Local equities continue negative trend; Sensex below 40k mark

Local equity benchmarks are trading in red in morning deals ahead of the RBI's monetary policy decision, amid weak cues from global markets. Some cautiousness came with a monthly survey showed that the country’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. Some concern also came with India Meteorological Department’s report which showed 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. However, losses remain capped with 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. Some support also came 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.

On the global front, Asian markets were trading mixed as the US and Mexico failed to reach a deal to avert proposed tariffs and investors weighed up the latest signs of fragility in the global economy. Back home, a report stated that Prime Narendra Modi constituted two cabinet committees to address the growth needs of the economy amid reports indicating an economic slowdown.

The BSE Sensex is currently trading at 39941.60, down by 141.94 points or 0.35% after trading in a range of 39929.99 and 40159.26. There were 8 stocks advancing against 21 stocks declining, while 2 stock remain unchanged on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.56%, while Small cap index was down by 0.52%.

The few gaining sectoral indices on the BSE were Consumer Durables up by 0.40%, Power up by 0.33%, FMCG was up by 0.22%, while Oil & Gas down by 2.02%, Basic Materials down by 1.38%, Utilities down by 1.31%, Energy down by 0.90% and Capital Goods down by 0.83% were the top losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 2.31%, Power Grid up by 1.92%, Coal India up by 1.77%, Hindustan Unilever up by 1.45% and HCL Tech was up by 0.42%. On the flip side, Yes Bank down by 2.19%, IndusInd Bank down by 1.86%, Mahindra & Mahindra down by 1.75%, SBI down by 1.52% and Tata Motors - DVR was down by 1.46% were the top losers.

Meanwhile, the Department for Promotion of Industry and Internal Trade (DPIIT) has said foreign direct investment (FDI) in services sector grew 36.5% to $9.15 billion in last financial year (FY19) as compared to $6.7 billion in FY18. Increasing FDI inflows in services sector is vital as it contributes over 60% to the gross domestic product. The sector accounts for about 18% of the total FDI India received between April 2000 and March 2019. The services sector includes finance, banking, insurance, outsourcing, R&D, courier, tech testing and analysis.

With an aim to improve ease of doing business in the country and attract foreign investments, the government has taken several measures like fixing timeliness for approvals and streamlining procedures. Other sectors that recorded healthy growth in FDI inflows include computer software and hardware, trading, automobile industry, and chemicals. However, the overall FDI inflows dropped for the first time in the last six years in FY19, falling 1% to $44.37 billion as foreign investments fell significantly in telecommunication and pharmaceutical sectors.

Beside, FDI is vital for India as the country needs around $1 trillion for overhauling its infrastructure sector such as ports, airports and highways to boost growth. A strong inflow of foreign investments helps improve the country's balance of payments situation and strengthens the value of rupee against global currencies, especially the US dollar.

The CNX Nifty is currently trading at 11957.95, down by 63.70 points or 0.53% after trading in a range of 11954.95 and 12039.80. There were 9 stocks advancing against 41 stocks declining on the index.

The top gainers on Nifty were Asian Paints up by 2.20%, Power Grid up by 1.94%, Coal India up by 1.67%, Titan Co up by 1.54% and Hindustan Unilever was up by 1.48%. On the flip side, GAIL India down by 9.77%, Indiabulls Housing down by 5.09%, Grasim Industries down by 3.31%, Ultratech Cement down by 2.57% and Yes Bank was down by 2.06% were the top losers.

Asian markets were trading mixed; Taiwan Weighted dropped 76.44 points or 0.73% to 10,385.18, Shanghai Composite declined 13.08 points or 0.46% to 2,848.34 and Straits Times was down by 6.25 points or 0.2% to 3,136.12.

On the other hand; Hang Seng increased 21.51 points or 0.08% to 26,916.95 and Nikkei 225 was up by 51.74 points or 0.25% to 20,827.84.