Indian equities add losses despite RBI rate cut

Adding losses, Indian equity benchmarks continued to trade lower in afternoon session, even though the monetary policy committee (MPC) of the Reserve Bank of India (RBI) reduced the repo rate by 25 basis points (bps) to 5.75 percent in the second bi-monthly monetary policy meet of the financial year 2019-20 (FY20), that concluded today. Sentiments on the street weakened further with monthly survey showing 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. 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. Investors' paid no heed towards 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 mostly in red, as investors feared a looming US trade war with Mexico would further depress global growth, even as they wagered central banks would have to respond with fresh stimulus. Back home, the BSE Sensex is currently trading at 39878.00, down by 205.54 points or 0.51% after trading in a range of 39868.53 and 40159.26. There were 9 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index fell 0.69%, while Small cap index was down by 0.62%.

The few gaining sectoral indices on the BSE were Consumer Durables up by 0.28% and FMCG was up by 0.23%, while Oil & Gas down by 1.97%, Utilities down by 1.41%, Basic Materials down by 1.40%, Capital Goods down by 1.26% and PSU was down by 1.11% were the top losing indices on BSE.

The top gainers on the Sensex were Asian Paints up by 1.76%, Hindustan Unilever up by 1.45%, Coal India up by 1.37%, Power Grid up by 1.19% and HCL Technologies was up by 0.71%. On the flip side, Indusind Bank down by 3.73%, Yes Bank down by 2.36%, Vedanta down by 2.20%, Tata Motors - DVR down by 1.81% and SBI was down by 1.63% were the top losers.

Meanwhile, Newly-appointed Micro, Small, and Medium Enterprises (MSME) Minister Nitin Gadkari has said that his Ministry will work with its commerce counterpart to identify goods being imported by India and look at the possibility of manufacturing them by MSMEs. He noted that the move would help in cutting India’s import bill. He added that the ministry would also look into the reasons which are leading to closure of small units.

The Minister further stated that small scale industries need to be promoted to further push the country's growth. He also said that the ministry would focus on supporting micro units and village industries to promote rural economy and create jobs. He noted that raw materials like stubble which are available in rural areas can be used by small units to manufacture different products.

Gadkari has highlighted that MSME sector plays a vital role in creating employment and pushing India’s Gross Domestic Product (GDP) growth. He also indicated that MSMEs contribute around 45 percent in the country's exports, about 25 percent to the GDP from service activities and over 33 percent to the manufacturing output of India.

The CNX Nifty is currently trading at 11934.45, down by 87.20 points or 0.73% after trading in a range of 11933.05 and 12039.80. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Asian Paints up by 1.97%, Hindustan Unilever up by 1.54%, Coal India up by 1.50%, Titan Company up by 1.32% and Power Grid was up by 1.24%. On the flip side, GAIL India down by 9.53%, Indiabulls Housing Finance down by 5.81%, Indusind Bank down by 3.82%, Grasim Industries down by 3.36% and Yes Bank was down by 2.65% were the top losers.

Asian markets were trading mostly in red; Shanghai Composite declined 37.85 points or 1.32% to 2,823.57, Taiwan Weighted dropped 52.42 points or 0.5% to 10,409.20, Straits Times trembled 12.91 points or 0.41% to 3,129.46 and Nikkei 225 was down by 2.06 points or 0.01% to 20,774.04. On the other hand, Hang Seng increased 10.55 points or 0.04% to 26,905.99.