Markets end choppy trade with marginal losses

Indian equity benchmarks ended the choppy day of trade below their crucial 35,600 (Sensex) and 10,800 (Nifty) levels, as traders remained worried on renewed concerns over a global trade war after US President Donald Trump on Friday announced plans to impose a 25% tariff on $50 billion worth of Chinese goods that contain industrially significant technologies. Markets traded in a tight band throughout the day as sentiments remained dampened with report showing that India’s trade deficit widened to $14.62 billion during the month under review as against $13.84 billion in May 2017, the highest in nearly four months mainly because of rising oil imports. Adding to the pessimism, a private FDI Report 2018 said that the number of greenfield FDI projects in India during the year fell sharply by 21% to 637. The US has surpassed India to become the top destination for greenfield FDI investment in 2017. Sentiments also weighed down with rating agency Moody’s sounding a note of caution that any reduction in excise duty on petrol and diesel would adversely affect fiscal deficit unless it is matched by a commensurate cut in expenditure. Observing that fiscal consolidation would be closely watched for assigning the sovereign rating, Moody’s said India’s biggest challenge is its fiscal strength which is relatively low as compared to -- Baa -- rated peers.

However, losses remained capped with report that India’s merchandise exports grew to a six-month high of 20.18% in the month of May 2018, boosted by a rise in receipts of petroleum, engineering and pharmaceutical products. Traders also found some support with Piyush Goyal’s statement that the government is hopeful of achieving double-digit gross domestic product (GDP) growth in the country by the fourth quarter of the ongoing financial year. He also added that that government is committed to meet the fiscal deficit target of 3.3% for the current fiscal. Market participants also get some relief with a report that Reserve Bank of India eased investment norms for foreign portfolio investors (FPIs) in debt, especially into individual large corporates, a move that can help attract more overseas flows and thereby help arrest the recent fall in the rupee on one hand and also lift the recent fall in demand for corporate bonds.

Global cues remained sluggish with European markets trading in red in early deals after President Donald Trump announced new tariffs against China. Asian markets ended lower, after US President Donald Trump cranked up trade tensions with China by going ahead with tariffs on Chinese imports, prompting Beijing to immediately respond in kind.

Back home, traders failed to get any sense of relief with Union Minister Arun Jaitley’s statement that 7.7% economic growth in the fourth quarter of 2017-18 firmly established India as the fastest growing major economy in the world and the trend is likely to continue for some years. On the sectoral front, shares of oil marketing companies remained on buyers’ radar after crude fell for second day in a row ahead of OPEC meet to discuss whether to relax oil output caps. Moreover, majority of Auto stocks remained in top gear with the Heavy Industry Ministry stating that the new National Auto Policy, which may seek emission-linked taxation for automobiles and a technology agnostic green mobility roadmap, is likely to be finalised in the next three months.

Finally, the BSE Sensex declined 73.88 points or 0.21% to 35,548.26, while the CNX Nifty was down by 17.85 points or 0.17% to 10,799.85.

The BSE Sensex touched a high and a low of 35,721.55 and 35,518.73, respectively and there were 11 stocks on gaining side as against 20 stocks on losing side on the index.

The broader indices ended in red; the BSE Mid cap index slipped 0.18%, while Small cap index was down by 0.77%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.25%, Energy up by 0.47%, Auto up by 0.33%, PSU up by 0.25% and Bankex up by 0.12%, while Metal down by 1.72%, Basic Materials down by 1.16%, Telecom down by 1.03%, IT down by 0.80% and TECK was down by 0.73% were the top losing indices on BSE.

The top gainers on the Sensex were ICICI Bank up by 3.61%, Tata Motors - DVR up by 1.97%, Tata Motors up by 1.83%, Bajaj Auto up by 0.98% and Maruti Suzuki up by 0.46%. On the flip side, Vedanta down by 2.70%, Kotak Mahindra Bank down by 1.97%, Bharti Airtel down by 1.67%, Coal India down by 1.59% and Axis Bank down by 1.33% were the top losers.

Meanwhile, with an aim to attract more overseas flows, the Reserve Bank of India (RBI) has eased investment norms for foreign portfolio investors (FPIs) in debt, especially into individual large corporates. More overseas inflow will help to arrest recent fall in rupee and also lift recent fall in demand for corporate bonds.

The FPIs cap on investment in government security has been revised to 30% of outstanding stock of that security, from 20% earlier. As per the revised minimum residual maturity requirement, FPIs are permitted to invest in Central Government securities (G-secs), including in Treasury Bills, and State Development Loans (SDLs) without any minimum residual maturity requirement, subject to the condition that short-term investments by an FPI under either category shall not exceed 20% of the total investment of that FPI in that category.

Besides, FPIs are permitted to invest in corporate bonds with minimum residual maturity of above one year, subject to the condition that short-term investments in corporate bonds by an FPI shall not exceed 20% of the total investment of that FPI in corporate bonds. These stipulations would not apply to investments in SRs by FPIs. Further, RBI noted that short-term investments shall not exceed 20% of total investment by an FPI in any category applies on an end-of-day basis. At the end of any day, all investments with residual maturity of up to one year will be reckoned for the 20% limit. RBI also said that Short-term investments by an FPI may exceed 20% of total investments, only if the short-term investments consist entirely of investments made on or before April 27, 2018; that is, short-term investments do not include any investment made after April 27, 2018.

The CNX Nifty traded in a range of 10,830.20 and 10,787.35. There were 20 stocks in green as against 30 stocks in red on the index.

The top gainers on Nifty were HPCL up by 4.78%, ICICI Bank up by 4.07%, Indian Oil Corporation up by 3.61%, Dr. Reddy’s up by 2.27% and BPCL up by 2.24%. On the flip side, Hindalco down by 2.97%, Vedanta down by 2.95%, Bharti Airtel down by 2.31%, Kotak Mahindra Bank down by 2.01% and Bajaj Finance down by 1.92% were the top losers.

The European markets were trading in red; Germany’s DAX declined 176.72 points or 1.36% to 12,833.83, France’s CAC decreased 65.29 points or 1.19% to 5,436.59 and UK’s FTSE 100 was down by 29.82 points or 0.39% to 7,604.09.

Asian equity markets ended in red on Monday as oil extended Friday's slump and escalating trade tensions between the US and China curbed investors' appetite for risk. Oil extended falls from late last week amid fears of a global trade war as well as expectations that major oil producers will soon start to increase supplies. After US President Donald Trump announced hefty tariffs on $50 billion worth of Chinese goods, China announced new tariffs on 545 products imported from the US. Japanese shares ended lower as fears of growing protectionism and news of a strong earthquake in Osaka and surrounding areas of western Japan overshadowed stronger-than-expected export data for May. Japanese exports climbed 8.1 percent year-on-year to 6.323 trillion yen in May, exceeding forecasts for 7.5 percent and up from 7.8 percent in the previous month, official data showed. While, imports soared an annual 14 percent to 6.901 trillion yen versus forecasts for 8 percent and up from 5.9 percent a month earlier. The markets in Taiwan, China and Hong Kong were closed for the Dragon Boat Festival and Indonesia is closed for Eid-ul-Fitr.