Post Session: Quick Review

Indian equity benchmarks ended the lackluster day of trade marginally in red on Thursday, with frontline gauges swinging between green and red for some part of the day. Domestic bourses made a cautious start and traded with marginal losses, as concerns about the outbreak of a global trade war persisted. Traders remained cautious on report that the Securities and Exchange Board of India has issued a fresh show-cause notice to the National Stock Exchange and some of the key officials - including former CEOs Ravi Narain and Chitra Ramkrishna - on Wednesday, asking them to explain the allegations of preferential access to a few high-frequency traders and brokers to its trading platform. Some cautiousness also came with a private report stating that the government decision to significantly increase minimum support price (MSP) for several kharif crops to boost farmers’ incomes could push inflation upwards and widen the fiscal deficit. The Reserve Bank of India could subsequently raise interest rates to counter the potential inflationary impact.

However, further down-ward move got restricted as traders found some solace with Union Minister Arun Jaitley’s statement that the government’s fiscal deficit target would not be breached on account of higher MSP for 14 crops as large provisioning for food subsidy has already been made in the Budget for current fiscal. Some comfort also came with Niti Aayog’s Vice-Chairman, Rajiv Kumar’s statement that food and fuel are not contributing to the overall inflationary pressures in the economy. So this constant talk about inflationary pressures because of the MSP is quite misplaced. Traders also took note of Commerce and Industry Minister Suresh Prabhu’s statement that India’s exports are growing at a healthy rate and may record about 20% growth in June. However, these are challenging times for global trade as countries are taking protectionist measures.

On the global front, Asian markets ended mixed. Investors fretted over US-China tariffs which are due to kick in within hours and threaten to trigger a trade war between the world's top two economies. European markets were trading in green in early deals on Thursday, as reassuring economic data from Germany and a report that its big carmakers could be spared from US tariffs offset another gloomy session for Asia.

Back home, shares of the four cable television service provider dropped after Reliance Industries announced the launch of fixed-line broadband service Jio GigaFiber from 15 August 2018. Besides, shares of liquor makers such United Breweries and Pincon Spirit fell after Karnataka chief minister HD Kumaraswamy proposed four percent tax hike on liquor in today’s Budget speech. However, select farm sector stocks closed in green after Karnataka Chief Minister H D Kumaraswamy announced a mega Rs 34,000 crore farm loan waiver scheme in the maiden budget of the Congress-JDS coalition government.

The BSE Sensex ended at 35597.71, down by 47.69 points or 0.13% after trading in a range of 35517.79 and 35748.26. There were 14 stocks advancing against 17 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell 0.66%, while Small cap index was down by 0.43%.(Provisional)

The few gaining sectoral indices on the BSE were FMCG up by 1.13%, Auto up by 0.28%, Bankex up by 0.10% and Consumer Disc up by 0.07%, while Consumer Durables down by 2.77%, Realty down by 1.64%, IT down by 1.54%, Metal down by 1.44% and TECK down by 1.28% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Yes Bank up by 3.79%, ITC up by 3.23%, Coal India up by 2.63%, Asian Paints up by 2.41% and Mahindra & Mahindra up by 1.37%. (Provisional)

On the flip side, Infosys down by 4.28%, Vedanta down by 3.66%, Tata Steel down by 2.72%, Reliance Industries down by 2.53% and Tata Motors - DVR down by 2.47% were the top losers. (Provisional)

Meanwhile, following the government’s approval to hike Minimum Support Price (MSP) for Kharif crops for 2018-19, Union Minister Arun Jaitley has said the government’s fiscal deficit target would not be breached on account of higher MSP for 14 crops. The government hiked MSP paid to farmers for paddy by a record Rs 200 per quintal and by up to 52 percent in other Kharif or summer-sown crops.

Jaitley further said that the government will be able to absorb the additional expenditure without breaching the fiscal deficit target as large provisioning for food subsidy has already been made in the Budget for current fiscal. He highlighted that the government’s initiative in raising the MSP for 14 crops would enrich and empower the farmer. He also said that added to the social sector and infrastructure investments in the rural areas, the revised MSP will go a long way to raise the quality of life in rural India.

The Cabinet Committee on Economic Affairs (CCEA), Home Minister Rajnath Singh said it would cost an additional Rs 15,000 crore to the exchequer. Moreover, in the 2018-19 Budget, the government had provided Rs 1.7 lakh crore towards food subsidy. Besides, the government aims to reduce the fiscal deficit for the current financial year ending March 2019 to 3.3 percent of the GDP from 3.5 percent in the previous fiscal.

The CNX Nifty ended at 10757.00, down by 12.90 points or 0.12% after trading in a range of 10726.25 and 10786.05. There were 24 stocks advancing against 26 stocks declining on the index. (Provisional)

The top gainers on Nifty were Ultratech Cement up by 3.91%, Yes Bank up by 3.83%, ITC up by 3.23%, Coal India up by 2.74% and Asian Paints up by 2.73%. (Provisional)

On the flip side, Titan Co down by 5.57%, Infosys down by 4.25%, Vedanta down by 3.64%, Tata Steel down by 3.13% and Reliance Industries down by 2.44% were the top losers. (Provisional)

European markets were trading in green; Germany’s DAX increased 154.27 points or 1.24% to 12,471.88, UK’s FTSE 100 was up by 47.76 points or 0.89% to 5,368.26 and France’s CAC rose 30.99 points or 0.41% to 7,604.08.

Asian equity markets ended on a mixed note on Thursday as lingering trade war fears and a public holiday in the US discouraged traders from taking long positions ahead of the July 6 deadline when the US administration is due to slap tariffs on $34 billion worth of Chinese goods. The minutes from the Federal Reserve's June meeting, due out later in the day and Friday's US jobs report were also on investors' radar. Chinese shares fell sharply as tariff worries overshadowed positive economic data. China's private sector expanded at the fastest pace in four months in June on stronger increase across manufacturing and services, data from IHS Markit showed. Meanwhile, Japanese shares hit three-month lows as the deadline neared for the US to start imposing tariffs on Chinese goods worth $34 billion.