Markets give up gains to end in red terrain

Indian equities gave up their all gains to end Tuesday’s session in red terrain, with Sensex and Nifty breaching their crucial psychological levels of 38,600 and 11,600, respectively. After a positive start, markets managed to keep their heads above water for the most part of the session, taking support from a private report stating that sales of Indian junk bonds have made a big comeback in 2019, almost tripling to hit a five-year high, boosted by a risk-on rally prompted by a dovish US Federal Reserve that has given the Asia market a record start to the year. Indian companies have sold $3.7 billion in high-yield, or junk-rated, bonds so far this year, an increase of 187% from 2018. Investors were encouraged as the Reserve Bank of India (RBI) is set to inject long-term liquidity worth $5 billion into the banking system through dollar-rupee buy-sell swap for a tenure of three years, the second such auction within a month. The RBI’s dollar-rupee swap auction would help absorb dollar inflows that could make the rupee stronger.

However, in the last leg of the trade, key indices lost their ground, following weak European markets. Trading sentiments got hit, as the Employees State Insurance Corporation (ESIC) in its latest payroll data showed that job creation declined by 1.73% in February 2019 to 15.03 lakh compared to 15.30 lakh in the same month last year. Market participants also got cautious with a private report stating that the India Volatility Index shot up to a three-year high of 24.05 on April 22, amid rising uncertainty over the new government formation and soaring crude oil prices. The India VIX, the fear gauge for domestic equities, rose 5.76 per cent to settle at 24.05, after an intra-day high of 24.56. Meanwhile, PHD Chamber of Commerce and Industry (PHDCCI) Delegation has discussed concerns of the Chamber related to the growth of the economy, exports, liquidity , Micro, Small and Medium Enterprises (MSMEs), NBFCs, Affordable Housing and Real Estate sector with Reserve Bank of India (RBI) Governor.

On the global front, European markets were trading in red, as Denmark's consumer confidence weakened in April. The survey data from Statistics Denmark showed that the consumer confidence index fell to 3.7 in April from 3.8 in March. The index measuring consumers' view regarding the past economic situation in Denmark rose to 5.9 in April from 5.0 in the previous month. Asian markets ended in green, after Taiwan's unemployment rate fell slightly in March. The Directorate General of Budget Accounting & Statistics or DGBAS reported that the jobless rate dropped to an unadjusted 3.68 percent in March from 3.72 percent in February. On a seasonally adjusted basis, the unemployment rate rose 3.72 percent. On the inflation front, Singapore's inflation rose marginally in March. As per data from the Monetary Authority of Singapore and the Ministry of Trade and Industry, the consumer price inflation rose to 0.6 percent in March from 0.5 percent in February.

Back home, airlines stocks ended mixed, after the Directorate General of Civil Aviation (DGCA) in its latest data report indicated that high air fares and capacity constraint decelerated India's domestic air passenger traffic growth in March. As per the data, the air passenger traffic growth rate in March rose to a mere 0.14% to 115.96 lakh from 115.80 lakh reported for the corresponding month of the previous fiscal. However, stocks related to pharma industry ended higher, with a commerce ministry data report showing that India’s pharmaceutical exports rose by 11 percent to $19.2 billion in 2018-19, mainly driven by higher demand in regions such as North America and Europe. Further, coal industry stocks remained in focus, amid reports that India's coal import increased by 8.8 percent to 233.56 million tonnes in 2018-19. Coal imports were at 214.61 MT in 2017-18.

Finally, the BSE Sensex slipped 80.30 points or 0.21% to 38,564.88, while the CNX Nifty was down by 18.50 points or 0.16% to 11,575.95.

The BSE Sensex touched a high and a low of 38,832.61 and 38,518.26, respectively and there were 10 stocks advancing against 21 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index gained 0.03%, while Small cap index was down by 0.13%.

The top gaining sectoral indices on the BSE were Energy up by 1.25%, Consumer Durables up by 0.96%, Oil & Gas up by 0.77%, Healthcare up by 0.73% and IT up by 0.33%, while Telecom down by 1.38%, Auto down by 1.32%, Utilities down by 1.10%, Power down by 0.64% and Bankex down by 0.59% were the top losing indices on BSE.

The top gainers on the Sensex were ONGC up by 3.93%, Sun Pharma up by 3.08%, Bajaj Finance up by 1.47%, Coal India up by 1.45% and Reliance Industries up by 1.38%. On the flip side, Maruti Suzuki down by 3.60%, Yes Bank down by 2.33%, Indusind Bank down by 2.18%, Tata Steel down by 2.15% and Hero MotoCorp down by 1.74% were the top losers.

Meanwhile, the Finance Ministry has asked all departments to undertake a review of government guarantees given by respective ministries to their Central Public Sector Enterprises (CPSEs) or entities. The review should undertake aspects such as discharge of repayment obligations or interest obligations as per terms of the loan agreement and covenants and conditions met.

Besides, the details of CPSEs or entities due guarantee fee paid on time to the government should also be submitted. The Ministry has extended date for submission of these details to April 30 from April 10. Guarantees are contingent liabilities have the potential to impact the financial performance of the government. The ministry further said that the Fiscal Responsibility and Budget Management (FRBM) Rules stipulates that government cannot guarantee more than 0.5 percent of the GDP of the respective financial year to CPSE/entities.

All ministries and departments are requested that prioritised guarantee requirement for 2019-20 may be worked out to include only such proposals where the loan agreement can be signed and guarantee agreement can be executed during the year. The guarantees already approved by the Budget Division of Department of Economic Affairs, Finance Ministry but not executed till March 31, 2019, needs to be revalidated and such proposals may also be included on the total guarantee requirement of 2019-20.

The CNX Nifty traded in a range of 11,645.95 and 11,564.80. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were ONGC up by 4.50%, Zee Entertainment up by 3.20%, Sun Pharma up by 2.97%, Bajaj Finance up by 1.53% and Reliance up by 1.43%. On the flip side, Maruti Suzuki down by 3.55%, Yes Bank down by 3.08%, Tata Steel down by 2.11%, Indusind Bank down by 1.96% and NTPC down by 1.84% were the top losers.

European markets were trading mostly in red; France’s CAC decreased 13.73 points or 0.25% to 5,566.65 and Germany’s DAX shed 31.46 points or 0.26% to 12,190.93, while UK’s FTSE 100 was up by 23.77 points or 0.32% to 7,483.65.

Asian markets ended mostly higher on Tuesday, with modest gains, as many markets reopened after the long Easter break, while oil jumped to its highest this year as the United States said it would soon impose sanctions on all buyers of Iranian oil. The Trump administration said it would no longer exempt any countries from US sanctions if they continue to buy Iranian oil. Japanese shares eked out modest gains, with oil-related stocks pacing the gainers after oil prices hit 2019 highs. However, Chinese stocks extended losses on concerns that Beijing will slow the pace of further policy easing after unexpectedly strong first-quarter economic data last week. Reports from a recent high-level meeting in China, which was chaired by President Xi Jinping, showed willingness to fine-tune monetary policy but raised questions about future government stimulus. Besides, traders remained on sidelines ahead of a slew of US earnings reports from big companies such as Twitter starting Tuesday.