Markets rally fizzles out on Friday; Nifty ends below 11,950 mark

Indian equity markets failed to sustain initial rally on Friday, as Sensex and Nifty settled with notable losses of 117 and 23 points, respectively. The markets made a firm start of the day, aided by industry body FICCI's economic outlook survey showing that India's GDP is likely to grow 6.5 per cent in the fourth quarter ended March 2019. FICCI survey has put forth an annual median GDP growth forecast for 2019-20 at 7.1 per cent and the projection for fiscal 2020-21 has been put at 7.2 per cent. Sentiments on the street were also positive with NITI Aayog Vice Chairman Rajiv Kumar’s statement that a slew of 'big-bang' economic reforms that should please foreign investors are likely to be pursued in the first 100 days of Indian Prime Minister Narendra Modi's second term. Kumar further said that the reforms will include changes in labour laws, privatisation moves, and creation of land banks for new industrial development.

However, markets turned negative in afternoon deals to end lower, on the back of weak cues from global markets. Domestic sentiments got hit amid reports that the rupee witnessed high volatility in the forex market following the allocation of key portfolios in the newly elected government. Traders took a note of reports that the Reserve Bank of India (RBI) has announced calendar for issuance of Sovereign Gold Bonds for the first half of the current fiscal. The Sovereign Gold Bonds (SGB) will be issued every month from June 2019 to September 2019. Investors also took a note of a report that US-based India-centric business advocacy and strategic group has sought establishing an India Trade Representative under the Prime Minister’s Office for all international trade negotiations to be handled by one office with a focused approach.

On the global front, European markets were trading in red, even though Germany's retail sales rebounded in April from last year driven by the timing of Easter. The data from Destatis showed that retail sales rebounded at a faster-than-expected pace of 4 percent annually in April, reversing a 2 percent fall in March. Sales were forecast to grow moderately by 1.3 percent. Asian markets ended mixed, as the manufacturing sector in China turned to contraction in May. The National Bureau of Statistics showed a manufacturing PMI score of 49.4. That was shy of expectations for 49.9 and down from 50.1 in April. It also fell below the boom-or-bust line of 50 that separates expansion from contraction.

Back home, infra stocks remained in limelight, after rating agency ICRA said transport infrastructure, which remains a key focus area for the new government, may see a major jump in capital allocation to around Rs 25-30 trillion in the next five years. Taking cues from the Bharatiya Janata Party (BJP) manifesto, ICRA expected that transport infrastructure (roads, railways, metro, airport, ports, inland waterway, etc.) to remain the main focus area for the new government.

Finally, the BSE Sensex lost 117.77 points or 0.30% to 39,714.20, while the CNX Nifty was down by 23.10 points or 0.19% to 11,922.80.

The BSE Sensex touched a high and a low of 40,122.34 and 39,374.24, respectively and there were 11 stocks advancing against 20 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index rose 0.23%, while Small cap index was down by 0.65%.

The top gaining sectoral indices on the BSE were IT up by 1.19%, TECK up by 1.07%, Oil & Gas up by 0.88%, Telecom up by 0.38% and Energy up by 0.27%, while Power down by 1.26%, Metal down by 1.07%, FMCG down by 1.03%, Utilities down by 0.76% and Basic Materials down by 0.70% were the top losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 2.43%, TCS up by 2.40%, HCL Tech up by 1.52%, ONGC up by 1.30% and Indusind Bank up by 1.16%. On the flip side, Yes Bank down by 4.27%, ITC down by 3.61%, Mahindra & Mahindra down by 2.17%, Vedanta down by 2.01% and NTPC down by 1.74% were the top losers.

Meanwhile, the share of foreign portfolio investments (FPIs) in domestic capital markets through participatory notes (P-notes) jumped to Rs 81,220 crore at the end of April on hopes of favourable market conditions. According to Securities and Exchange Board of India (SEBI) data, total value of P-note investments in Indian markets including equity, debt and derivatives, at April end climbed to Rs 81,220 crore from Rs 78,110 crore at the end of March.

Of the total, P-notes holdings in equities at April -end were at Rs 58,820 crore, while in debts and derivatives were at Rs 21,542 crore and Rs 123 crore respectively. Besides, the quantum of FPI investments via P-notes increased to 2.4% during the period under review from 2.3% in the preceding month.

P-notes are issued by registered foreign portfolio investors (FPIs) to overseas investors who wish to be a part of the Indian stock market without registering themselves directly after going through a due diligence process.

The CNX Nifty traded in a range of 12,039.25 and 11,829.45. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Tech Mahindra up by 3.81%, TCS up by 2.50%, Asian Paints up by 2.36%, Indian Oil Corporation up by 2.07% and Britannia up by 1.65%. On the flip side, Yes Bank down by 4.81%, ITC down by 3.50%, Grasim Industries down by 3.06%, Zee Entertainment down by 2.23% and Vedanta down by 2.13% were the top losers.

European markets were trading in red; UK’s FTSE 100 lost 70.17 points or 0.97% to 7,147.99, France’s CAC fell 78.44 points or 1.49% to 5,170.47 and Germany’s DAX was down by 225.03 points or 1.89% to 11,677.05.

Asian markets ended mixed on Friday in response to escalating trade tensions and after the release of weak Chinese data. US President Donald Trump has announced new tariffs on all goods coming from Mexico to curb illegal immigration across the border to the US. Trump said that from 10 June a 5 percent tariff would be imposed and would slowly rise until the situation is resolved. Chinese shares fell modestly as China's manufacturing activity for the month of May missed expectations. The official manufacturing PMI dropped to 49.4 from 50.1 in April. Further, Japanese shares ended lower as the yen strengthened and Germany's benchmark medium-term government bond yield hit the lowest level on record. Meanwhile, a slew of Japanese data released on May 31 proved to be a mixed bag.