Post Session: Quick Review

Extending their losing streak for second straight session, Indian equity benchmarks ended Thursday’s trade near day’s low, even as the Reserve Bank of India (RBI) cut repo rate by 25 basis points to lowest in nine years and changed policy stance to ‘Accommodative’ from ‘Neutral’. Key indices made a cautious start and traded in red, as market participants remained cautious with report that the India’s services sector activity increased at the slowest pace in a year in May, as disruptions arising from the elections in the earlier part of the month hampered growth of new work intakes. The seasonally adjusted Nikkei India Services Business Activity Index fell to 50.2 in May, from 51.0 in April, pointing to the slowest growth rate in the current 12-month stretch of expansion. Sentiments remained downbeat with the India Meteorological Department’s statement that the onset of monsoon is likely to be delayed by a week and it is now expected to arrive only by June 8. The normal onset date for monsoon over Kerala is June 1 which also marks the official commencement of the four-month-long rainfall season.

Markets continued a downward trajectory in the last leg of trade, as the Street remained disappointed as the RBI lowered the economic growth forecast for the current fiscal to 7 per cent due to the slowdown in domestic activities and escalation in a global trade war. In the April monetary policy, the growth of Gross Domestic Product (GDP) for 2019-20 was projected at 7.2 per cent. Traders failed to get relief with World Bank report which forecasted that India’s economy is projected to grow at 7.5 per cent in the next three years, supported by robust investment and private consumption, in some good news to the new Indian government. The traders even overlooked Department for Promotion of Industry and Internal Trade’s (DPIIT) report that foreign direct investment in services sector grew 36.5 per cent to $9.15 billion in 2018-19.  The sector attracted FDI worth $6.7 billion in 2017-18.

On the global front, Asian markets ended mixed on Thursday after the US and Mexico failed to reach a deal during their trade talks on Wednesday. European markets were trading in green, as expectations the European Central Bank will provide more stimulus for an ailing euro zone economy countered disappointment over the collapse of Renault-Nissan’s merger with Fiat-Chrysler. Back home, steel industry stocks were in focus with credit rating agency ICRA’s report that while the performance of domestic steelmakers is likely to be lower in the first quarter of the current financial year as compared the previous year due to several headwinds, the construction sector will be at the forefront of demand recovery in the second half.

The BSE Sensex ended at 39531.89, down by 551.65 points or 1.38% after trading in a range of 39481.15 and 40159.26. There were 9 stocks advancing against 22 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell 1.77%, while Small cap index was down by 1.56%. (Provisional)

The only gaining sectoral index on the BSE was Consumer Durables up by 0.11%, while Oil & Gas down by 3.05%, Capital Goods down by 2.77%, PSU down by 2.47%, Bankex down by 2.22% and Industrials down by 2.12% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Coal India up by 1.60%, Power Grid up by 1.29%, Hindustan Unilever up by 1.13%, Hero MotoCorp up by 0.98% and NTPC up by 0.96%.  (Provisional)

On the flip side, Indusind Bank down by 6.85%, Yes Bank down by 5.96%, SBI down by 4.21%, Tata Motors - DVR down by 3.98% and Larsen & Toubro down by 3.39% were the top losers. (Provisional)

Meanwhile, the World Bank in its Global Economic Prospects report has retained its forecast of India's growth rate at 7.5% for the current financial year 2019-20 (FY20) and said growth rate is expected to remain the same for the next two fiscal years, supported by robust investment and private consumption. It said private consumption and investment will benefit from strengthening credit growth amid more accommodative monetary policy, with inflation having fallen below the Reserve Bank of India's target. It added that support from delays in planned fiscal consolidation at the central level should partially offset the effects of political uncertainty around elections.

The report said that the country’s urban consumption was supported by a pickup in credit growth, whereas rural consumption was hindered by soft agricultural prices. On the production side, robust growth was broad-based, with a slight moderation in services and agricultural activity accompanied by an acceleration in the industrial sector. Weakening agricultural production reflected subdued harvest in major crops on the back of less rainfalls.

As per the report, services activity softened mainly due to slowing trade, hotel, transport, and communication activity. The industrial sector benefited from strong manufacturing and construction with solid demand for capital goods. The slowing momentum in economic activity in late 2018 carried into the first quarter of 2019, as suggested by softening services and manufacturing Purchasing Managers' Indexes. Observing that the new Goods and Services Tax regime is still in the process of being fully established, creating some uncertainty about the projections of government revenues, it said fiscal deficits continue to exceed official targets in some countries -- India, Pakistan.

The CNX Nifty ended at 11846.05, down by 175.60 points or 1.46% after trading in a range of 11830.25 and 12039.80. There were 13 stocks advancing against 37 stocks declining on the index. (Provisional)

The top gainers on Nifty were Coal India up by 2.33%, Titan up by 1.69%, Hero MotoCorp up by 1.46%, Power Grid up by 1.32% and NTPC up by 1.26%.  (Provisional)

On the flip side, GAIL India down by 11.54%, Indiabulls Housing Finance down by 7.70%, Indusind Bank down by 6.97%, Yes Bank down by 5.86% and SBI down by 4.27% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 increased 43.72 points or 0.61% to 7,263.94, France’s CAC rose 33.34 points or 0.63% to 5,325.34 and Germany’s DAX was up by 89.66 points or 0.75% to 12,070.47.

Asian markets ended mixed on Thursday after the US and Mexico failed to reach a deal during their trade talks on Wednesday. Chinese shares ended lower after the International Monetary Fund cut China's growth forecast for this year and next, citing downside risks and high uncertainty surrounding trade tensions. The lender lowered the growth forecast for this year to 6.2 percent from 6.3 percent seen in April. The projection for next year was trimmed to 6 percent from 6.1 percent. On conclusion of the IMF staff Article IV mission to China, the lender said it expects China's growth to gradually slow to 5.5 percent by 2024, as the economy moves towards a more sustainable growth path. Japanese shares ended on a flat with negative bias amid trade uncertainties after the US and Mexico failed to reach a deal on immigration issues. Meanwhile, markets in South Korea, Malaysia and Indonesia were closed for holidays.