Post Session: Quick Review

Indian benchmark indices ended a highly volatile day on negative note on Tuesday, as investors remained jittery ahead of Reserve Bank of India’s (RBI’s) second bi-monthly monetary policy outcome for 2018-19, due on June 6. Domestic bourses made a cautious start and traded marginally in red, on the back of selling activities by market-participants. Sentiments remained weak with Commerce and Industry Minister Suresh Prabhu’s statement that unilateral trade restrictive actions by some developed countries could derail the fragile global economic recovery which would have implications on job scenario. Some anxiety also spread among the local traders on a report stating that the demand for Indian goods has been on a decline in the Chinese market, India’s increasing dependence on China for items such as electric equipment, machines, medical and surgical instruments and fertilizers, among others, is widening India’s trade deficit with the country.

Local barometer gauges added losses and were hovering near the intraday low points in last hour of trade, on the back negative Services PMI data. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index contracted to 49.6 in the month of May from 51.4 in April. The Nikkei India Composite PMI Output Index, which measures both manufacturing and services, also fell to 50.4 in May from 51.9 in April. Adding some woes, S&P Global’s chief economist stated 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. However, markets trimmed some of their losses with taking support from report that markets regulator SEBI has drastically slashed the additional expense charged by mutual funds to just 5 basis points to help increase the penetration of such products among investors. The move will help reduce the cost of investing in MFs and industry players believe that it may result in lower commissions for distributors.

On the global front, Asian markets closed mostly higher, as analysts said optimism over the improving US economy was helping overcome worries about a possible trade war and geopolitical uncertainty. The European markets were trading mixed in early deals on Tuesday, as the market awaited for official agenda of Italian government coupled with ongoing trade tensions between US and rest of the world. Back home, most of the sugar stocks were in sweet spot on report that Centre is expected to announce a fresh package of almost Rs 8000 crore to bail out the sugar sector. This will be in addition to the financial assistance of Rs 5.50 per quintal of sugarcane announced a few weeks ago, costing over Rs 1500 crore. However, select steel sector stocks were 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.

The BSE Sensex ended at 34895.68, down by 116.21 points or 0.33% after trading in a range of 34784.68 and 35073.12. There were 8 stocks advancing against 23 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell by 1.03%, while Small cap index was down by 2.40%. (Provisional)

The only gaining sectoral indices on the BSE were Oil & Gas up by 0.19% and Energy up by 0.17%, while Telecom down by 3.11%, Capital Goods down by 1.92%, Industrials down by 1.75%, TECK down by 1.53% and IT down by 1.46% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Steel up by 1.05%, HDFC Bank up by 0.78%, Maruti Suzuki up by 0.74%, Reliance Industries up by 0.71% and HDFC up by 0.60%. (Provisional)

On the flip side, Coal India down by 2.50%, Bharti Airtel down by 2.11%, Dr. Reddys Lab down by 1.97%, Larsen & Toubro down by 1.88% and Yes Bank down by 1.87% were the top losers. (Provisional)

Meanwhile, in order to promote India’s exports including improving export related infrastructure, the commerce ministry is taking several steps. In the same direction, the ministry has given green signal to as many as 15 projects, including setting up of a cold chain in Madhya Pradesh. It has approved these projects under its Trade Infrastructure for Export Scheme (TIES) which was launched to create appropriate infrastructure for development and growth of exports through engagement of central or state agencies. It said that out of the total scheme outlay of Rs 600 crore, Rs 80 crore was provided in 2017-18 and the same amount will be provided during the current fiscal also and the scheme has been launched for three years to 2020.

The approved projects include setting up of an integrated cargo terminal at Imphal international airport; establishment of trade promotion centre in Bhopal; solid waste management system at Noida SEZ; and construction of office cum laboratory complex of export inspection agency at Vishakhapatnam. The implementing agencies of these projects include Karnataka Fisheries Development Corporation; Visvesvaraya Trade Promotion Centre, Bengaluru; Cochin SEZ; Airport Authority of India, Coffee Board, Exports Inspection Council and Andhra Pradesh Med Tech Zone (AMTZ).

Unlike Assistance to States for Development of Export Infrastructure and Allied Activities (ASIDE) Scheme, which was funded by the Centre, the cost of projects under TIES are equally shared between the Centre and the states. The central and state agencies, including Export Promotion Councils, Commodities Boards, SEZ authorities and apex trade bodies are eligible for financial support under the scheme. The Central government funding will be in the form of grant-in-aid, normally not more than the equity being put in by the implementing agency or 50% of the total equity in the project.

The CNX Nifty ended at 10593.30, down by 35.20 points or 0.33% after trading in a range of 10550.90 and 10633.15. There were 18 stocks advancing against 32 stocks declining on the index. (Provisional)

The top gainers on Nifty were Cipla up by 4.24%, Bajaj Finance up by 2.39%, Tata Steel up by 1.38%, HPCL up by 1.20% and Bajaj Finserv up by 1.00%. (Provisional)

On the flip side, Zee Entertainment down by 2.98%, Coal India down by 2.60%, Titan Co down by 2.38%, Indiabulls Housing Finance down by 2.17% and Bharti Airtel down by 2.05% were the top losers. (Provisional)

The European markets were trading mixed; France’s CAC increased 23.43 points or 0.43% to 5,496.34 and Germany’s DAX rose 97.35 points or 0.76% to 12,868.10, while UK’s FTSE 100 was down by 35.72 points or 0.46% to 7,705.57.

Asian equity markets ended mostly higher on Tuesday. Chinese shares ended higher after data showed activity in China's services sector expanded at a steady pace in May. The Caixin Services PMI stood at 52.9 in the month, matching expectations and unchanged from the previous month. Japanese shares eked out modest gains as the yen edged lower against the dollar and data on services sector activity and household spending painted a mixed picture of the economy. However, weak commodity prices pulled down resource stocks and investors waited for cues from the G-7 summit in Canada later this week as well the June 12 summit in Singapore between US President Donald Trump and North Korean leader Kim Jong Un.