Markets end last trading day of week on negative note

Indian equity benchmarks ended the last trading day of week on negative note, on the back of mixed cues from other Asian markets. After a cautious start, the markets added gains to remain in green for the most part of day, aided by a report stating that India was the biggest recipient of funds from Asian Development Bank last year and would continue to get sovereign loans in excess of $3 billion in 2019 as well. The multilateral funding institution committed $3 billion in sovereign loans to India in 2018, the highest level of assistance since sovereign operations began in the country in 1986. Investors also got comfort with Union minister Nitin Gadkari’s statement that development has always been the top agenda of the government and the Centre has given impetus to infrastructure projects in the last five years.

But, in the last leg of the trade, markets erased all the gains to settle in red terrain, as the Finance Ministry’s monthly report showed that India’s economy slowed down slightly in the last fiscal due to declining growth in private consumption, slow increase in fixed investment and muted exports, though it is still fastest growing major economy. It further said there is slowdown of growth in agriculture and sustained growth in industry as well as some challenges. Adding anxiety on the streets, the Reserve Bank of India (RBI) study report said that inflation forecasts by the central bank have gone awry only at time of low food inflation. In most other periods, forecasts have remained almost close to actual, and in line with the trend in the forecast of other central banks.

On the global front, European markets were trading in green, after Bank of England policymakers unanimously decided to hold the key interest rate and asset purchases unchanged and raised the growth outlook, while reiterating that policymakers would always aim to achieve the 2 percent inflation target. In its May Inflation Report, the bank raised the first quarter growth projection to 0.5 percent from 0.3 percent predicted in February. Asian markets ended mixed, as investors looked ahead to the release of US Labor Department's closely watched monthly jobs report for April due later in the day for clues on the strength of the world's largest economy.

Back home, sugar stocks remained in limelight, after the industry body ISMA said that sugar output in India has reached 32.11 million tonne in the first seven months of the ongoing marketing year that started October 2018 and the total production could touch a new record of 33 million tonne. The country's sugar output during the 2017-18 marketing year (October-September) was a record 32.5 million tonne. Further, stocks related to the aviation industry remained in focus, as ICRA said air traffic growth hit 5-year low in last financial year (FY19) at 11.6 percent, pulled down by low growth of 3.9 percent in the March quarter as against a healthy 14.9 percent in the first three quarters.

Finally, the BSE Sensex slipped 18.17 points or 0.05% to 38,963.26, while the CNX Nifty was down by 12.50 points or 0.11% to 11,712.25.

The BSE Sensex touched a high and a low of 39,172.76 and 38,920.17, respectively and there were 19 stocks advancing against 12 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.10%, while Small cap index was down by 0.31%.

The top gaining sectoral indices on the BSE were Realty up by 1.56%, Telecom up by 1.17%, Bankex up by 0.92%, Auto up by 0.66% and Power up by 0.65%, while IT down by 1.91%, TECK down by 1.52%, FMCG down by 0.98%, Healthcare down by 0.70% and Basic Materials down by 0.16% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 3.11%, ICICI Bank up by 1.84%, NTPC up by 1.65%, Tata Motors - DVR up by 1.31% and Tata Motors up by 1.13%. On the flip side, TCS down by 3.70%, Hindustan Unilever down by 2.04%, HCL Tech. down by 1.40%, Tata Steel down by 1.31% and Infosys down by 0.84% were the top losers.

Meanwhile, the Finance Ministry in its monthly report for March said that though easing of monetary policy has the potential to support growth, the recent cuts in the key short-term lending rate, or repo rate by 25 basis points each in February and April are yet to transmit to weighted average lending rate (WALR) of banks. Therefore, it said the effects of easing on investment activity are yet to manifest.

According to the report, credit growth could have been challenged by continuous tightening of bank liquidity causing the call money market rates to trend up since Q1 (April-June) of 2018-19, however, some relief is evident in Q4FY19. It also said that nominal exchange rate has been appreciating in Q3 of 2018-19, yet the net flow of portfolio investment remained negative. It added that the real effective exchange rate has appreciated in the Q4 of 2018-19 and could pose challenges to the revival of exports in the near future.

The monthly report further said that India’s foreign exchange reserves in terms of months of import cover have dropped from 14 months from April 2016 to 9 months in October 2018. However, it noted that the import cover has been increasing since then. It also explained that not only do fuel and food inflation directly drive the Consumer Price Index (CPI) headline inflation, they do so indirectly as well by spilling over into other sectors of the economy as captured by core inflation.

The CNX Nifty traded in a range of 11,770.90 and 11,699.35. There were 25 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 4.15%, Bharti Airtel up by 2.64%, NTPC up by 2.07%, ICICI Bank up by 1.82% and Yes Bank up by 1.18%. On the flip side, TCS down by 3.54%, Britannia down by 2.89%, Tech Mahindra down by 2.61%, Adani Ports & SEZ down by 2.02% and Hindustan Unilever down by 1.91% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 52.72 points or 0.72% to 7,404.03, France’s CAC was up by 12.83 points or 0.23% to 5,551.69 and Germany’s DAX rose 41.94 points or 0.34% to 12,387.36.

Asian markets ended mixed on Friday as investors looked ahead to the release of US Labor Department's closely watched monthly jobs report for April due later in the day for clues on the strength of the world's largest economy. US employment is expected to increase by 185,000 jobs in April following the addition of 196,000 jobs in March, while the unemployment rate is expected to hold at 3.8 percent. Crude Oil extending a steep fall from the previous session on surging US output and an expected supply increase from producer club OPEC and putting crude on track for weekly declines. Meanwhile, Hong Kong shares ended higher as the US and China ended their latest round of trade negotiations in Beijing after ‘productive meetings’. Markets in China and Japan were closed for holidays.