Benchmarks end off day’s high on last hour profit booking

Indian equity benchmarks ended the Friday’s session with marginal gains, as traders opted to book most of their early gains in last leg of trade. Markets, soon after a cautious start, gained traction and traded superbly for most part of the day as traders took some support with private report that a lower base in the previous year’s quarter and likely good show by select companies in sectors such as automobiles, capital goods, FMCG, IT, and metals should help the Nifty 50 companies report a double-digit growth in aggregate sales and profits for the June 2018 quarter. Markets extend gains, as optimism remained on the street with a private report stating that the Indian engineering exports have managed to grow by close to 20% for the April-May, 2018, reflecting a so far so good scenario even as the US - China tariff war has spread to some key trading markets in Europe, Canada and Mexico and shows no early signs of abating.

Some support also came with private report stating that economic activity is indeed improving after robust services PMI data showed that the manufacturing sector is growing at a robust pace, providing a big boost to the government at the centre. Adding to the optimism, India’s outgoing chief economic advisor Arvind Subramanian said that the country can handle shocks from external factors like high oil prices and a strong dollar. However, market participants trimmed their gains in last leg of trade and dragged markets lower to end off day’s high on report that the increase in minimum support prices (MSP) by the government is set to bump up the Reserve Bank of India’s already heightened inflation forecast and will likely lead to higher interest rates at the next monetary policy review on August 1 and possibly another before the year ends.

On the global front, European markets were trading mostly in red in early deals on Friday, as the trade dispute between the United States and China escalated with US tariffs on $34 billion in Chinese imports taking effect and China immediately retaliating. Asian stocks bounced back to recover on the last trading day of the week, with most markets finishing the session higher. Investors were watching developments on the trade front as a deadline for tariffs from the US and China to take effect passed on Friday.

Back home, IT stocks edged higher on report that Nasscom chairman Rishad Premji and president Debjani Ghosh said US administrative measures on immigration have not had a significant impact on Indian IT, and that the industry has adjusted by drastically reducing dependence on H-1B visas. Textile sector was in limelight after the Indian Textiles Accessories and Machinery Manufacturers (ITAMMA) said India is poised to overtake China in the textile sector by capitalizing on factors such as cheaper labour and modernisation and Tamil Nadu will have a major role to play in it. Besides, Airline stocks ended higher, supported with a private report stating that the number of flyers in the months of April and May rising 17.7% to 9.4 lakh every day on average. However, telecom stocks exhibited mixed trend on report that telecom regulator Trai prescribed amendments to the interconnect regulations, proposing certain changes in terms and conditions for an operator to seek fresh call connect ports from other telcos.

Finally, the BSE Sensex rose 83.31 points or 0.23% to 35,657.86, while the CNX Nifty was up by 22.90 points or 0.21% to 10,772.65.

The BSE Sensex touched a high and a low of 35,799.71 and 35,532.21, respectively and there were 16 stocks advancing against 13 stocks declining, while 2 stocks remain unchanged on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.56%, while Small cap index was up by 0.46%.

The top gaining sectoral indices on the BSE were Industrials up by 1.50%, Auto up by 1.39%, Realty up by 1.27%, Capital Goods up by 1.16% and Energy was up by 1.01%, while Healthcare down by 0.75%, Consumer Durables down by 0.23%, FMCG down by 0.16%, Utilities down by 0.07% and Telecom was down by 0.02% were the top losing indices on BSE.

The top gainers on the Sensex were Hero MotoCorp up by 4.25%, Tata Motors up by 3.69%, Tata Motors - DVR up by 2.25%, Bajaj Auto up by 1.80% and TCS up by 1.68%. On the flip side, Sun Pharma down by 1.28%, NTPC down by 1.22%, HDFC down by 1.11%, Wipro down by 0.75% and Vedanta down by 0.72% were the top losers.

Meanwhile, as India aims to double exports from agricultural sector by the year 2022, Commerce Secretary Rita Teaotia has said that her ministry is working on an institutional mechanism for addressing market access barriers and to deal with sanitary and phyto sanitary issues, which certainly are the biggest barriers in global food trade. Besides, she said that they are trying to focus on high value products, the value added agricultural products, focusing on some perishable commodities that need to be stored and transported properly. She added that they are also looking at the indigenous, ethnic and some non-ethnic categories.

The Secretary further said that there is a need to look at the issue of disproportionate large subsidies to agriculture by developed countries and the product-specific concentration of subsidies that the measures of support permit under the WTO agreement on agriculture. She noted that under the global trade norms, a WTO member country's food subsidy bill should not breach the limit of 10 percent of the value of production based on the reference price of 1986-88. She said 'when we looked at the prices, the prices that are obtained by Indian consumers whether less or high, this also factors in the effect on global prices of distortionary policies of other countries, so global prices are a function of that as well.'

According to Teaotia, recent times have witnessed very perverse efforts to target minimal support extended to poorest farmers in developing countries and to make efforts to undermine the core principles of special and differential treatment for such countries, which is at the heart of multilateralism. She pointed out that these short-sighted efforts would further aggravate the kind of imbalances they have already seen in the agreement on agriculture and also undercut one of the key objectives of WTO which is to improve living standards of populations around the world.

The CNX Nifty traded in a range of 10,816.35 and 10,735.05. There were 24 stocks in green as against 26 stocks in red on the index.

The top gainers on Nifty were HPCL up by 4.54%, Hero MotoCorp up by 4.05%, Tata Motors up by 3.04%, Grasim Industries up by 2.01% and TCS up by 1.99%. On the flip side, Cipla down by 2.25%, Tech Mahindra down by 1.81%, Bharti Infratel down by 1.47%, Sun Pharma down by 1.40% and Dr Reddy’s down by 1.38% were the top losers.

European markets were trading mostly in red; UK’s FTSE 100 declined 15.90 points or 0.21% to 7,587.32 and France’s CAC was down by 0.92 points or 0.02% to 5,365.40, while Germany’s DAX was up by 9.57 points or 0.08% to 12,473.86.

Asian equity markets ended mixed on Friday as investors responded with calm to the US tariffs on 34 billion dollars worth of Chinese imports that took effect after midnight Thursday. China said it is ‘forced to make a necessary counterattack’ in equal measure. Chinese shares clawed back earlier losses, but lengthened a string of weekly declines as Washington’s tariffs on Chinese goods took effect, escalating the trade row between the world’s two largest economies. Meanwhile, Japanese shares rose for the first time this week, as investors took heart from gains in Chinese stocks and covered their short positions after early wobbles when Washington’s tariffs on Chinese imports took effect.