Profit booking spoils markets’ four-day rally

Profit booking in the recent gainers spoiled the four-day upward rally of Indian equity benchmarks on Thursday. After a cautious start, the markets remained lackluster throughout the session, tracking weak global markets. Trading sentiments got hit with Engineering Exports Promotion Council’s (EEPC) statement that there was a sharp annualised drop of over 54% in the gross bank credit deployment in the export sector. It further noted that the Reserve Bank and the government need to ensure timely and affordable bank credit for exporters to boost outbound shipments. The market participants were seen taking note of the World Bank CEO Kristalina Georgieva’s statement that in this more challenging environment, developing economies like India, must get ready to cope with possible turbulence and to build fiscal and monetary space, to build policy buffers. She also said that the growth of the global economy is expected to slow to 2.9% in 2019 compared with 3% in 2018. Traders remained pessimistic even though the Federation of Indian Chamber of Commerce and Industry (FICCI) and PwC in their latest survey report showed that India Inc expects Indian economy likely to grow over 7% in the next 12 months on the back of a number of policy initiatives taken by the government. 

In the second half of the session, the key indices extended their losses to end near intraday low points, on account of continuous selling on the counters. The market participants failed to take any sense of relief with a private report indicating that India's December retail inflation is expected to have eased to its lowest since June 2017 as food costs fell and fuel prices rose at a slower pace, giving the central bank breathing space to keep policy on hold. Investors even overlooked rating agency ICRA’s report that toll collections are likely to witness a double-digit growth in the next financial year, propelled by an increase in commercial vehicle sales and wholesale price index (WPI). The street even failed to take encouragement with Finance Minister Arun Jaitley’s statement that the government's electric mobility programme will promote manufacturing and job creation and reduce dependency on oil import, besides reducing pollution. He underlined that electric mobility is an attractive, sustainable and profitable solution to mitigate adverse impact of climate change and the threat to public health caused especially by vehicular emission.

On the global front, European markets were trading in red, as France's consumer confidence fell sharply in December to its lowest level since late 2014. The survey data from INSEE showed that the consumer confidence dropped to 87 from 91 in November. The latest reading was the lowest since November 2014. The street took note of reports that Germany's merchandise trade surplus grew in November to its biggest level in five months as imports fell unexpectedly, and exports decreased, giving further evidence of a slowdown in the biggest euro area economy. The preliminary data from the Federal Statistical Office showed that the non-adjusted trade surplus grew to EUR 20.5 billion from EUR 18.9 billion in October. Exports fell a seasonally and calendar adjusted 0.4% month-on-month following a 0.9% rise in October. The latest fall was the biggest in four months. Asian markets ended mixed, as optimism surrounding US-China trade talks waned and a partial US government shutdown over funding for a border wall entered the 20th day.

Back home, pharma stocks ended mostly higher, amid private report that the domestic pharmaceutical industry bounced back to a nearly double-digit year-on-year growth in 2018 (9.4%), after falling to an eight-year low (5.5%) in the previous year. The industry’s size was Rs 1.29 trillion last year, while stocks related to the sugar industry ended mixed with private report stating that India's sugar exports are likely to be far lower than a 5 million-tonne target set by New Delhi as a strengthening rupee and falling global prices make shipments unattractive despite a government push for overseas sales. Further, telecom stocks remained in limelight, after Ministry of Communications noted that six-fold increase in Government spending on telecommunications infrastructure and services in the country - from Rs. 9,900 crores between 2009-14, to Rs. 60,000 crores (actual + planned) between 2014-19. Besides, it said that increase in overall tele-density in the country from 75% in June 2014 to 93% in March 2018, adding 305 million new subscribers.

Finally, the BSE Sensex lost 106.41 points or 0.29% to 36,106.50, while the CNX Nifty was down by 33.55 points or 0.31% to 10,821.60.

The BSE Sensex touched a high and a low of 36,269.31 and 36,070.76, respectively and there were 14 stocks advancing against 17 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.49%, while Small cap index was up by 0.19%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.71%, Healthcare up by 0.47%, Industrials up by 0.46%, Utilities up by 0.45% and Capital Goods up by 0.38%, while Oil & Gas down by 0.81%, Bankex down by 0.75%, Energy down by 0.52%, PSU down by 0.32% and Metal down by 0.14% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 1.34%, Tata Motors - DVR up by 1.13%, NTPC up by 1.13%, Mahindra & Mahindra up by 0.99% and Bajaj Auto up by 0.86%. On the flip side, Indusind Bank down by 2.36%, Kotak Mahindra Bank down by 1.42%, ONGC down by 1.37%, Maruti Suzuki down by 1.07% and Axis Bank down by 1.05% were the top losers.

Meanwhile, highlighting the importance of access to data in achieving faster growth, National Institution for Transforming India (NITI) Aayog Vice Chairman Rajiv Kumar has said that India needs to adopt a middle path with regard to data protection.

NITI Aayog Vice Chairman said ‘I think there is a midway that will make for digital cooperation as opposed to data protection.’ He further said that India would be the creator of the largest amount of data going forward and also added that the country has something like data nationalism and that may be the anti-thesis of global growth of digital economy.

Meanwhile, India is in the process of coming out with a law on data protection. The draft personal data protection bill was prepared by a high-level panel headed by Justice B N Srikrishna. The draft bill moots seeking ‘explicit consent’ for processing 'sensitive personal information' like religious or political beliefs and biometric details.

The CNX Nifty traded in a range of 10,859.35 and 10,801.80. There were 20 stocks advancing against 30 stocks declining on the index.

The top gainers on Nifty were Titan up by 1.58%, Tata Motors up by 1.34%, Eicher Motors up by 1.18%, Bajaj-Auto up by 1.00% and NTPC up by 0.99%. On the flip side, HPCL down by 2.76%, Indusind Bank down by 2.42%, Grasim Industries down by 1.95%, Bharti Infratel down by 1.84% and MARUTI down by 1.68% were the top losers.

European markets were trading in red; UK’s FTSE 100 fell 19.88 points or 0.29% to 6,886.75, France’s CAC lost 36.13 points or 0.75% to 4,777.45 and Germany’s DAX was down by 45.14 points or 0.41% to 10,848.18.

Asian stocks ended mixed on Thursday as three days of trade negotiations between mid-level American and Chinese officials ended in Beijing without significant breakthroughs. China said meetings were 'extensive, in-depth and detailed' without offering specifics. Chinese shares ended lower after the release of lower-than-expected inflation data. Consumer prices in China were up just 1.9 percent year on year in December, the National Bureau of Statistics said. That was shy of expectations for an increase of 2.1 percent year on year and down from 2.2 percent in November. The bureau also said that producer prices were up an annual 0.9 percent - well shy of forecasts for 1.6 percent and down sharply from 2.7 percent in the previous month. Further, Japanese shares ended lower as the yen firmed up in view of the dovish tone of the Fed minutes released on Wednesday.