Bears continue to dominate D-Street for seventh straight session

Bears continued to dominate Dalal Street for seventh straight session on Thursday, with the Sensex and the Nifty closing below their crucial psychological levels of 37,600 and 11,350, respectively. The start of day was sluggish, as the Reserve Bank of India warned of the growing risks to fiscal consolidation of the states as their finances are saddled with farm loan waivers, income support schemes and the Ujwal Discom Assurance Yojana (UDAY) bonds for their power distribution companies. Adding more worries among traders, Former Finance Minister P Chidambaram said that macro-economic indicators confirm that the Indian economy has entered a disastrous phase of slowdown. He further said the Finance Ministry's report is a damning indictment of the state of the economy in the country. The street took a note of the statistics ministry’s statement that an official committee will examine the NSS technical report on services sector enterprises, which has raised questions over the GDP data.

Key equity benchmarks settled the trading session in red terrain but staged some recovery in the last hour of the trade, supported by IHS Markit's statement that the Reserve Bank of India (RBI) is likely to cut interest rates one more time in June before rising inflation pressures and elevated fiscal deficits leave little room for further accommodation in rest of the year. RBI had cut interest rate by 25 basis points each in February and April to boost economic growth. Markets participants also got some relief with Secretary in the Department for Promotion of Industry and Internal Trade (DPIIT) Ramesh Abhishek’s statement that India is hoping to further improve its rank in World Bank’s Doing Business report this year especially in indicators of paying taxes, insolvency resolution, trading across borders, issue of building permits and starting a business.

On the global front, European markets were trading in red, as Norway's industrial production declined further in March. The figures from Statistics Norway showed that industrial production declined 6.5 percent year-on-year in March, following a 5.7 percent fall in February. Among sectors, output of electricity, gas and steam dropped 19.4 percent annually in March. Output in extraction and related services fell by 6.6 percent and that of mining and quarrying by 2.9 percent. Asian markets ended lower, after China took the hard line in trade talks, saying the communist country will take necessary countermeasures if the US follows through on a planned increase in tariffs on Chinese goods on Friday.

Back home, aviation sector stocks ended mostly lower, as International Air Transport Association (IATA) said that the growth of India's domestic passenger market dropped to 3.1% in March 2019 as compared to 8.3% in February. The slowdown largely reflects the reduction in flight operations of Jet Airways - which stopped flying in April - as well as disruptions at Mumbai airport due to construction. Stocks related to the telecom sector also fell, even though the industry body, Cellular Operators Association of India (COAI) said that stability and rationality may return to the telecom market by the fourth quarter of the current fiscal, as mobile operators move beyond hyper-competitive pricing into tapping new, value-added avenues of revenue to bolster topline and profit.

Finally, the BSE Sensex slipped 230.22 points or 0.61% to 37,558.91, while the CNX Nifty was down by 57.65 points or 0.51% to 11,301.80.

The BSE Sensex touched a high and a low of 37,780.46 and 37,405.40, respectively and there were 10 stocks advancing against 21 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.19%, while Small cap index was down by 0.38%.

The top gaining sectoral indices on the BSE were TECK up by 0.44%, IT up by 0.43%, Consumer Durables up by 0.30%, Realty up by 0.27% and FMCG up by 0.10%, while Energy down by 2.63%, Metal down by 1.49%, Telecom down by 1.30%, Power down by 1.24% and Oil & Gas down by 1.11% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 5.94%, Bajaj Finance up by 1.64%, Hero MotoCorp up by 1.17%, Hindustan Unilever up by 0.87% and TCS up by 0.75%. On the flip side, Reliance Industries down by 3.41%, Coal India down by 2.53%, NTPC down by 2.33%, Asian Paints down by 2.29% and Bharti Airtel down by 1.64% were the top losers.

Meanwhile, the rating agency ICRA in its latest report has said that financial institutions are likely to realise more than Rs 80,000 crore in the current financial year (2019-20) from the resolution of stressed assets under the Insolvency and Bankruptcy Code (IBC), on the back of expected conclusion of the Corporate Insolvency Resolution Process (CIRP) of two large accounts - Essar Steel and Bhushan Steel and Power. It noted that this is 21% higher as compared to about Rs 66,000 crore realised in FY19. It added that both Essar Steel and Bhushan Steel and Power are part of the Reserve Bank of India's (RBI) list of the 12 largest defaulting companies announced in June 2017.

According to the report, successful completion of the CIRP for these two accounts would bring closure to eight companies from the RBI's list and could help strengthen the confidence in the IBC, despite the significant delays seen in the process with most of the CIRPs lasting more than 500 days. However, despite the hurdles being faced by the IBC, it expects the number of cases being admitted to the National Company Law Tribunal (NCLT) to continue to increase, especially from the operational creditors who are responsible for 50 percent of all cases admitted by the NCLT.

ICRA has highlighted that CIRP under the IBC has been hampered over the past two years by the over-burdened NCLT Benches, innumerable litigations, defiant promoters and failing sectors. It also said that even then, the process under the IBC has chugged on, albeit at a slower pace than envisioned. It stated that the NCLTs continue to remain heavily burdened as the number of cases being admitted continues to increase quarter-on-quarter with the highest quarterly admissions of 359 cases reported in Q4 FY19.

The CNX Nifty traded in a range of 11,357.60 and 11,255.05. There were 23 stocks advancing against 27 stocks declining on the index.

The top gainers on Nifty were Zee Entertainment up by 8.40%, Yes Bank up by 6.47%, Bajaj Finserv up by 2.02%, Bajaj Finance up by 1.63% and Hero MotoCorp up by 1.61%. On the flip side, Reliance Industries down by 3.56%, BPCL down by 3.19%, Coal India down by 2.65%, Asian Paints down by 2.58% and Kotak Mahindra Bank down by 2.29% were the top losers.

European markets were trading in red; UK’s FTSE 100 decreased 32.01 points or 0.44% to 7,238.99, France’s CAC fell 70.09 points or 1.29% to 5,347.50 and Germany’s DAX was down by 94.31 points or 0.77% to 12,085.62.

Asian markets ended lower on Thursday as investors waited to see if the US and China can strike a trade deal during two days of talks in Washington starting later in the day. Underlying sentiment turned cautious after US President Donald Trump said he would be happy to keep tariffs on Chinese imports, while Beijing announced it would take ‘necessary countermeasures’. Japanese shares ended lower as the yen remained well bid against the dollar on safe-haven demand. Fears of the rapidly escalating trade tensions were eased a bit by China inflation data suggesting demand may be starting to perk up thanks to Beijing's stimulus. China's consumer price inflation rose to a six-month high in April, while producer price inflation increased at the fastest pace in four months. The consumer price index rose 2.5 percent year-on-year, following a 2.3 percent increase in March. The producer price index rose an annual 0.9 percent in the month, following a 0.4 percent increase in March. Separately, central bank data showed that new yuan loans given by Chinese banks totaled CNY 1.02 trillion in April, well below expectations, and March's CNY 1.69 trillion.