Markets pare losses to end flat; Nifty holds 10,750 level

Recovery in last leg of trade helped, Indian equity benchmarks to end almost flat on Friday with frontline gauges holding their crucial 35,400 (Sensex) and 10,750 (Nifty) levels. Markets started the session on a pessimistic note amid sluggish global trend. The sentiments also affected after rupee fell to its one week low against the dollar in the morning trade. Sentiments remained down-beat after Union Minister Dharmendra Pradhan said 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. Traders also seems to be cautious 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. Some anxiety also persist among investors with government identifying 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.

The selling got intensified and markets even went to test their psychological 35,250 (Sensex) and 10,700 (Nifty), but key gauges got strong support near those levels and managed to prune most some of their losses to end with negligible cut. Domestic sentiments got 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. Market participants get some comfort with 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. Meanwhile, the International Monetary Fund (IMF) has said addressing the ongoing crisis in the banking sector was important for India to support investment and inclusive growth agenda.

On the global front, European markets were trading in red in early deals, as investors awaited the Group of Seven leaders' meeting taking place amid intense tensions between US President Donald Trump and most of the participating statesmen. Asian markets ended lower, 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.

Back home, sugar stocks ended mixed on report that sugar prices at the wholesale markets in Mumbai has crossed Rs 29 a kg after Wednesday’s decision by the Union government to fix this as the legal minimum sale price (MSP) for mills. Steel stocks edged lower despite report that the government has set aside Rs 200 crore for an innovation fund to increase domestic steel production. The government has set a target to increase steel capacity to 300 mt by 2030 from the current levels of 160-170 mt per year. Defence stocks remained 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.

Finally, the BSE Sensex slipped 19.41 points or 0.05% to 35,443.67, while the CNX Nifty was down by 0.70 points or 0.01% to 10,767.65.

The BSE Sensex touched a high and a low of 35,484.94 and 35,260.00, respectively and there were 13 stocks on gaining side as against 18 stocks on losing side on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.42%, while Small cap index was up by 0.58%.

The top gaining sectoral indices on the BSE were Healthcare up by 3.62%, IT up by 0.77%, Energy up by 0.75%, TECK up by 0.73% and Oil & Gas was up by 0.60%, while Power down by 0.74%, Metal down by 0.43%, FMCG down by 0.36%, Basic Materials down by 0.24% and Bankex was down by 0.24% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 8.13%, Dr. Reddy’s Lab up by 4.92%, Tata Motors - DVR up by 3.56%, Tata Motors up by 1.56% and SBI up by 1.28%. On the flip side, Power Grid Corporation down by 2.12%, HDFC down by 1.42%, Axis Bank down by 1.05%, ITC down by 0.98% and Asian Paints down by 0.97% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) has said that the interest subsidy scheme (ISS) for farmers will be implemented through the direct benefit transfer (DBT) mode from the financial year 2019. Under the scheme, farmers can avail of short-term crop loans of up to Rs 3 lakh at subsidised interest rate of 7 percent that could go down to 4 percent on prompt repayment. The government has earmarked a sum of Rs 15,000 crore for this purpose.

Central bank has said that as advised by government, from 2018-19 the ISS is being put on DBT mode on ‘In kind/services’ basis and not on ‘In cash’ basis and all loans processed in 2018-19 are required to be brought on ISS portal/DBT platform, once it is launched. In a notification, it said that the ISS 2018-19 will be required to be settled as applicable in Plan Scheme - Scheduled Caste (SC), Scheduled Tribe (ST) and North East Region (NER), among others. The notification also asked the banks to capture category-wise data (General, SC, ST, etc) of beneficiaries for reporting of the same on ISS portal ‘individual farmer wise’ to settle the claims arising from 2018-19 onwards.

RBI said that till the DBT portal becomes functional, banks are requested to submit their claims, category-wise and further stated that it is working on the detailed modalities regarding categorisation of loans. It stated that till the modalities are finalised, banks may obtain the category-wise data on self-declaration basis and there should however be no cap on the loans given under each category. Under the ISS, interest subvention is provided to NABARD, regional rural banks, cooperative banks, public sector banks as well as private banks for providing short term credit to farmers at subsidised rate of interest.

The CNX Nifty traded in a range of 10,779.45 and 10,709.05. There were 24 stocks in green as against 26 stocks in red on the index.

The top gainers on Nifty were Sun Pharma up by 8.02%, Lupin up by 5.35%, Dr. Reddy’s Lab up by 4.83%, Cipla up by 3.01% and GAIL India up by 1.98%. On the flip side, Hindalco down by 2.55%, Power Grid Corporation down by 2.42%, HDFC down by 1.67%, BPCL down by 1.45% and HPCL down by 1.37% were the top losers.

The European markets were trading in red; Germany’s DAX declined 93.26 points or 0.73% to 12,717.79, UK’s FTSE 100 decreased 48.16 points or 0.63% to 7,656.24 and France’s CAC was down by 4.82 points or 0.09% to 5,443.54.

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.