Bulls make comeback on Dalal Street after nine consecutive losses

Bulls took late charge on Dalal Street on Tuesday and markets snapped their nine days losing streak, with Sensex and Nifty closing with gains of more than half a percent each. The Indian benchmarks made a soft opening, as traders remained pessimistic about the Central Statistics Office (CSO) data showing that retail inflation inched up to a six-month high of 2.92% in April due to a spike in food prices, including vegetables, meat, fish and eggs. Inflation based on the Consumer Price Index (CPI) was at 2.86% in the previous month and 4.58% in April 2018. The rate of price rise in April is the highest since October 2018 when the rate was 3.38%. Traders remained cautious with Moody's Investors Service’s statement that India’s rising oil consumption will support its investments in refining capacity additions and upstream production, but imports will keep growing amid stagnant production. The country's dependence on imported crude oil to meet its needs has risen to 83.7% in 2018-19 fiscal year from 82.9% in 2017-18. Import dependence was 80.6% in 2015-16.

Markets recouped losses in last leg of trade and get back to their positive trajectory, as traders took some support with data showing that wholesale price inflation (WPI) for the month of April eased to 3.07 percent compared to 3.18 percent in March led by fall in prices of manufacturing products. Local investors also cheered with Chief Economic Advisor (CEA) Krishnamurthy V. Subramanian’s statement that the Indian economy will grow at 7% range in the current fiscal powered by the effects of the strong structural reforms such as bankruptcy laws, Goods and Services Tax (GST), crackdown on shell companies and the fiscal prudence undertaken in the last five years. Indices gave up some of their gains in dying hour of trade, as some cautious came with a private report that India saw the largest migration of its high net worth individuals in 2018 after China and Russian Federation. India failed in creating a suitable environment for millionaires to stay back in the country which claims to be the fastest growing economy in the world.

On the global front, European markets were trading in green, as US President Donald Trump's more conciliatory tone on trade talks with China helped spur optimism the two sides will eventually reach a deal. Trump said that a breakthrough with China, if it happens, would be announced in three to four weeks. Asian markets ended in red, following hefty losses on Wall Street that came in response to China's hike in tariffs on $60 billion of US imports, ramping up tensions in a trade war between the global economic titans.

Back home, auto stocks ended higher after traders opted to buy beaten down stocks with report that sales of cars and SUVs in India slumped the most since October 2011. Further, passenger vehicle sales in April fell 17.1 per cent to 247,541 units from a year earlier, data released by the Society of Indian Automobile Manufacturers showed. Car sales slumped almost 20 per cent, while overall automobile sales dropped 16 per cent. Sugar stocks remained buzzing with report that sugar mills in India have achieved 2.8 million tonnes of the sweetener exports so far this season, 56 per cent of the cumulative 5 million tonnes of total minimum indicative export quota (MIEQ) allotted for the current season (October 2018 - September 2019).

Finally, the BSE Sensex gained 227.71 points or 0.61% to 37,318.53, while the CNX Nifty was up by 73.85 points or 0.66% to 11,222.05.

The BSE Sensex touched a high and a low of 37,572.70 and 36,956.10, respectively and there were 17 stocks advancing against 14 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.62%, while Small cap index was up by 0.30%.

The top gaining sectoral indices on the BSE were Telecom up by 2.81%, Energy up by 1.66%, Capital Goods up by 1.46%, Utilities up by 1.29% and Oil & Gas up by 1.24%, while IT down by 1.23% and TECK was down by 0.76% were the only losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 5.87%, Bharti Airtel up by 5.40%, Vedanta up by 4.08%, IndusInd Bank up by 2.58% and SBI was up by 2.33%. On the flip side, TCS down by 1.72%, HCL Tech. down by 1.56%, Bajaj Finance down by 1.52%, Bajaj Auto down by 0.92% and Infosys was down by 0.86% were the top losers.

Meanwhile, Chief Economic Advisor (CEA) Krishnamurthy V. Subramanian has said  that the Indian economy would grow at 7% range in the current financial year (FY20) powered by the effects of the strong structural reforms such as bankruptcy laws, Goods and Services Tax (GST), crackdown on shell companies and the fiscal prudence undertaken in the last five years. He also stated that India would be able to maintain the fastest growing economy tag ahead of China. India still has significant potential and scope to grow strongly given the reforms that have been undertaken.

Talking about current economic slowdown, he said the effect of investments would manifest on economic growth with a lag and in an election year, there is wait-and- watch mode by corporates before undertaking fresh fund infusion into businesses. Moreover, he also said as an effect of the government’s recent measures, the current economic slowdown will gradually be replaced by higher investment and consumption going ahead.

Besides, the Indian economy grew at 6.6% in the December quarter, the slowest in five quarters, which prompted the government's Central Statistics Office (CSO) to trim its 2018-19 forecast to 7% from 7.2%. The Asian Development Bank (ADB), the Reserve Bank of India (RBI) and the International Monetary Fund (IMF) have cut India's Gross Domestic Product (GDP) growth forecast to 7.3% for FY20.

The CNX Nifty traded in a range of 11,294.75 and 11,108.30. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 5.76%, Bharti Airtel up by 5.63%, Sun Pharma up by 5.36%, Vedanta up by 4.25% and GAIL India was up by 3.95%. On the flip side, Tech Mahindra down by 3.33%, Bajaj Finance down by 1.71%, TCS down by 1.71%, Wipro down by 1.56% and HCL Tech was down by 1.46% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 65.01 points or 0.91% to 7,228.69, France’s CAC increased 57.85 points or 1.1% to 5,320.42 and Germany’s DAX was up by 60.54 points or 0.51% to 11,937.19.

Asian markets ended lower on Tuesday after China announced tariffs on about $60 billion worth of US goods in retaliation for the US decision to raise tariffs on about $200 billion worth of Chinese imports. The office of US Trade Representative is taking necessary steps to raise duties of up to 25 percent on a further $300 billion worth of imports from China, with a public hearing likely on June 17, followed by at least a week of discussions, leading up to the G-20 summit. Japanese shares ended lower as investors remained fearful of a full-blow trade war. On economic front, Japan posted a current account surplus of 2,847.9 billion yen in March, official data showed - down 10.6 percent from last year. That missed forecasts for a surplus of 3,007.2 billion yen but was still up from 2,676.8 billion yen in February. The trade balance showed a surplus of 700.1 billion yen, also missing expectations for 838.9 billion yen and up from 489.2 billion yen in the previous month.