Benchmarks end lower on F&O Expiry day

Benchmark indices ended lower on the F&O Expiry day, with Sensex and Nifty slipping below their crucial psychological levels of 35,900 and 10,800, respectively. The markets made a firm start of the day, amid a private report indicating that private equity (PE) investments in India witnessed a 36 per cent growth to $1,325 million despite fall in volume on account of increased follow-on investments last month as compared to a year ago. Trade remained positive for most part of the session, aided by a report that the Ministry of Micro, Small and Medium Enterprises is organizing a programme on Technology Support and Outreach (TECH-SOP) in New Delhi. The objective of the programme is to educate MSMEs and enhance their awareness about latest technological innovation available and sensitize them on the role of technology in creating competitiveness and opportunities. Investors took a note of the commerce ministry’s statement that India and countries of the Latin American and Caribbean region have huge potential to boost economic ties in areas like agriculture, health, energy and information technology.

But, volatility which came during noon deals pushed the markets lower to settle in red, on the account of weak cues from global markets. Traders got cautious with Fitch Ratings’ statement that government's $7 billion (around Rs 48,000 crore) fund infusion into public sector banks (PSBs) would not be sufficient to support significantly stronger lending growth. Fitch estimated that banks would need an additional $23 billion (around Rs 1.6 trillion) in 2019, after these latest injections, to sufficiently meet minimum capital standards. Adding more anxiety among market participants, credit rating agency, India Ratings said that the Government has depended on the National Small Savings Fund (NSSF) in FY19, but such borrowing runs the risk of understating the fiscal deficit number. It further noted that the Government has borrowed an additional Rs 500 billion from the NSSF to take its total dependence on this route to Rs 1,420 billion or 22.4 percent of the budgeted fiscal deficit in FY19.

On the global front, European markets were trading in red, as a measure of Switzerland's future economic performance declined for a fifth consecutive month in February and at a sharp rate, suggesting that the economy is set for some slowdown in the coming months. The figures from the Zurich-based KOF Swiss Economic Institute showed that the KOF Economic Barometer fell to 92.4 from January's 96.2, which was revised from 95 reported initially. Asian markets ended in red, as US-North Korea summit entered second day and a report showed China's manufacturing sector shrank in February for the third straight month. The official manufacturing PMI dropped to 49.2 in February from 49.5 in the previous month, as export orders fell to the lowest level since the global crisis. The non-manufacturing PMI came in with a score of 54.3 in February - shy of expectations for 54.5 and down from 54.7 in the previous month.

Back home, airlines stocks ended mostly higher, after Suresh Prabhu, Union Minister of Commerce, Industry and Civil Aviation said that aviation sector has the potential to add to the growth of Indian economy. Metal sector stocks also rose, aided with rating agency Crisil’s statement that domestic iron ore prices are likely to rise by 3-4% in 2019 on account of global supply glitch. Further, domestic steel prices are likely to soften following global cues. Besides, cement stocks remained in focus with India Ratings’ report stating that domestic cement demand is expected to register a modest growth of 6-8% in fiscal 2020 mainly driven by the diminishing base effect, increased thrust on infrastructure by the Central government and the affordable housing segment. However, agri stocks came under pressure, after the government said that India's foodgrains production is estimated to decline by one per cent to 281.37 million tonne in 2018-19 despite record rice output, as the country is likely to harvest lower coarse cereals and pulses crops. The country had produced 284.83 million tonne in the 2017-18 crop year (July-June).

Finally, the BSE Sensex lost 37.99 points or 0.11% to 35,867.44, while the CNX Nifty was down by 14.15 points or 0.13% to 10,792.50.

The BSE Sensex touched a high and a low of 36,085.85 and 35,829.15, respectively and there were 16 stocks advancing against 15 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index gained by 0.49%, while Small cap index was up by 0.86%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.49%, Oil & Gas up by 1.29%, PSU up by 1.23%, Realty up by 1.10% and Capital Goods up by 1.04%, while IT down by 1.02%, TECK down by 0.93%, Auto down by 0.67% and Telecom down by 0.36% were the top losing indices on BSE.

The top gainers on the Sensex were Coal India up by 3.16%, Vedanta up by 2.88%, NTPC up by 1.83%, Yes Bank up by 1.36% and SBI up by 0.94%. On the flip side, TCS down by 3.38%, Maruti Suzuki down by 1.77%, Hero MotoCorp down by 1.49%, Mahindra & Mahindra down by 1.42% and Axis Bank down by 1.18% were the top losers.

Meanwhile, Central Board of Indirect Taxes and Customs Member John Joseph said that the government has detected Goods and Services Tax (GST) evasion worth Rs 20,000 crore between April-February 2018-19 of which Rs 10,000 crore was recovered. He also said that the government will take more steps to check frauds and increase compliance.

Joseph has stated that the tax officers detected fake invoice worth Rs 1,500 crore which was used to claim illegal GST credit of Rs 75 crore. He said “we have already recovered Rs 25 crore and the rest is on the way.” Stating that only 5-10 percent of the businesses are black sheep and bring bad name to the industry, he said the government will take more measures to increase compliance, and act against evaders in a way such that genuine businesses do not suffer.

He further said the government has been dynamic in rationalising tax rates since GST rollout on July 1, 2017, while increasing compliance for 1.2 crore registered businesses. He said “in future, as GST moves forward, the rates need to consolidate. Across the world it is one rate, but it may not be possible for us to implement it here... because we have the poorest of the poor and the richest of the rich in the country. What is good for the richest, cannot be the best for the poor... But five rates converging into two or three, depending on what the Council decides. This is the way forward.”

The CNX Nifty traded in a range of 10,865.70 and 10,784.85. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were ONGC up by 5.43%, Vedanta up by 3.67%, Coal India up by 3.32%, BPCL up by 2.36% and GAIL India up by 2.17%. On the flip side, TCS down by 3.62%, Eicher Motors down by 2.87%, Ultratech Cement down by 2.03%, Maruti Suzuki down by 1.96% and Hero MotoCorp down by 1.81% were the top losers.

European markets were trading mostly in red; UK’s FTSE 100 decreased 49.41 points or 0.7% to 7,057.79 and Germany’s DAX declined 5.28 points or 0.05% to 11,482.05, while France’s CAC was up by 0.13 points or 0% to 5,225.48.

Asian markets ended lower on Thursday as comments by US Trade Representative Robert Lighthizer dampened recent optimism about the US-China trade talks. Investor sentiment was also dented by weak data from China and news that US President Donald Trump and North Korean leader Kim Jong Un have abruptly ended summit talks earlier than scheduled. Chinese shares fell as weak data reinforced fears that the world's second-largest economy is losing momentum. Activity in China's vast manufacturing sector continued to contract in February, and at a faster rate, the latest survey from the National Bureau of Statistics revealed with a manufacturing PMI score of 49.2. That missed expectations for a score of 49.5, which would have been unchanged from the previous month. The non-manufacturing PMI came in with a score of 54.3 in February - shy of expectations for 54.5 and down from 54.7 in the previous month. Further, Japanese shares ended lower as data showed the biggest decline in Japanese factory output in a year. Meanwhile, Taiwan's stock markets were closed for the Peace Memorial Day holidays.