Sensex, Nifty come off lifetime highs on Tuesday

Tuesday turned out to be a volatile day for Indian equity indices, with both larger peers, Sensex and Nifty, closing off their lifetime highs. After a negative start, markets remained lackluster throughout the day, with industry chamber, Confederation of Indian Industry’s (CII) statement that the US decision to withdraw export incentives from India has been taken in a haste and would hurt the domestic exporters. CII President Vikram Kirloskar expressed hope that both the US and India would discuss the matter and find an amicable solution to this issue. Adding more anxiety among market participants, the Reserve Bank of India said that over 6,800 cases of bank fraud involving an unprecedented Rs 71,500 crore have been reported in 2018-19. In the last 11 fiscal years, a total of 53,334 cases of fraud were reported by banks involving a massive amount of Rs 2.05 lakh crore.

Weak trade persisted on the street, also with a private report stating that the pre-monsoon rainfall in the country was the second lowest in 65 years. The three-month pre-monsoon season March, April and May ended with a rainfall deficiency of 25%. As per the report, all the four meteorological divisions - Northwest India, Central India, East-Northeast India and South Peninsula - recorded deficit rainfall of 30%, 18%, 14% and 47%, respectively. Traders failed to take any sense of relief with IHS Markit’s latest report that India is likely to overtake the UK to become the world's fifth largest economy this year and added that by 2025, Indian GDP is also forecast to surpass Japan, which will make India the second-largest economy in the Asia-Pacific region. Investors also overlooked Finance Secretary Subhash Chandra Garg’s statement that declining global oil prices, stable rupee and falling interest rate are sure signs of high growth in coming months.

On the global front, European markets were trading in green, after the euro area unemployment rate dropped to the lowest since 2008 in April. The figures from Eurostat showed that the unemployment rate came in at 7.6 percent versus 7.7 percent in March. This was the lowest rate seen since August 2008. The rate was expected to remain unchanged at 7.7 percent. However, Asian markets ended in red, as South Korea's gross domestic product was down 0.4 percent on quarter in the first three months of 2019. As per the Bank of Korea preliminary reading report, that's down from the 0.3 percent decline suggested in last month's advance estimate and it follows the 0.9 percent increase in the fourth quarter of 2018.

Back home, stocks related to textile industry remained in focus, as the Cotton Association of India retained its cotton production estimate at 315 lakh bales in its latest forecast for the 2018-19 season. In the last cotton season, total output stood at 365 lakh bales. The cotton season runs from October to September. Further, microfinance industry stocks also remained in limelight, amid reports that the microfinance industry's gross loan portfolio (GLP) stood at Rs 1,87,386 crore at the end of March, up 38 per cent year-on-year. As per the report, the total number of microfinance accounts was 9.33 crore at the end of March 2019, showing a growth of 21.9 per cent.

Finally, the BSE Sensex slipped 184.08 points or 0.46% to 40,083.54, while the CNX Nifty was down by 66.90 points or 0.55% to 12,021.65.

The BSE Sensex touched a high and a low of 40,312.07 and 40,031.05, respectively and there were 14 stocks advancing against 17 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.22%, while Small cap index was down by 0.19%.

The top gaining sectoral indices on the BSE were Capital Goods up by 0.43%, Utilities up by 0.35%, Metal up by 0.28%, Telecom up by 0.26% and Industrials up by 0.11%, while IT down by 1.63%, TECK down by 1.50%, Healthcare down by 0.99%, Oil & Gas down by 0.84% and Basic Materials down by 0.77% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 2.28%, NTPC up by 1.47%, Vedanta up by 1.19%, Axis Bank up by 1.12% and Coal India up by 1.04%. On the flip side, Hero MotoCorp down by 3.08%, TCS down by 2.58%, HCL Tech down by 2.58%, Asian Paints down by 2.52% and Indusind Bank down by 1.67% were the top losers.

Meanwhile, India Inc has pitched for a series of reforms in the areas of land, labour and capital, to take the Indian economy to double-digit growth in the next five years. To target Gross Domestic Product (GDP) growing up to 10 percent by 2023-24, Confederation of Indian Industry (CII) President Vikarm Kirloskar has said that the total investment requirement is estimated at $5.74 trillion (around Rs 397 lakh crore) for the next five years. Of this, he said the total investment required for infrastructure sector is estimated at $1.18 trillion (around Rs 81.72 lakh crore) for the next five years, while for non-infrastructure including agriculture and industry to be $4.56 trillion (around Rs 315 lakh crore).

CII President has stated that the private sector is facing difficulty in getting land for manufacturing units and the states have a huge role to play and there is a need to create land banks. On labour reforms, he suggested for the formulation of national employment policy and encourage states to provide fixed-term employment besides incentivising companies for creating employment. Besides, he said the government needs to bring in Direct Taxes Code (DTC) and the last leg of reforms in the GST.

According to Kirloskar, strong action to spur consumption, investments and net exports will take GDP growth rates much higher and this is the right time for India to think big and envision GDP growth rate of 10 percent to greatly improve development outcomes. With GDP growth slowed to a five-year low of 5.8 percent in January-March quarter of 2018-19, he emphasized four key drivers for reinvigorating the growth rate - boosting consumption, investments, public expenditure on social and physical infrastructure and net exports.

The CNX Nifty traded in a range of 12,095.20 and 12,005.85. There were 17 stocks advancing against 31 stocks declining, while 2 remained unchanged on the index.

The top gainers on Nifty were Yes Bank up by 2.61%, Bharti Infratel up by 2.29%, NTPC up by 1.50%, Axis Bank up by 1.38% and Coal India up by 1.07%. On the flip side, Zee Entertainment down by 3.70%, Hero MotoCorp down by 2.86%, Asian Paints down by 2.51%, Dr Reddy down by 2.43% and BPCL down by 2.30% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 12.07 points or 0.17% to 7,196.87, France’s CAC rose 5.50 points or 0.1% to 5,246.96 and Germany’s DAX was up by 104.68 points or 0.89% to 11,897.49.

Asian markets ended mostly lower on Tuesday in cautious trade as worries about rising trade tensions and impact on global economic growth sapped risk appetite. Tech stocks in Asia followed their US counterparts lower as news of an antitrust probe into big tech companies stoked concerns about the sector. St. Louis Fed President James Bullard said that interest rates may have to be cut soon because of low inflation and the trade war’s threat to the economy. Some forecasters now expect as many as two rate cuts by the end of the year. Seoul shares ended lower as weak GDP data and rising trade tensions dented investor sentiment. Meanwhile, Japanese shares closed flat with a negative bias in choppy trade amid worries about global economic growth and on a stronger safe-haven yen. The Indonesia market is closed all week in observance of Eid-ul-Fitr.