Post Session: Quick Review

Indian equity benchmarks closed Friday’s session in red terrain after recovering in the last leg of trade. Domestic bourses made a cautious start and traded marginally in red, tracking weak global cues and profit booking. Sentiments remained weak with Moody’s Investors Service’s statement that India could prune its capital expenditure to avoid any slippage of its fiscal deficit target of 3.3% of GDP in the current fiscal, but warned any reduction in the excise duty on petroleum products would exert negative pressure on the country’s sovereign credit profile. Markets added losses during second half of the day, as sentiments remained dull with Union Minister Dharmendra Pradhan’s statement that with petrol and diesel kept out of the purview of GST, the state owned oil industry is losing Rs 200 billion annually in terms of input credit.  Besides, domestic sentiments were hit as the rupee declined by 66 paise to hit a fresh 1-month low of 67.78 per dollar due to appreciation of the American currency overseas and foreign fund outflows.

Local bourses trimmed their losses to trade flat in the last hour of trade and came off their intra-day low points, on the back of heavy buying in Healthcare, IT and TECK counters. Traders found some relief with DIPP Secretary Ramesh Abhishek’s statement that foreign direct investment in India increased to $61.96 billion in 2017-18. He also said during the four years of the Modi government, foreign inflows jumped to $222.75 billion from $152 billion in the previous four-year period. Investors also took a note of industry body Assocham’s statement that reducing taxes is the best solution to check the spurt in fuel prices which would also tremendously help India on the exports front. However, markets remained in red as anxiety remained among the investors with government identifing over 2.25 lakh companies and 7,191 LLPs which have not filed requisite financial statement for 2015-16 and 2016-17, and they may be struck off during the current financial year.

On the global front, Asian markets ended lower, as investors adopted a cautious stance ahead of G-7 summit starting in Canada later today as well as upcoming U.S. Federal Reserve, European Central Bank and Bank of Japan policy meetings. The European markets were trading in red in early deals, as investors worried about world trade ahead of this weekend's G-7 meeting in Canada.

Back home, sugar stocks such as Shree Renuka Sugars and Bajaj Hindusthan Sugar ended higher with the CCEA fixing the MSP of sugar at Rs 29 per kg. It also imposed stock holding limits on sugar mills for the current sugar season (up to September 2018) as a safeguard mechanism to keep retail sugar prices range bound. These decisions are aimed at helping cash-starved industry to clear cane arrears which have crossed Rs 22,000 crore. However, defence stocks were in limelight as the defence ministry approved military purchases worth over Rs 5,500 crore, including 12 high power radars for the Indian Air Force.

The BSE Sensex ended at 35436.21, down by 26.87 points or 0.08% after trading in a range of 35260.00 and 35484.94. There were 13 stocks advancing against 18 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index rose 0.35%, while Small cap index was up by 0.50%. (Provisional)

The top gaining sectoral indices on the BSE were Healthcare up by 3.47%, IT up by 0.77%, TECK up by 0.76%, Energy up by 0.69% and Oil & Gas up by 0.49%, while Power down by 0.76%, Metal down by 0.46%, FMCG down by 0.42%, Capital Goods down by 0.30% and Basic Materials down by 0.24% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Sun Pharma up by 8.09%, Dr. Reddys Lab up by 4.58%, Tata Motors - DVR up by 3.00%, SBI up by 1.36% and Tata Motors up by 1.33%. (Provisional)

On the flip side, Power Grid down by 2.12%, HDFC down by 1.54%, ITC down by 1.07%, Axis Bank down by 1.01% and Mahindra & Mahindra down by 0.92% were the top losers. (Provisional)

Meanwhile, global rating agency Moody's Investors Service, in its latest report has said that India should cut its capital expenditure to avoid any slippage of its fiscal deficit target of 3.3% of gross domestic product (GDP) in the current fiscal (2018-19). However, it warned that any reduction in the excise duty on petroleum and diesel products in view of high crude oil prices, would exert negative pressure on the country’s sovereign credit profile. In the last year, it had upped India’s sovereign rating for the first time in over 13 years to ‘Baa2’ with a stable outlook, saying that growth prospects have improved with continued economic and institutional reforms.

The report also said that rating agency expects the government to meet its fiscal deficit target of 3.3% for 2018-19, based on its commitment to gradual fiscal consolidation and budget assumptions which appear achievable. But, it expressed some concern on the revenue side, saying that there is some downside risk to the government’s assumptions on the collections from the Goods and Services Tax (GST) and petroleum products excise duty. It added that the ongoing uncertainty around GST implementation and compliance, including the timely provision of input tax credit refunds and iterative changes to tax rates, could result in some potential revenue losses. However, it said that the initial setbacks on implementation appear to be fading and, over the medium term and expects that GST compliance to stabilise and revenues to become more predictable as the economy becomes more formalised.

As per the Moody's Indian affiliate, ICRA, the high crude oil price is likely to widen India's current account deficit (CAD) and points at slowing foreign portfolio investments as an area of concern. It added that if global oil prices remain at current levels, India’s CAD to widen to 2.4% of GDP in 2018-19 from 0.7% in 2016-17. However, it said that higher crude oil prices and a weaker Rupee would improve remittances and the services trade surplus in 2018-19, offsetting some of the adverse effects of rising commodity prices.

The CNX Nifty ended at 10766.05, down by 2.30 points or 0.02% after trading in a range of 10709.05 and 10779.45. There were 24 stocks advancing against 26 stocks declining on the index. (Provisional)

The top gainers on Nifty were Sun Pharma up by 7.99%, Lupin up by 5.49%, Dr. Reddys Lab up by 4.74%, Cipla up by 3.27% and GAIL India up by 2.31%. (Provisional)

On the flip side, Hindalco down by 2.67%, Power Grid down by 2.54%, HDFC down by 1.65%, Grasim Industries down by 1.60% and BPCL down by 1.48% were the top losers. (Provisional)

The European markets were trading in red; Germany’s DAX decreased 131.97 points or 1.03% to 12,679.08, UK’s FTSE 100 was down by 60.97 points or 0.79% to 7,643.43 and France’s CAC shed 14.46 points or 0.27% to 5,433.90.

Asian equity markets ended lower on Friday due to selling pressure, as investors adopted a cautious stance ahead of G-7 summit starting in Canada later today as well as upcoming US Federal Reserve, European Central Bank and Bank of Japan policy meetings. The high-profile US-North Korea summit was also on top of investors' radar. Chinese stocks ended lower amid renewed trade worries and concerns about the liquidity concerns of the stock market. Further, Japanese shares snapped a four-day winning streak as caution set in ahead of contentious G7 talks and the historic US-North Korea summit.