deeply integrated with global economy and believed that protectionist measures could undermine the multilateral trading system governed by WTO rules.

The CNX Nifty is currently trading at 10597.40, down by 35.90 points or 0.34% after trading in a range of 10558.45 and 10602.15. There were 14 stocks advancing against 35 stocks declining on the index, while 1 stock remained unchanged.

The top gainers on Nifty were Coal India up by 2.50%, Mahindra & Mahindra up by 1.80%, Power Grid Corporation up by 1.69%, UPL up by 1.58% and Lupin up by 1.04%. On the flip side, Hindalco down by 2.14%, HPCL down by 1.79%, ICICI Bank down by 1.69%, Hero MotoCorp down by 1.65% and Bharti Infratel down by 1.54% were the top losers.

Asian markets are trading mostly in red; Hang Seng declined 430.11 points or 1.41% to 30,054.47, Nikkei 225 decreased 323.78 points or 1.45% to 22,034.65, Taiwan Weighted dropped 135.7 points or 1.24% to 10,828.42, Shanghai Composite shed 55.38 points or 1.77% to 3,065.08and KOSPI Index slumped 43.7 points or 1.78% to 2,413.55. 

On the flip side, Jakarta Composite was up by 8.29 points or 0.14% to 6,076.62.