Benchmarks snap five-day winning streak

Snapping five days of winning streak, Indian equity benchmarks ended the Friday’s trade slightly in red terrain, as traders opted to book profit ahead of information technology (IT) heavyweight Infosys June quarter earnings. Markets started the session on an optimistic note with traders getting some encouragement from Finance Minister Arun Jaitley’s statement that India could soon emerge as the world’s fifth largest economy if it continues to maintain its current pace of growth. Soon traders turned cautious on account of disappointing macroeconomic data. India’s retail inflation surged to five-month high of 5% in June 2018, for the third straight month, as compared to 4.87% in May, while India’s industrial production measured by Index of Industrial Production (IIP) declined to a seven-month low of 3.2% in the month of May 2018, as compared to a revised 4.8% growth in April. Some cautiousness also crept in with Organisation for Economic Cooperation and Development’s (OECD) statement that big emerging economies like China and India will suffer more than developed countries if trade tariffs return to 1990 levels.

Sentiments also remained pessimistic on report that the UK government's latest blueprint for Brexit released July 12 threatens to derail plans for closer trade ties with India as it would prevent Britain from making the kind of concessions on trade in goods. Anxiety also prevailed with Reserve Bank of India’s report stating that loan waivers have reduced burden on the farmers but there may be no visible benefits to the overall economy. Traders also took note of Niti Aayog vice chairman Rajiv Kumar’s statement that emergence of India as the sixth largest economy was very much expected but still there is a long way to go as the per capita income of the country is still low. Meanwhile, the government has set up a high-level task force under the chairmanship of Cabinet Secretary P K Sinha. The move assumes importance as India is highly dependent on imports of several items such as oil, electronic hardware, machinery, ingredients for pharmaceuticals, gold and chemicals.

On the global front, European markets were trading in green in early deals on Friday, tracking overnight gains on Wall Street amid elevated expectations of strong US earnings. Asian markets ended mostly in green, following a record close on Wall Street as trade war fears are tempered by hopes China and the US will eventually reach a compromise, while attention turns to the start of earnings season.

Back home, tourism sector remained limelight after tourism Minister Kadkampally Surendran said the state government is planning to create 5 lakh new employment opportunities in the state tourism sector in the next three years. Infrastructure related stocks edged lower on report that not all is well for central infrastructure projects, as 75% of those under implementation are either delayed or do not have a definitive timeline. In addition, the cost overrun on some is expected to cost the country another Rs 2.18 trillion. The total original combined cost of the 1,304 projects under implementation stands at Rs 16.2 trillion. While not all of the delayed projects are facing legacy issues, a break-up of these projects was not shared. However, the report stated that the number of projects under implementation has grown from 727 in April 2014 to 1,304 in February 2018.

Finally, the BSE Sensex slipped 6.78 points or 0.02% to 36,541.63, while the CNX Nifty was down by 4.30 points or 0.04% to 11,018.90.

The BSE Sensex touched a high and a low of 36,740.07 and 36,501.61, respectively and there were 15 stocks advancing against 16 stocks declining on the index.
The broader indices ended in red; the BSE Mid cap index lost 0.77%, while Small cap index was down by 1.36%.

The few gaining sectoral indices on the BSE were Consumer Durables up by 0.91%, Energy up by 0.78%, IT up by 0.34% and Oil & Gas was up by 0.01%, while Telecom down by 1.98%, Realty down by 1.36%, Basic Materials down by 1.15%, Industrials down by 1.05% and PSU was down by 1.02% were the top losing indices on BSE.
The top gainers on the Sensex were Reliance Industries up by 1.34%, Infosys up by 1.12%, Bajaj Auto up by 1.02%, Asian Paints up by 0.98% and Coal India up by 0.96%. On the flip side, ONGC down by 2.80%, Axis Bank down by 2.48%, ITC down by 2.29%, SBI down by 1.96% and ICICI Bank down by 1.60% were the top losers.

Meanwhile, a day after the World Bank ranked India as sixth largest economy in the World, Union Minister Arun Jaitley has said that the country can emerge as the world’s fifth largest economy next year, if it continues to grow at current pace. He further added that Indian economy is in a stable condition but there is need to more focus on eliminating agrarian distress.

Arun Jaitley further recommended a uniform set of agriculture related policies to benefit farmers and double their income, noting that government’s recent hike in the Minimum Support Price (MSP) for farmers will reduce farmer distress that was rampant last year.  He also underlined a crucial role played by a National Bank for Agriculture and Rural Development (NABARD) in shaping the agriculture sector.

Besides, Jaitley mentioned about the government’s continuous focus in improving the country’s rural infrastructure.   Further, Union Minister pointed that studies have shown that states which focused on the agriculture sector to help increase farm income have been re-elected and those who neglected this sector, have not come back to power.

The World Bank in its latest report stated that Indian economy has now become world’s sixth-biggest economy in 2017. The country pushed France to the seventh spot and ranked ahead of several European Union (EU) states. India’s gross domestic product (GDP) was valued at $2.597 trillion at the end of 2017 overtaking French economy, which was amounted at $2.582 trillion last year.

The CNX Nifty traded in a range of 11,071.35 and 10,999.75. There were 23 stocks in green as against 27 stocks in red on the index.

The top gainers on Nifty were Titan Co up by 3.72%, BPCL up by 2.57%, Bajaj Finance up by 2.44%, Infosys up by 2.21% and Reliance Industries up by 1.72%. On the flip side, Zee Entertainment down by 4.54%, Bharti Infratel down by 3.76%, Axis Bank down by 2.76%, ONGC down by 2.74% and Grasim Industries down by 2.73% were the top losers.

European markets were trading in green; Germany’s DAX increased 45.34 points or 0.36% to 12,538.31, UK’s FTSE 100 added 33.30 points or 0.43% to 7,684.63 and France’s CAC was up by 23.98 points or 0.44% to 5,429.88.

Asian equity markets ended mostly higher on Friday amid easing trade tensions after US Treasury Secretary Steven Mnuchin said the US could reopen trade talks if Beijing was milling to make serious efforts to make structural changes. Better-than-expected Chinese exports data also offered some support. Japanese shares ended higher as the dollar hit a fresh six-month high against the yen and heavyweight Fast Retailing posted record Q3 profit on the back of brisk sales at its overseas Uniqlo stores. Though, Chinese shares ended lower after data showed China's trade surplus with the United States swelled to a record in June, adding to fears the US may increase tariffs on Chinese products. Reports showed that Chinese exports climbed 11.3 percent year-over-year in dollar terms in June, faster than the expected rise of 9.5 percent. Imports advanced 14.1 percent from a year ago, well below economists' forecast for a growth of 21.3 percent. The trade surplus totaled $41.61 billion in the month versus the expected surplus of $27.72 billion.