Post Session: Quick Review

Indian equity benchmarks traded in red throughout the day on Thursday and ended the session with losses of around half percent. The market indices snapped a three-session gaining run. Domestic indices began trading on a negative note, tracking losses in global markets after the US Federal Reserve raised interest rates and took a more hawkish tone in policy statement. Trading sentiments remained subdued with report showing that the country’s current account deficit (CAD) rose to $13 billion (Rs 878 billion and 1.9 per cent of gross domestic product, or GDP) in the fourth and final quarter (Q4 of 2017-18), compared to $2.6 billion (Rs 176 billion and 0.4 per cent of GDP) in the same period of 2016 -17. Traders also remained concerned on report that Reserve Bank of India to hike rates once again at its August monetary policy review as headline inflation surging to a four-month high of 4.87 per cent in May.

Sentiments on the street weakened further with a private report stating that the Centre and some states strongly disagree on the inclusion of certain petroleum products--natural gas and aviation turbine fuel--under the ambit of Goods and Services Tax (GST). Adding some woes, India's wholesale inflation shot up to a 14-month high of 4.43 percent in May on increasing prices of petrol and diesel as well as vegetables. The WPI based inflation stood at 3.18 percent in April and 2.26 percent in May last year. However, key indices trimmed some of their losses in final hours of trade as traders took some solace from report that Fitch Ratings raised India growth forecast for 2018-19 to 7.4 per cent from 7.3 per cent, but cited higher financing costs and rising oil prices as risks to growth. For 2019-20, it estimated the country to grow at 7.5 per cent. Some relief also came with Commerce and industry minister Suresh Prabhu's statement that India’s purchases of commercial aircraft and gas from the US would help bridge the trade deficit between the two countries even as they agreed to hold official talks soon to address trade and economic irritants between them. But, markets failed to trim all their losses as sentiments remained pessimistic with State Bank of India’s (SBI) latest report stating that India has only one decade to change its status into a developed country and will need to focus on education, failing which the much-hailed 'demographic dividend' will turn into a disadvantage.

On the global front, Asian markets ended in red; following the weak cues from Wall Street after the U.S. Federal Reserve raised interest rates and stuck a hawkish tone by projecting a faster pace of rate hikes this year. In addition, U.S.-China trade tensions weighed on sentiment. European markets were trading in red in early deals on Thursday as traders watched developments from central banks across the world.

Back home, select real estate stocks ended lower despite Credit rating agency, ICRA stating that government incentives to boost the residential real estate sector, especially budget housing, may push housing credit growth to 17-19 per cent in the current fiscal year. Besides, majority of oil & gas stocks were under pressure as India’s oil imports from Iran surged to about 705,000 barrels per day (bpd) in May, their highest level since October 2016.

The BSE Sensex ended at 35587.95, down by 151.21 points or 0.42% after trading in a range of 35488.55 and 35749.88. There were 11 stocks advancing against 20 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index fell 0.07%, while Small cap index was up by 0.06%. (Provisional)

The top gaining sectoral indices on the BSE were Healthcare up by 1.53%, Auto up by 0.17%, Consumer Disc up by 0.11% and Energy up by 0.03%, while IT down by 1.46%, TECK down by 1.37%, PSU down by 1.01%, Capital Goods down by 0.86% and Consumer Durables down by 0.85% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Sun Pharma up by 2.80%, Yes Bank up by 1.10%, Indusind Bank up by 0.93%, Dr. Reddys Lab up by 0.76% and Mahindra & Mahindra up by 0.61%. (Provisional)

On the flip side, Infosys down by 3.06%, ICICI Bank down by 2.05%, TCS down by 1.85%, Adani Ports &SEZ down by 1.74% and SBI down by 1.72% were the top losers. (Provisional)

Meanwhile, the global credit rating agency Fitch Ratings has raised India’s gross domestic product (GDP) growth forecast to 7.4 per cent for FY19 as against a growth estimation of 7.3 per cent earlier. The rating agency has also projected a GDP growth of 7.5 per cent for FY20. However, it mentioned that there are concern regarding higher finance costs and rising oil prices. The rating agency has protected global oil price to stay around $70 per barrel in 2018, up from $54.9 a barrel last year. It is expecting oil price to ease at around $65 a barrel next year. Moreover, the rating agency has cited that the rupee has been among the worst performers vis-a-vis Asian currencies this year, although the depreciation was more muted than during the 2013 taper-tantrum episode.

The Indian economy grew at 6.7 per cent in 2017-18. In the fourth quarter (January-March) the GDP grew at 7.7 per cent. The global rating agency said that India has better macroeconomic fundamentals than in 2013 and very low foreign ownership rates in the domestic government bond market, but the current account deficit has been widening as a result of rising oil prices, reviving domestic demand and poor manufacturing export performance.

In addition, Fitch projected retail inflation to be five per cent by the end of 2018. It said inflation has picked up since mid-2017, despite food inflation being muted. The rise in the oil price and the INR depreciation should add to price pressure in the coming months, although it expects inflation to be contained within the upper band of the RBI's target range.

Further, Fitch retained the global growth forecast at 3.3 per cent in 2018 and 3.2 per cent for 2019, reflecting the disappointment over the distribution of growth, with shortfalls in a number of smaller economies. It said however that expansion will be on-track or slightly better in the world’s two largest economies the US and China. It also said the near-term global growth prospects remain robust despite rising trade tensions and political risks.

The CNX Nifty ended at 10809.25, down by 47.45 points or 0.44% after trading in a range of 10773.55 and 10833.70. There were 19 stocks advancing against 31 stocks declining on the index. (Provisional)

The top gainers on Nifty were Lupin up by 3.57%, Sun Pharma up by 2.44%, HCL Tech up by 1.33%, Cipla up by 1.32% and Yes Bank up by 1.04%. (Provisional)
On the flip side, Infosys down by 2.97%, Indian Oil Corporation down by 2.17%, TCS down by 2.14%, Adani Ports & SEZ down by 2.12% and Indiabulls Housing Finance down by 2.10% were the top losers. (Provisional)

European markets were trading in red, UK’s FTSE 100 decreased 47.13 points or 0.61% to 7,656.58, Germany’s DAX shed 45.09 points or 0.35% to 12,845.49 and France’s CAC was down by 12.98 points or 0.24% to 5,439.75.

Asian equity markets ended lower on Thursday as trade war fears resurfaced and the US Federal Reserve sounded slightly more hawkish after raising official interest rate for the second time this year. Investors also adopted a cautious stance ahead of the European Central Bank's monetary policy announcement later in the day amid expectations the central bank will signal a winding down of its vast bond-buying program by the end of this year. Chinese shares dropped after reports suggested the Trump administration is preparing to proceed with tariffs on Chinese goods. Further, a slew of economic data from China too disappointed investors. Industrial production in China was up an annual 6.8 percent in May, the National Bureau of Statistics said. That was shy of expectations for 7.0 percent, which would have been unchanged from the April reading. Retail sales grew an annual 8.5 percent in May - also missing expectations for 9.6 percent and down from 9.4 percent in the previous month. Fixed asset investment gained 6.1 percent year-on-year, missing forecasts for 7.0 percent, which would have been unchanged from the April reading. Japanese shares ended lower as a firmer yen on worries about global trade and faster pace of interest rate hikes sapped investors' appetite for risk. Japan's industrial production climbed 0.5 percent month-over-month in April, faster than the 0.3 percent estimated earlier, final data from the Ministry of Economy, Trade and Industry showed today. This marked the third successive monthly rise. Meanwhile, the Indonesian market was closed for Eid-ul-Fitr.