Bears continue to dominate Indian stock markets

Bears continued to exert pressure on the domestic markets in the early noon session as investors remained on sidelines ahead of Services PMI data for the month of May which is slated to be released later in the day. Further, Investors remained cautious with S&P Global’s chief economist stating that global economic growth could slow down by 1 percentage point - or more than a quarter of the expansion rates projected by various international bodies - if US President Donald Trump’s tariff threats against China and others escalate into a full-blown trade war. Sentiments on the street remained dull as Commerce and industry ministry Suresh Prabhu said that unilateral trade measures and counter measures can stop the fragile global economic recovery in its tracks and have implications for jobs, economic growth and development. Besides, CARE Ratings said that domestic refined copper output is likely to decline by 40 percent to 5,10,000 tonnes during FY19 on the back of permanent closure of Vedanta’s Tuticorin smelter. In currency market, Indian rupee weakened against greenback due to increased demand for the US currency from importers, which also weighed on the markets.

On the global front, Asian markets witnessed recovery and most of the indices are now trading in green as traders opted to buy beaten down but fundamentally strong stocks. However, gains remained capped due to lingering trade concerns, with investors focusing on the G-7 summit in Canada later this week. Back on the domestic turf, steel sector stocks like Tata Steel, JSW Steel and Jindal Steel were reeling under pressure with a private report stating that the large NPAs of the banks with predominant share by the defaulting big steel players specifically the PSBs have already hurt the institutional credit flow. In scrip specific development, ONGC fell on reporting loss of Rs 4000 crore on gas output in FY18, while SSWL rose on bagging another exports order from USA.

The BSE Sensex is currently trading at 34946.49, down by 65.40 points or 0.19% after trading in a range of 34847.36 and 35073.12. There were 7 stocks advancing against 22 stocks declining on the index, while 2 stocks remained unchanged.

The broader indices were trading in red; the BSE Mid cap index fell by 1.09%, while Small cap index down by 2.00%.

The sole gaining sectoral index on the BSE was Energy up by 0.47%, while Telecom down by 2.91%, Power down by 1.75%, Capital Goods down by 1.67%, Utilities down by 1.65% and Industrials down by 1.60% were the losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 1.31%, Indusind Bank up by 0.56%, Maruti Suzuki up by 0.42%, Asian Paints up by 0.35% and HDFC up by 0.33%. On the flip side, Power Grid Corporation down by 2.65%, Bharti Airtel down by 2.45%, Larsen & Toubro down by 1.73%, Yes Bank down by 1.68% and Coal India down by 1.54% were the top losers.

Meanwhile, markets regulator Securities and Exchange Board of India (SEBI) has drastically reduced the additional expenses charged by mutual funds (MFs) from 20 basis points to 5 basis points, a move aimed at increasing penetration of such products among investors. The move will also reduce the overall cost of investing in equity mutual funds and industry players believe that it may result in lower commissions for distributors. In 2012, the SEBI had permitted MFs to charge 20 basis points of assets under management of the scheme in lieu of exit loads, or the sum mobilised from investors when they offload holdings.

In case of open ended equity and balanced schemes currently, the additional expense charged is significantly higher than the actual credit back of exit load to the scheme. In comparison, the additional charge is lower in the case of open-ended debt schemes. Across all open ended equity and balanced schemes, an average exit load of around 5 basis points has been credited back whereas an average additional expense of 18-20 basis points has been charged to such schemes.

Apart from this, the regulator has made amendment to the regulatory framework to enable disclosures related to MFs in investor-friendly electronic form. It has dispensed with the requirement of publication of daily net asset value (NAV), sale or repurchase prices in newspapers and of sending physical copies of scheme annual reports or abridged summary to all the investors whose email addresses are not available and statement of scheme portfolios to unitholders on half-yearly basis. Presently, there are 42 mutual fund houses managing assets to the tune of over Rs 23 lakh crore.

The CNX Nifty is currently trading at 10598.20, down by 30.30 points or 0.29% after trading in a range of 10565.05 and 10633.15. There were 15 stocks advancing against 34 stocks declining on the index, while 1 stock remained unchanged.

The top gainers on Nifty were Cipla up by 2.18%, Tech Mahindra up by 1.50%, Bajaj Finance up by 1.46%, Reliance Industries up by 1.18% and Maruti Suzuki up by 0.49%. On the flip side, Zee Entertainment down by 3.36%, Indiabulls Housing down by 2.92%, Bharti Airtel down by 2.54%, Power Grid Corporation down by 2.50% and GAIL India down by 1.82% were the top losers.

Asian markets were trading mostly in green; KOSPI Index increased 8.02 points or 0.33% to 2,455.78, Shanghai Composite advanced 12.43 points or 0.4% to 3,103.62, Jakarta Composite surged 49.7 points or 0.83% to 6,064.52, Nikkei 225 soared 63.6 points or 0.28% to 22,539.54 and Hang Seng was up by 114.25 points or 0.37% to 31,112.23.

On the other hand, Taiwan Weighted decreased 9.39 points or 0.08% to 11,100.11 and FTSE Bursa Malaysia KLCI was down by 4.15 points or 0.24% to 1,751.02.