Benchmarks end in red as govt faces no-confidence motion

Wednesday turned out to be a disappointing day of trade for Indian equity benchmarks, with frontline gauges settling below their crucial 11,000 (Nifty) and 36,400 (Sensex) levels, as traders opted to book profit in second half of trade after the opposition parties tabled a no-confidence motion against Prime Minister Narendra Modi’s government. Markets started the session on an optimistic note with Confederation of Indian Industry’s (CII) president Rakesh Bharti Mittal’s statement that GDP growth at 7.5% plus was a very healthy and positive sign for Indian economy, noting that impact of sustained structural reforms is now being felt on the ground. Traders also took some support with a private report that inflation based on wholesale prices, which touched a 4-year high in June, seems to have peaked for this financial year, and is expected to glide down to around 4.1% by March 2019. Traders also got some confidence with the International Monetary Fund (IMF) saying that India’s Gross Domestic Product (GDP) growth remains quite robust into the future, despite marginally trimming the country’s growth projection for 2018 due to high oil prices and a tight monetary policy regime.

However, markets took U-turn and entered into red terrain in second half of the day’s trade after Lok Sabha Speaker Sumitra Mahajan accepted the no-confidence motion moved against the BJP Government on the first day of the Monsoon Session that began in Parliament on Wednesday. Some anxiety was also among the local traders with report that India’s import bill of crude oil and petroleum products swelled 57% to $12.73 billion in June as compared to the same month last year. In the sectoral landscape, all the indices except Oil & Gas and Energy were trading in the red. Traders also remained concerned with a private study report pointing out discrepancies in FDI data and also suggested that the RBI should regenerate foreign fund inflows and outflows data with detailed information at least for the past five years with a view to providing a more realistic picture of overseas investments.

On the global front, European markets are trading in green to hit a one-month high on Wednesday, as Federal Reserve Chair Jerome Powell’s upbeat economic view bolstered investor confidence in the world's largest economy. Asian markets ended mostly in green, tracking a Wall Street rally after the head of the Federal Reserve expressed confidence in the US economy despite fears of a global trade war.

Back home, stocks related to PSU banking space edged lower despite report that the finance ministry is likely to infuse about Rs 10,000 crore within a few days in some state-owned lenders including PNB, Corporation Bank and Central Bank of India, to help them meet regulatory capital requirement. Aviation stocks ended in red despite report that the air travel demand in India continues to be high with the domestic air passenger traffic registering a growth of 18.36% in the month of June 2018. According to the Directorate General of Civil Aviation (DGCA) data, domestic airlines flew 113.25 lakh passengers in June, over to 95.68 lakh passengers carried in the same period last year. Textile sector stocks edged lower despite report that the government doubling import duty on over 50 textile products -- like jackets, suits and carpets -- to 20%, a move that is aimed at promoting domestic manufacturing.

Finally, the BSE Sensex declined 146.52 points or 0.40% to 36,373.44, while the CNX Nifty was down by 27.60 points or 0.25% to 10,980.45.

The BSE Sensex touched a high and a low of 36,747.87 and 36,320.92, respectively and there were 8 stocks advancing against 23 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index lost 1.27%, while Small cap index was down by 0.95%.

The only gaining sectoral indices on the BSE were Oil & Gas up by 1.07% and Energy was up by 0.37%, while Metal down by 3.12%, Realty down by 2.42%, Basic Materials down by 1.89%, Telecom down by 1.85% and Auto was down by 1.36% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 2.69%, Asian Paints up by 0.95%, Yes Bank up by 0.92%, HDFC up by 0.91% and Hero MotoCorp up by 0.63%. On the flip side, Tata Steel down by 5.22%, Tata Motors - DVR down by 3.90%, Vedanta down by 2.74%, Axis Bank down by 2.57% and Hindustan Unilever down by 2.37% were the top losers.

Meanwhile, in a major relief to the domestic textile manufacturers, the Central Board of indirect Taxes and Custom (CBIC) has doubled import duty on over 50 textile products to 20 percent from 10 percent earlier. It has also raised the ad-valorem rate of duty for certain items. The imported products which have become expensive include woven fabrics, dresses, trousers, suits and baby garments.

Federation of Indian Export Organisations (FIEO) DG Ajay Sahai has stated that the increased customs duty on import of a range of textile products will help boost domestic manufacturing. However, he noted that imports from the least developed countries such as Bangladesh would continue to enjoy duty free access to Indian markets.

According to government data, imports of textile yarn, fabric, made-up articles into the country grew by 8.58 percent to $168.64 million in June. However, exports of Cotton Yarn/Fabrics/made-ups, Handloom Products etc. grew by 24 percent to $986.2 million. Man-made Yarn/Fabrics/made-ups exports grew 8.45 percent to $403.4 million. Exports of all textile ready made garments dipped by 12.3 percent to $13.5 billion.

The CNX Nifty traded in a range of 11,076.20 and 10,956.30. There were 21 stocks in green as against 28 stocks in red, while one stock remained unchanged on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 4.03%, ONGC up by 2.66%, BPCL up by 2.25%, HPCL up by 1.78% and Indian Oil Corporation up by 1.61%. On the flip side, Tata Steel down by 5.33%, Hindalco down by 3.01%, Vedanta down by 2.95%, UPL down by 2.54% and Tata Motors down by 2.48% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 43.56 points or 0.57% to 7,669.89, France’s CAC added 27.08 points or 0.50% to 5,449.62 and Germany’s DAX was up by 85.94 points or 0.67% to 12,747.48.

Asian equity markets ended mixed on Wednesday even as Federal Reserve Chair Jerome Powell's upbeat economic view bolstered investors' confidence in the world's largest economy. In testimony before the Senate Banking Committee, Powell on Tuesday offered a positive outlook of the US economy and reiterated that gradually raising interest rates is ‘the best way forward’. He also downplayed potential negative fallout from the ongoing US-China trade spat. Japanese shares closed higher at their highest level in more than a month as exporters such as automakers and technology firms got a boost after the dollar hit a six-month high against the yen. Further, Chinese shares ended lower as a weaker yuan pulled down prices of real estate developers and airliners.