Late hour selloff caps gains on Dalal Street

Monday turned out to be a disappointing day of trade for Indian equity benchmarks, as frontline gauges failed to hold initial jubilation and ended with marginal gains as traders booked most of their early gains ahead of the outcome of a historic meeting between the US President Donald Trump and the North Korean leader Kim Jong Un. Markets gained strength after making flat-to-positive start, as traders took some encouragement with CII’s statement that Industry is expecting the GDP to grow by close to 8% over the next couple of years, as strong reforms process and fiscal prudence have laid a solid foundation for growth. Markets extended northward journey in noon deals as some support came with report that foreign direct investment (FDI) in India increased to $61.96 billion in 2017-18. FDI inflows stood at $60 billion in the previous fiscal. During the four years of the BJP government, foreign inflows jumped to $222.75 billion from $152 billion in the previous four-year period. Adding to the optimism, Commerce Minister Suresh Prabhu said that India’s GDP growth is likely to cross 8% in the next two years and the government is taking a number of steps including formulation of a new industrial policy to double the economy’s size to $5 trillion in 7-8 years.

Further, investors also took some support with a report highlighting that Central Board of Indirect Taxes and Customs (CBIC) cleared over Rs 7000 crore worth Goods and Services Tax (GST) refunds of exporters during the initial phase of the special refund drive undertaken by the authorities. However, market participants pared most of their initial gains as sentiments turned pessimistic, as anxiety spread on the street with Former finance minister P Chidambaram’s statement that state of the economy was bad in the country due to the wrong policies of the NDA government and tyres of three (Exports, Private Investment, Private Consumption) of the four wheels on which the economy rides were punctured. Sentiments also weighed down on report that annual consumer price inflation (CPI) likely to increase at 4.83% in May, the highest since January and above April’s 4.58%.

On the global front, European markets were trading in green terrain in early deals, ahead of a historic meeting between the US President and the North Korean leader set to take place in Singapore on Tuesday. Asian markets ended mostly in green despite trade-related tensions remained in focus after US President Donald Trump abruptly withdrew his support for a joint communique at the conclusion of the weekend G7 summit.

Back home, agri input companies remained buzzing owing to forecasts that the monsoon this year will be normal. Stocks related to in public sector undertaking (PSU) banks edged higher with Finance Minister Piyush Goyal’s statement that a committee will come out with its recommendations on setting up an asset reconstruction or an asset management company for faster resolution of bad loans. Auto stocks remained in top gear on report that domestic passenger vehicle sales rose 19.65% to 3,01,238 units in May from 2,51,764 units in the corresponding month of 2017. Domestic car sales were up 19.64% to 1,99,479 units as against 1,66,732 units in May 2017. However, steel stocks erased gains to end in red, despite Steel Secretary Aruna Sharma said that the rollout of new steel policy saved forex of Rs 5,000 crore since last year while around 24 million tonnes of crude steel capacity was added during past four years.

Finally, the BSE Sensex gained 39.80 points or 0.11% to 35,483.47, while the CNX Nifty was up by 19.30 points or 0.18% to 10,786.95.

The BSE Sensex touched a high and a low of 35,704.84 and 35,444.49, respectively and there were 18 stocks on gaining side as against 13 stocks on losing side on the index.

The broader indices ended mixed; the BSE Mid cap index slipped 0.09%, while Small cap index was up by 0.51%.

The top gaining sectoral indices on the BSE were Telecom up by 1.56%, Consumer Durables up by 1.03%, Healthcare up by 0.51%, TECK up by 0.41% and FMCG was up by 0.37%, while Realty down by 0.71%, Metal down by 0.35%, Oil & Gas down by 0.22%, Energy down by 0.18% and Utilities was down by 0.10% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 3.19%, Sun Pharma up by 1.29%, Dr. Reddy’ s Lab up by 0.90%, Maruti Suzuki up by 0.84% and Indusind Bank up by 0.76%. On the flip side, Tata Steel down by 1.79%, Power Grid Corporation down by 1.21%, Coal India down by 0.72%, Hero MotoCorp down by 0.60% and Yes Bank down by 0.56% were the top losers.

Meanwhile, with a solid foundation of strong reforms process and fiscal prudence, the Confederation of Indian Industry (CII) in its latest report has said that industry is expecting the gross domestic product (GDP) to grow by close to 8% over the next two years. It also said that the economy is in a sweet spot right now as the adjustment process regarding major reforms of the past few years is largely stabilised and industry is ready for a fresh phase of investment while capacity utilization builds up. It added that Rs 50,000 crore worth of investments have been recently announced.

According to a chief executive officers (CEOs) opinion poll, about 82% of them expect GDP growth to be higher than 7% for the year 2018-19, with 10% of them expecting growth to be above 7.5%. The survey said that industry is looking forward to GDP growth rate picking up to close to 8% over the next couple of years. It highlighted that fiscal prudence, able macroeconomic management, and strong reforms process have laid a sound foundation for growth.

The CII’s poll report stated that in the manufacturing sector, although input costs are rising the overall opinion was that demand is healthy. The report showed that CEOs noted good performance across sectors such as automotives, white goods, steel, cement, and capital goods. In the ICT sector, CEOs stated that the outlook is ‘good’ and that manufacturing of smartphone components is set to go up, indicating upward local value-addition.

The CNX Nifty traded in a range of 10,850.55 and 10,777.05. There were 33 stocks in green as against 17 stocks in red on the index.

The top gainers on Nifty were Bharti Airtel up by 3.17%, Bajaj Finance up by 2.89%, Grasim Industries up by 1.89%, Ultratech Cement up by 1.85% and Zee Entertainment up by 1.40%. On the flip side, Tata Steel down by 2.26%, UPL down by 2.09%, HCL Tech down by 2.02%, Power Grid Corporation down by 1.14% and Indian Oil Corporation down by 1.09% were the top losers.

The European markets were trading in green; France’s CAC increased 13.24 points or 0.24% to 5,463.46, Germany’s DAX gained 62.56 points or 0.49% to 12,829.11 and UK’s FTSE 100 was up by 69.75 points or 0.91% to 7,750.82.

Asian equity markets ended mostly higher on Monday, with investors shrugging off concerns about trade war and looking ahead to the outcome of a historic meeting between the US President Donald Trump and the North Korean leader Kim Jong Un. However, gains are just modest in most of the markets in the region amid largely thin volumes ahead of crucial monetary policy meetings of the Bank of Japan, European Central Bank, and the US Federal Reserve. Japanese shares ended modestly higher, although volume of business was rather thin. Meanwhile, Chinese shares closed lower, on investor concerns over the liquidity conditions in the market. The markets in Indonesia remain closed for Eid-Ul-Fitr holiday.