Markets remain under bears’ grip

Indian equity markets remained under bears’ grip on Monday, with Sensex and Nifty closing lower by around a percent each. Key indices made a negative start of the day, amid reports that in a first in recent history of tax filings, income tax e-filings in FY2019 have dropped. Income tax e-filings in FY 2018-19 was 6.68 crore, down from 6.74 crore in the previous fiscal. This is surprising given that post demonetisation it was expected that the tax base would continue to increase. Adding more anxiety among market participants, India’s services sector fell for the second consecutive month in April, with rates of new business and output growth both cooling to seven-month lows. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index eased to 51 in April from 52 in March. Further, the Nikkei India Composite PMI Output Index -- which measures both manufacturing and services -- also slipped to 51.7 in April as against 52.7 in March.

Weakness persisted in the markets during the whole day, on the back of weak cues from global markets. The street paid no heed towards reports that with a view to facilitate fundraising by start-ups, the Department for Promotion of Industry and Internal Trade (DPIIT) has proposed relaxation in the income tax laws pertaining to sale of residential properties and carrying forward of losses. Traders even overlooked the Reserve Bank of India’s (RBI) data showing that the country's foreign exchange reserves soared by $4.368 billion to $418.515 billion in the week to April 26, helped by the second dollar-rupee swap auction. In the swap auction conducted on April 23, the RBI had received bids worth $18.65 billion against $5 billion on offer. It accepted just five bids worth $5 billion.

On the global front, European markets were trading in red, as Eurozone's consumer price inflation accelerated more-than-expected in April to its highest level in five months, led by higher energy prices and service costs, and core price growth was the fastest in six months. The preliminary data from Eurostat showed that the consumer price index rose 1.7 percent year-on-year following a 1.4 percent increase in March. Asian markets ended in red, after US President Donald Trump vowed to hike tariffs on China and the Wall Street Journal said that China is considering canceling trade talks with the United States this week.

Back home, rubber stocks remained in focused, as the state-run Rubber Board said that India's natural rubber imports in 2018-19 surged to a record high as production dropped amid a rise in consumption. The world's second-biggest consumer of natural rubber imported 582,351 tonnes rubber in 2018-19, up 24 percent from the previous year. Further, TV broadcasting industry related stocks also remained in limelight with a report that Telecom Regulatory Authority of India (TRAI) roped in state-owned Broadcast Engineering Consultants India (BECIL) for conducting audits to ensure that cable TV and DTH companies are complying with its new regulatory norms.

Finally, the BSE Sensex slipped 362.92 points or 0.93% to 38,600.34, while the CNX Nifty was down by 114.00 points or 0.97% to 11,598.25.

The BSE Sensex touched a high and a low of 38,719.33 and 38,509.79, respectively and there were 05 stocks advancing against 25 stocks declining, while 01 stock remain unchanged on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.79%, while Small cap index was down by 0.85%.

The only gaining sectoral indices on the BSE were Telecom up by 0.49% and Oil & Gas up by 0.19%, while Consumer Durables down by 2.82%, Metal down by 2.07%, Realty down by 1.55%, Industrials down by 1.39% and Consumer Disc down by 1.33% were the top losing indices on BSE.

The top gainers on the Sensex were ITC up by 1.12%, TCS up by 1.04%, Bharti Airtel up by 0.69%, Sun Pharma up by 0.09% and ONGC up by 0.06%. On the flip side, Yes Bank down by 5.30%, Tata Motors - DVR down by 4.73%, Tata Motors down by 4.49%, Bajaj Finance down by 2.33% and Tata Steel down by 2.20% were the top losers.

Meanwhile, in a bid to spur economic growth in developing member countries (DMCs), Economic Affairs Secretary Subhash Chandra Garg has stressed on channeling pension and sovereign wealth funds of advanced countries to emerging markets with the assistance of Asian Development Bank (ADB). He also said that innovation in financing will be the key to success of long-term growth strategy.

Garg said “if we can, with ADB assisting, ensure flow of funds from advanced economies to the emerging market and developing economies, we would succeed in not only keeping global growth sustained high but also make significant dent on poverty and infrastructure services debt.” He also emphasized that it is in emerging markets and developing economies where consumption is rising and more investment can and should be made there. On the other hand, he said, due to several factors, advanced economies are seeing stagnant consumption and they have much larger savings pools in pensions, insurance and sovereign wealth funds than their investment requirement.

Talking about the Indian economy, the Secretary said India has witnessed a robust growth of 7.5 percent on an average in the previous five years and has become world's fastest growing economy. He pointed out that this momentum in growth has been combined with efforts in containing inflation to an average 4.6 percent, and reducing the fiscal deficit to 3.4 percent in 2018-19. He also said India has managed to contain the debt-to-GDP ratio at 46.5 percent in year 2017-18. He added that at the same time, public investments, development initiatives and poverty alleviation programs have been further expanded.

The CNX Nifty traded in a range of 11,632.55 and 11,571.35. There were 08 stocks advancing against 39 stocks declining, 3 stocks remained unchanged on the index.

The top gainers on Nifty were BPCL up by 2.42%, TCS up by 1.09%, Bajaj Finserv up by 0.79%, ITC up by 0.64% and Bharti Airtel up by 0.54%. On the flip side, Zee Entertainment down by 6.42%, Titan down by 5.47%, Yes Bank down by 5.06%, Tata Motors down by 4.46% and JSW Steel down by 4.05% were the top losers.

European markets were trading in red, France’s CAC decreased 112.36 points or 2.02% to 5,436.48 and Germany’s DAX was down by 243.19 points or 1.96% to 12,169.56.

Asian markets ended lower on Monday due to selling pressure followed by escalated US-China trade tensions after US President Donald Trump on May 05 said that the US would hike tariffs on $200 billion worth of Chinese goods this week, with further tariffs on $325 billion goods ‘shortly’. Following Trump's threats to slam higher tariffs, the South China Morning Post newspaper reported, citing sources that Beijing is considering canceling the 11th round of trade talks with US officials later this week. Chinese shares ended lower on heavy selling pressure as Trump's comments unsettled investors who had been anticipating a trade deal as early as this week. Meanwhile, markets in Japan and South Korea were closed for holidays.