Benchmarks end choppy day with half a percent cut

Indian equity benchmarks ended the choppy day of trade with half a percent cut, as traders remained on sidelines ahead of services sector data for May slated to be released on June 5, while the Reserve Bank’s rate decision will be announced on June 6. The RBI is expected to take a wait-and-watch approach despite the higher GDP growth figures released last week. However, Markets started the session with a gap-up opening as traders took some encouragement with Prime Minister Narendra Modi’s statement that India’s economy will sustain a growth of 7.5 to 8% per year. He said the Indian government has kept its economic growth forecast for the current fiscal unchanged at 7.5%, buoyed by turnaround in manufacturing and pick up in investment. Traders also took note of Union Minister Nitin Gadkari’s statement that in a major policy initiative aimed at benefitting farmers, the government has done away with the licensing permits for foreign vessels for coastal movement of agriculture, fishery and animal produce, besides allowing Indian citizens to charter ships for these.

But, market participants pared all of their initial gains and markets turned flat and traded choppy for most part of the day, as sentiments remain dampened on report that foreign investors pulled out a massive Rs 29,714 crore from the capital markets in May, making it the biggest outflow in 18 months, primarily due to a surge in global crude prices. Markets extended losses to end near intraday low levels, as some anxiety persist with report that collections from the Goods and Services Tax in May fell to Rs 94,016 crore, from the Rs 1.03 lakh crore collected in April. Traders paid no heed towards report that the country’s Fiscal Deficit, the difference between total revenue and expenditure, has improved in the first month of the current financial year 2018-19, on the back of higher revenue and lower expenditure. As per the latest data released by the controller-general of accounts (CGA), April’s fiscal deficit was at 24.3% of the budget estimates, as against 37.6% for the same period of the last fiscal year.

On the global front, European markets are trading mostly in green in early deals on Monday, thanks to bank stocks as deal making took center stage again after a week of political tension in Italy and Spain and friction between the US and its allies over trade policies. Asian markets closed mostly higher, as upbeat manufacturing and jobs data from the US bolstered optimism in the world’s largest economy and US President Donald Trump revealed that his summit with North Korean leader Kim Jong Un is back on.

Back home, select aviation flied higher as Airport Authority of India’s report showed that passenger traffic at Indian airports in April registered a growth of 21.7% over the corresponding month last year. The report also said that domestic traffic grew by 25% and international traffic by 10.2% in April, with the overall passenger movement being recorded at 28.22 million. However, public sector banks remained under pressure on report that losses by state-run banks have almost entirely wiped out the $13-billion capital infusion by the government, and the situation is unlikely to improve in the current fiscal year.

Finally, the BSE Sensex declined 215.37 points or 0.61% to 35011.89, while the CNX Nifty was down by 67.70 points or 0.63% to 10,628.50.

The BSE Sensex touched a high and a low of 35,555.59 and 34,982.25, respectively and there were 7 stocks on gaining side as against 24 stocks on losing side on the index.

The broader indices ended in red; the BSE Mid cap index declined 0.82%, while Small cap index was down by 2.09%.

The few gaining sectoral indices on the BSE were Energy up by 0.43%, IT up by 0.42%, TECK up by 0.33% and Metal was up by 0.23%, while Realty down by 3.25%, Power down by 2.32%, Telecom down by 1.95%, Consumer Durables down by 1.83% and Utilities was down by 1.66% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddy’s Lab up by 2.86%, Infosys up by 1.59%, Mahindra & Mahindra up by 1.27%, Tata Steel up by 1.18% and Reliance Industries up by 1.09%. On the flip side, HDFC Bank down by 2.99%, Bharti Airtel down by 2.77%, Adani Ports & SEZ down by 2.47%, Power Grid Corporation down by 2.06% and Hindustan Unilever down by 1.73% were the top losers.

Meanwhile, India’s largest apex body of business organisation, Federation of Indian Chambers of Commerce and Industry (FICCI) has praised the country’s economic growth, which was recorded at 7.7% for Q4 (January-March) of fiscal year 2017-18, the fastest in seven quarters. It noted that India’s growth scenario is set to improve further going ahead as the March quarter growth clearly shows that the Indian economy is on an uptrend.

The industry body has further stated that the GDP growth data released presents an optimistic picture of the economy, reflected in y-o-y growth for Q4, especially for construction and manufacturing sectors. It also expressed hopes that the government will continue investing in infrastructure to accelerate the pace of growth even further.

According to FICCI, Indian economy will grow at 7.5 percent in the current fiscal. However, it warned that one will have to be watchful about the movement in the oil prices in the global market as well as the pace at which the health of the domestic banking sector improves.

The CNX Nifty traded in a range of 10,770.30 and 10,618.35. There were 15 stocks in green as against 35 stocks in red on the index.

The top gainers on Nifty were Dr. Reddy’s Lab up by 2.40%, Infosys up by 1.65%, Lupin up by 1.37%, Hindalco up by 1.30% and Mahindra & Mahindra up by 1.26%. On the flip side, Indiabulls Housing Finance down by 4.49%, HDFC Bank down by 3.11%, Bharti Airtel down by 2.74%, Adani Ports & SEZ down by 2.35% and Bharti Infratel down by 2.20% were the top losers.

The European markets were trading in green; France’s CAC increased 22.1 points or 0.4% to 5,487.63, Germany’s DAX gained 28.23 points or 0.22% to 12,752.50 and UK’s FTSE 100 was up by 65.85 points or 0.85% to 7,767.62.

Asian equity markets ended mostly higher on Monday as upbeat manufacturing and jobs data from the US bolstered optimism in the world's largest economy and US President Donald Trump revealed that his summit with North Korean leader Kim Jong Un is back on. US non-farm payroll employment surged up by 223,000 jobs in May after climbing by a downwardly revised 159,000 jobs in April. The jobless rate edged down to 3.8 percent from 3.9 percent in April, the lowest since a matching rate in April 2000. Japanese shares ended higher, with a weaker yen and solid data from the US buoying investors’ sentiments. Further, Chinese stocks closed higher even as trade worries persisted after China warned that it will withdraw from commitments made so far on trade if US President Donald Trump carries out his threat to impose tariffs on the Asian country.