Post Session: Quick Review

Indian equity benchmarks altering between positive and negative territory, finished Friday’s session mildly in green, backed by buying in TECK and IT stocks. Markets made a cautious start and traded slightly in green, as traders took some support with India’s Oil Minister Dharmendra Pradhan conveying India’s concerns when he met ambassadors of OPEC countries in India over high international oil prices. The markets also drew some solace with Road Transport and Highways Minister Nitin Gadkari’s statement that he had expedited 280 national highway projects which would now be completed before the Lok Sabha elections next year.

In second half of the session, domestic indices erased all of their gains and started trading in red terrain, as sentiments turned pessimistic with private report that the record low equity risk premium and the gap between earnings yield and the bond yields are making it cautious on the Indian equity market. Selling further crept in with report that Private equity (PE) investments saw 50% decline in value terms in May at $1,180 million amid fall in big-ticket deals and cautious investor approach. However, in final hours of trade, key indices once again entered into positive territory, as traders took some solace with a private report stating that the Centre is planning to change labour laws in order to raise the basic income of salaried employees. The government’s intention is to put a stop to employers keeping their employees’ basic income low to reduce their contributions to social security schemes like provident fund and gratuity.

On the global front, Asian markets ended mixed, after Wall Street largely finished with gains following the European Central Bank's announcement to phase out its bond-buying stimulus. Upbeat U.S. data helped bolstered sentiments. European markets were trading mostly in green in early deals on Friday, as investors paused for breath after a stellar rally in the previous session fueled by the European Central Bank (ECB).

Back home, telecom sector was under pressure with a report stating that the call drop situation deteriorated in April 2018 after two consecutive months - February and March - of good performance by telecom operators. Select Infrastructure stocks ended in green as Transport minister Nitin Gadkari said he will soon meet top bankers to resolve the issue of drying up of funds from banks for construction of highways.

The BSE Sensex ended at 35634.91, up by 35.09 points or 0.10% after trading in a range of 35419.68 and 35675.20. There were 9 stocks advancing against 22 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell 0.39%, while Small cap index was down by 0.54%. (Provisional)

The few gaining sectoral indices on the BSE were IT up by 2.33%, TECK up by 1.91% and Healthcare up by 1.85%, while PSU down by 1.65%, Metal down by 1.55%, Oil & Gas down by 1.16%, Realty down by 1.11% and Capital Goods down by 1.01% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Dr. Reddys Lab up by 3.51%, Infosys up by 3.28%, TCS up by 2.99%, Sun Pharma up by 2.06% and Reliance Industries up by 0.67%. (Provisional)

On the flip side, Yes Bank down by 1.81%, ONGC down by 1.75%, Coal India down by 1.68%, SBI down by 1.66% and NTPC down by 1.42% were the top losers. (Provisional)

Meanwhile, the Financial Stability and Development Council (FSDC) Sub-Committee headed by the Reserve Bank of India (RBI) Governor Urjit Patel has reviewed the insolvency resolution process under the Insolvency and Bankruptcy Code (IBC), amid mounting stressed loans. It also reviewed major developments on the global and domestic fronts that impinge on the financial stability of the country.

The Sub-Committee has reviewed the status of Corporate Insolvency Resolution Process, functioning of State Level Coordination Committee (SLCCs) in various States/ Union Territories (UTs) and activities of its various Technical Groups. IBC had came into effect in 2016. Following this, 12 top stressed accounts with Non-Performing Asset (NPA) over Rs 5,000 crore were identified by RBI for the National Company Law Tribunal (NCLT) proceedings. Therefore, Banks referred Bhushan Steel, Bhushan Power & Steel, Essar Steel, Jaypee Infratech, Lanco Infratech, Monnet Ispat & Energy, Jyoti Structures, Electrosteel Steels, Amtek Auto, Era Infra Engineering, Alok Industries and ABG Shipyard to NCLT. These accounts together have total outstanding loan of Rs 1.75 lakh crore.

The FSDC Sub-Committee further discussed issues related to framework for Systemically Important Financial Institutions (SIFI), Common Stewardship Code for financial sector, single entity undertaking multiple activities and status of Central KYC Registry (CKYCR). The other issues like Investor Education and Protection Fund (IEPF), action taken against Shell companies, legal framework for cross border insolvency and issues regarding acceptance of deposits under Companies Act were discussed by the committee.

The CNX Nifty ended at 10823.40, up by 15.35 points or 0.14% after trading in a range of 10755.40 and 10834.00. There were 20 stocks advancing against 30 stocks declining on the index. (Provisional)

The top gainers on Nifty were Cipla up by 4.07%, Dr. Reddys Lab up by 3.62%, Infosys up by 3.38%, TCS up by 3.21% and UPL up by 2.34%. (Provisional)

On the flip side, Hindalco down by 2.78%, Indian Oil Corporation down by 2.36%, Ultratech Cement down by 2.29%, Yes Bank down by 1.85% and SBI down by 1.65% were the top losers. (Provisional)

European markets were trading mostly in green; Germany’s DAX surged 2.5 points or 0.02% to 13,109.60 and France’s CAC rose 20.94 points or 0.38% to 5,549.40, while UK’s FTSE 100 was up by 47.62 points or 0.61% to 7,718.17.

Asian equity markets ended mixed on Friday in response to dovish ECB statement and BOJ's weaker view on inflation outlook. Trade concerns persisted ahead of likely announcement of US tariffs on Chinese goods. Hong Kong stocks fell and posted their biggest weekly drop in two-and-a-half months as Washington looked set to unveil a tariff list targeting $50 billion Chinese goods, and Beijing vowed to retaliate, putting investors on edge. Chinese shares hit a 20-month low on worries that rising trade tensions could add pressure to the country's economic growth. Meanwhile, Seoul stocks closed lower amid selling by foreign investors on worries about renewed trade frictions between the US and China. Though, Japanese equities rose amid a weaker yen as the Bank of Japan downgraded its assessment of inflation. The markets in Malaysia, Singapore and Indonesia are remained closed in observance of Eid-ul-Fitr.