Markets witness volatility; Sensex breaches 39K level

Indian equity benchmarks witnessed volatility on Thursday, with Sensex and Nifty closing below their crucial psychological levels of 39,000 and 11,750, respectively. After a negative start, key indices managed to keep their heads above water for the most part of the session, taking support with the finance ministry’s statement that Goods and Services Tax (GST) collection scaled all-time high in first month (April) of current financial year (FY20).  The total gross GST revenue collected in April 2019 is Rs 1,13,865 crore of which Central GST (CGST) is Rs 21,163 crore, State GST (SGST) is Rs 28,801 crore, Integrated GST (IGST) is Rs 54,733 crore and cess is Rs 9,168 crore. Some relief seemed among traders, with a report stating that the growth of India's eight core sectors improved marginally to 4.7% in March 2019 against 4.5% in the same month last year, helped by a broad-based recovery in sectors such as cement, refinery products, steel, and coal. 

But, Indian bourses failed to hold gains and ended session in red terrain amid mixed cues from global markets. Trading sentiments got hit as India Ratings and Research (Ind-Ra) in its latest report lowered India’s gross domestic product (GDP) growth projection to 7.3% for fiscal year 2019-20 (FY20), from its earlier projection of 7.5%. The key reasons for the downward revision are the prediction of lower-than-normal monsoon for 2019, continued agrarian distress and the loss of momentum in the industrial output growth, especially manufacturing and electricity. Adding more anxiety on the street, April data signaled further loss in the growth momentum across India's manufacturing sector, reflecting softer increase in new orders. As per the survey report, the Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - eased to 51.8 in April from 52.6 in March.

On the global front, European markets were trading in red, after Germany's retail sales fell for the first time in three months, defying expectations for a rise. The data from the Federal Statistical Office showed that retail sales declined 2.1 percent year-on-year in March, after a 4.4 percent rise in February, which was revised from 4.7 percent. Asian markets ended mixed, as investors kept a close eye on US-China trade talks amid speculation the two sides may announce a trade deal by May 10.

Back home, selected auto stocks ended higher, on the back of positive sales numbers in April. Ashok Leyland reported a rise of 7% in April 2019 sales (Domestic + Exports) to 13626 units, as against 12677 units sold in the same month of last year, while Bajaj Auto registered a rise of 2% in total sales to 423,315 units in April 2019 against 415,168 units in April 2018. Sugar stocks remained in focus, with a food ministry order that sugar mills can sell 2.1 million tonne of the sweetener in the open market in the current month, higher than the April quota of 1.8 million tonne.

Finally, the BSE Sensex slipped 50.12 points or 0.13% to 38,981.43, while the CNX Nifty was down by 23.40 points or 0.20% to 11,724.75.

The BSE Sensex touched a high and a low of 39,189.95 and 38,882.99, respectively and there were 15 stocks advancing against 16 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.61%, while Small cap index was down by 0.21%.

The top gaining sectoral indices on the BSE were Telecom up by 1.97%, Energy up by 0.49%, Capital Goods up by 0.32%, Power up by 0.25% and Realty up by 0.07%, while IT down by 1.84%, TECK down by 1.49%, Consumer Durables down by 0.95%, Healthcare down by 0.80% and Bankex down by 0.57% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 3.45%, Power Grid up by 1.88%, HDFC Bank up by 1.66%, Hero MotoCorp up by 1.55% and Kotak Mahindra Bank up by 1.49%. On the flip side, Tata Motors down by 3.29%, ICICI Bank down by 3.23%, Tata Motors - DVR down by 3.03%, Indusind Bank down by 2.81% and Infosys down by 2.68% were the top losers.

Meanwhile, the rating agency ICRA in its latest report has said that cement demand in India is expected to grow by 8 percent in the financial year 2019-20, which may result in an improvement in the industry's utilisation to 71 percent in FY20 from 65 percent in FY18. It noted that improved capacity utilization is likely to support the price uptick which has been seen since March 2019. Besides, it pointed out that the growth in demand will be driven by a likely 18-20 million tonnes per annum (MTPA) of capacity addition in FY20.

According to the report, during April 2018-February 2019, the domestic cement production surged by around 13 percent as against 6 percent year-on-year growth in FY18. However, it said that a disproportionate part of the capacity addition is grinding opposed to clinker capacity. Thus, it noted that the actual production from new capacities could be lower. It added that with the incremental demand of around 24-28 million tonne being greater than the incremental supply, this is likely to translate to improved capacity utilization.

The agency further stated that while in some regions such as north, north-east and east, the cement players' utilisation is likely to be higher than the national average, in other regions such as south and west, the utilisation is likely to remain muted given the past capacity overhang. It also pointed out that cement production remains healthy supported by the demand in south India, primarily in Andhra Pradesh and Telangana driven by irrigation, low cost housing and infrastructure projects.

The CNX Nifty traded in a range of 11,789.30 and 11,699.55. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Bharti Infratel up by 3.60%, Yes Bank up by 3.57%, Power Grid up by 2.04%, Hero MotoCorp up by 1.72% and HDFC Bank up by 1.66%. On the flip side, Britannia down by 4.01%, Zee Entertainment down by 3.57%, Tata Motors down by 3.45%, Indusind Bank down by 3.17% and ICICI Bank down by 3.13% were the top losers.

European markets were trading mostly in red; UK’s FTSE 100 decreased 3.36 points or 0.05% to 7,381.90 and France’s CAC was down by 21.64 points or 0.39% to 5,564.77, while Germany’s DAX increased 42.53 points or 0.34% to 12,386.61.

Asian markets ended mixed on Thursday as the Federal Reserve's latest monetary policy statement cooled investor expectations for a rate cut and investors watched ongoing negotiations between the US and China. The manufacturing sector in South Korea moved back into expansion territory in April, the latest survey from Nikkei revealed with a manufacturing PMI score of 50.2, up from 48.8 in March. Investors shrugged off a government report showing that the total number of building permits issued in New Zealand fell a seasonally adjusted 6.9 percent month-on-month in March. Meanwhile, stock markets in Japan and China were closed for public holidays.