Bourses halt 3-day rally

Indian equity benchmarks halted three days rally on Wednesday, with Sensex and Nifty losing more than half a percent each. After a weak start, key indices remained lackluster during the whole day, affected with the Department for Promotion of Industry and Internal Trade’s (DPIIT) latest data report showing that foreign direct investment (FDI) in India declined for the first time in the last six years in 2018-19, falling by 1% to $44.37 billion as compared to $44.85 billion recorded in 2017-18. Traders were seen taking a note of a private report that the Reserve Bank of India is expected to cut key policy rates by 25 bps in the upcoming monetary policy meeting amid subdued domestic industrial activity and slowdown in trade on the global front.

Markets saw further fall in the late hours of trade, amid weak cues from global markets. Profit booking in recent gainers, also weighed on trading sentiments. The street paid no heed towards a report stating that India has moved up one place to rank as the world’s 43rd most competitive economy on the back of its robust economic growth, a large labour force and its huge market size. Markets participants also overlooked another report indicating that India can attract FDI to a ratio of 1.5 percent to 2 percent of its GDP by further improving on ease of doing business and building infrastructure. It also said that the country is in favourable position to attract foreign firms planning to relocate their manufacturing bases due to trade tension between the US and China.

On the global front, European markets were trading in red, as France's economic growth eased slightly in the first quarter after revision. The detailed results from the statistical office Insee showed that gross domestic product grew 0.3 percent sequentially, in line with the estimate released on April 30, but slightly slower than the revised 0.4 percent expansion seen in the fourth quarter of 2018. Asian markets ended in red, after South Korea's consumer confidence fell to a four-month low in May. The survey data from Bank of Korea showed that the consumer sentiment index fell to 97.9 in May from 101.6 in April. The latest reading was the worst since January, when the score was 97.5. Consumers' sentiment regarding the current living standards and their future outlook fell in May.

Back home, shares of oil marketing companies (OMCs) ended lower after rating agency, Crisil in its latest report said thinner spreads and rising under-recoveries are expected to shave the operating profit margins of oil marketing companies by 1.5-1.7 per cent in current financial year (FY20), even as crude prices remain elevated and volatile. Further, financial services companies stocks remained in watch, as capital and commodity markets regulator SEBI proposed a regulatory sandbox for financial institutions wherein exemptions could be provided from various regulations for developing new products and services. By participating in the sandbox regime, the companies will get an opportunity to test their solutions on real customers/investors.

Finally, the BSE Sensex slipped 247.68 points or 0.62% to 39,502.05, while the CNX Nifty was down by 67.65 points or 0.57% to 11,861.10.

The BSE Sensex touched a high and a low of 39,767.93 and 39,420.50, respectively and there were 09 stocks advancing against 22 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.83%, while Small cap index was down by 0.57%.

The few gaining sectoral indices on the BSE were IT up by 0.60%, TECK up by 0.32% and Consumer Durables up by 0.04%, while Metal down by 1.97%, Auto down by 1.54%, PSU down by 1.44%, Basic Materials down by 1.37% and Industrials down by 1.21% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 2.41%, TCS up by 1.78%, HCL Tech up by 1.17%, Power Grid up by 0.48% and Hindustan Unilever up by 0.27%. On the flip side, SBI down by 3.29%, Tata Steel down by 2.76%, ICICI Bank down by 2.67%, Tata Motors - DVR down by 2.63% and Tata Motors down by 2.46% were the top losers.

Meanwhile, the Goods and Service Tax (GST) Council has constituted two sub-groups to look into the policy and technical aspects like turnover threshold and mode of generation, for e-invoice generation by businesses. One sub-group will examine the business process, policy and legal aspects for generation of e-invoice, while the other will recommend technical aspects for its roll-out.

The sub-group on policy issues would also suggest some immediate steps to check fake invoices in case of business-to-business (B2B) supplies with a high threshold turnover and also recommend a carve-out for sectors like banking and telecom. Electronic invoice, or e-invoice, has been envisaged by the revenue department to mainly curb GST evasion. The sub-group on policy issues for e-invoice would recommend legal aspects including invoice format, threshold turnover for invoice generation from the portal and immediate steps for 'B2B' supplies with a high threshold turnover. It would also suggest optional treatment for some sectors such as banking, telecom, tentative timeline for execution and phase-wise implementation.

The sub-group on technical issues would suggest mode of generation, like app-based or mobile or SMS or offline and online, data security and system integration. Depending on the success of the project in the B2B segment, the revenue department would look at extending it to B2C sales, especially in sectors where the probability of tax evasion is high.

The CNX Nifty traded in a range of 11,931.90 and 11,836.80. There were 14 stocks advancing against 35 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Bharti Infratel up by 2.51%, Sun Pharma up by 2.25%, GAIL India up by 2.22%, TCS up by 1.95% and HCL Tech up by 1.28%. On the flip side, JSW Steel down by 4.44%, SBI down by 3.29%, Tata Steel down by 2.86%, Cipla down by 2.80% and Zee Entertainment down by 2.61% were the top losers.

European markets were trading in red; UK’s FTSE 100 lost 104.96 points or 1.44% to 7,163.99, France’s CAC fell 98.89 points or 1.86% to 5,213.80 and Germany’s DAX was down by 175.74 points or 1.46% to 11,851.31.

Asian markets ended mostly in red on Wednesday as investors reacted to falling US Treasury bonds yields, reflecting worries over an economic slowdown. Trade worries deepened after reports suggested that China could be considering restricting the export of rare earth minerals, which are crucial for the US technology industry. Though, Chinese shares closed a tad higher, shrugging off concerns over slowing growth and the standoff in Sino-US trade talks.