Benchmarks end choppy session with marginal losses

Indian equity benchmarks ended the choppy day of trade slightly in red terrain on Thursday, as investors remained watchful for developments in the Parliament on Thursday after the opposition parties tabled a no-confidence motion against Prime Minister Narendra Modi’s government. Markets after a positive start turned flat and traded choppy in green and red terrain throughout the day. Sentiments remained downbeat with new World Bank’s study report stating that the government’s demonetisation during the third quarter of 2016-17 took away up to 7.3 percentage points of growth in the country’s Gross Domestic Product (GDP) for that period only, in districts dominated by informal activities. Traders took note of a recent ASSOCHAM-Ashvin Parekh Advisory Services LLP (APAS) joint study stating that a developed corporate bond market is the need of the hour for India as an 8% economic growth cannot be achieved without a robust corporate capex cycle, more so as sole reliance on bank loans is not warranted, particularly when bank lending has been squeezed.

However, losses remained capped with as some solace also came with the Asian Development Bank’s (ADB) latest report stating that Indian economy is on track to meet fiscal year 2018 projected growth of 7.3% and will further accelerate to 7.6% in 2019. Traders also took note of report that the government has initiated as many as 214 anti-dumping investigations up to December last year against China, with which India has a huge trade deficit. Meanwhile, the trade deficit (difference between imports and exports) with China has increased to $63.12 billion in 2017-18 from $51 billion in the previous fiscal. Market participants got some respite with RBI data showing that banks’ credit grew by 12.78% to Rs 86,60,069 crore in the fortnight ended July 6. The data also showed that banks’ deposits rose by 8.33% to Rs 114,85,768 crore from Rs 106,01,663 crore in the previous fortnight.

On the global front, European markets were trading in red, as sentiments got hit with Euro area annual inflation accelerating in June, exceeding the European Central Bank's target of ‘below, but close to 2%’. As per final data from Eurostat, the annual inflation rate rose to 2% from 1.9% in May, in line with the flash estimate release on June 29. Asian markets ended in red, as investors awaited new developments on global trade disputes.

Back home, PSU banking stocks ended mostly higher with report that after approving capital support for five public sector banks (PSBs), the finance ministry is assessing the needs of 2-3 more banks and fund infusion in them would be done by the end of the second quarter of the current fiscal. Stocks related to airline space edged lower with ICRA’s latest report that the domestic airline industry is expected to post losses to the tune of Rs 3,600 crore in the current fiscal on rise in crude oil prices and falling rupee. Sugar sector edged lower with report that the government has decided to increase the minimum price sugar mills pay to cane growers by Rs 20 per quintal to Rs 275 per quintal for the next marketing year starting October.

Finally, the BSE Sensex slipped 22.21 points or 0.06% to 36,351.23, while the CNX Nifty was down by 23.35 points or 0.21% to 10,957.10.

The BSE Sensex touched a high and a low of 36,515.58 and 36,279.33, respectively and there were 18 stocks advancing against 13 stocks declining on the index.
The broader indices ended in red; the BSE Mid cap index lost 0.63%, while Small cap index was down by 1.00%.

The few gaining sectoral indices on the BSE were Consumer Durables up by 0.99%, Energy up by 0.64%, FMCG up by 0.52% and Oil & Gas was up by 0.17% while, Capital Goods down by 1.80%, Healthcare down by 1.25%, Industrials down by 1.19%, IT down by 0.79% and Basic Materials was down by 0.68% were the top losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 2.21%, Yes Bank up by 1.93%, ITC up by 1.71%, Bharti Airtel up by 1.69% and Adani Ports & SEZ up by 1.39%. On the flip side, Kotak Mahindra Bank down by 3.69%, Larsen & Toubro down by 2.61%, Hero MotoCorp down by 1.22%, Tata Steel down by 0.98% and Coal India down by 0.95% were the top losers.

Meanwhile, amid various measures taken to strengthen the banking system and tax reform which boost investment, the Asian Development Bank (ADB) in its latest report has said that Indian economy is on track to meet fiscal year 2018 projected growth of 7.3% and will further accelerate to 7.6% in 2019. An international development finance institution also forecasted that the growth in Asia and the Pacific’s developing economies will remain solid in 2018 and 2019 despite rising trade tensions.

ADB further said that even though rising trade tensions remain a concern for the region, protectionist trade measures implemented so far in 2018 have not significantly dented buoyant trade flows to and from developing Asia and added that prudent macroeconomic and fiscal policymaking will help economies across the region prepare to respond to external shocks, ensuring that growth in the region remains robust.

The report also noted that South Asia continues to be the fastest growing subregion, led by India, while in Southeast Asia, growth projections for the subregion remain unchanged at 5.2% in both 2018 and 2019, on the back of robust domestic demand. As per the report, Central Asia is growing faster than expected, prompting an upward revision to forecasts from 4.0% to 4.2% in 2018 and from 4.2% to 4.3% in 2019.

The CNX Nifty traded in a range of 11,006.50 and 10,935.45. 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 Titan Company up by 2.93%, Yes Bank up by 2.33%, Vedanta up by 2.21%, Reliance Industries up by 2.00% and Bharti Airtel up by 1.84%. On the flip side, Hindalco down by 6.07%, Kotak Mahindra Bank down by 3.78%, Larsen & Toubro down by 2.41%, Cipla down by 2.27% and Dr Reddy’s down by 1.86% were the top losers.

European markets were trading mostly in red; France’s CAC shed 29.55 points or 0.55% to 5,417.89 and Germany’s DAX decreased 56.89 points or 0.45% to 12,709.05, while UK’s FTSE 100 was up by 0.73 points or 0.01% to 7,677.01.

Asian equity markets ended mostly lower on Thursday as renewed concerns about the impact of tariffs offset earnings optimism and upbeat comments from US Federal Reserve Chairman Jerome Powell during his two days of testimony. Chinese shares ended lower, despite moves by the central bank to encourage more bank lending, as persistent yuan weakness hit airline stocks. Further, Japanese shares ended a choppy session lower as the yen strengthened against all major currencies after the Bank of Japan (BoJ) lowered purchases of longer-dated bonds for the first time since January. Japan posted a merchandise trade surplus of 721.408 billion yen in June, the Ministry of Finance said today. That exceeded expectations for a surplus of 531.2 billion yen following the 578.3 billion yen deficit in May. Exports advanced an annual 6.7 percent to 7.052 trillion yen while imports were up just 2.5 percent from a year earlier.