Markets settle with notable gains

Indian equity bourses managed to settle with notable gains on Monday, with both the larger peers, Sensex and Nifty, closing higher by over 0.40% each. The start of the day was fabulous, aided by the Reserve Bank of India (RBI) Governor Shaktikanta Das’ statement that the revised guidelines to deal with stressed assets will sustain improvement in credit culture that have been ushered in by the efforts of the Government and the Reserve Bank so far and will go a long way in promoting a strong and resilient financial system in India. Traders also took support with a report that foreign investors have pumped in a net amount of Rs 7,095 crore into the Indian capital markets during the first week of June in anticipation of continued policy reforms.

However, markets turned volatile in afternoon deals, after Commerce and Industry Minister Piyush Goyal said that slowdown in global trade and investment is of serious concern as it adversely affects economic growth, development and job creation. He has called for de-escalating trade tensions and reviving confidence in the rules-based multilateral trading system. But, in the last leg of trade, key indices extended their gains with Moody's Investors Service stating that the RBI's revised framework for the resolution of stressed assets is credit positive, because it brings back the focus on the need for the timely resolution of such assets and the buildup of loan loss provisioning against those assets, Traders remained positive with Trade Promotion Council of India’s statement that the government should take six concrete steps such as reducing cost and time of port clearance for goods and enhancing availability of credit with a view to boost exports.

On the global front, European markets were trading in green, even though the UK economy contracted for the second straight month in April on weak manufacturing. The data from the Office for National Statistics showed that gross domestic product fell 0.4 percent on a monthly basis after easing 0.1 percent in March. Asian markets ended in green, after Chinese trade data topped forecasts, helping ease investor concerns surrounding slowing global growth. China's exports grew 1.1 percent last month after falling 2.7 percent in April. Imports, however, plummeted 8.5 percent after rising 4.0 percent in April given softening external conditions.

Back home, power stocks remained in watch, as Power and New and Renewable Energy Minister Raj Kumar Singh exuded confidence that the renewable energy target of 175 gigawatt (GW) by 2022 would be achieved. While, aviation stocks came under pressure,  with the International Air Transport Association’s (IATA) chief Alexandre de Juniac’s statement that high costs, adverse conditions such as fluctuation in rupee against the US dollar and strong competition were putting pressure on the profitability of airlines.

Finally, the BSE Sensex gained 168.62 points or 0.43% to 39,784.52, while the CNX Nifty was up by 52.05 points or 0.44% to 11,922.70.

The BSE Sensex touched a high and a low of 39,979.48 and 39,619.97, respectively and there were 20 stocks advancing against 11 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index gained 0.11%, while Small cap index was down by 0.49%.

The top gaining sectoral indices on the BSE were IT up by 1.78%, TECK up by 1.61%, FMCG up by 1.10%, Capital Goods up by 0.74% and Telecom up by 0.61%, while Oil & Gas down by 1.20%, PSU down by 0.76%, Energy down by 0.38% and Bankex down by 0.10% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 2.39%, Infosys up by 1.93%, Bharti Airtel up by 1.60%, Axis Bank up by 1.41% and ITC up by 1.34%. On the flip side, Yes Bank down by 2.89%, Tata Motors down by 1.92%, Coal India down by 1.89%, ONGC down by 1.61% and Hero MotoCorp down by 0.77% were the top losers.

Meanwhile, Reserve Bank of India (RBI) in its Consumer Confidence Survey (CCS) has showed that consumer confidence dropped to 97.3 in May 2019, after a sharp upsurge of 104.6 in the March 2019 round. It noted that weakening confidence is primarily attributable to the deterioration in sentiments on jobs, price levels and the economy.

RBI has said that while there were negative sentiments with sign of deterioration as against last round with respect to employment situation and price level, the respondent expressed positive sentiments with sign of deterioration on the economic situation, income and spending behavior. It also noted that for the one year ahead expectations compared with current situation, the consumer confidence fell to 128.4 in May as against the all-time high of 133.4 in March.

According to the survey, the respondents expressed negative sentiments with sign of deterioration compared to last round when it came to price level expectations. It also said that there were positive sentiments with sign of deterioration on responses about economic situation, employment, income and spending. It pointed out that the one year ahead outlook also turned out to be less optimistic, more than 60 per cent of respondents expect improvement in the general economic situation in the year ahead.

The CNX Nifty traded in a range of 11,975.05 and 11,871.75. There were 34 stocks advancing against 16 stocks declining on the index.

The top gainers on Nifty were Britannia up by 3.47%, Tech Mahindra up by 2.41%, TCS up by 2.17%, Dr. Reddys Lab up by 1.95% and Infosys up by 1.88%. On the flip side, BPCL down by 3.26%, Yes Bank down by 2.43%, Coal India down by 2.22%, GAIL India down by 2.02% and IOC down by 1.62% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 32.34 points or 0.44% to 7,364.28 and France’s CAC was up by 14.54 points or 0.27% to 5,378.59.

Asian markets ended higher on Monday following the gains on Wall Street Friday after disappointing US jobs data for May raised hopes that the Federal Reserve will cut interest rates in the near future. In addition, news that the US and Mexico have reached a migration deal to avert the implementation of President Donald Trump's threatened tariffs set to begin on Monday, boosted sentiment. The Japanese shares are rising, with stocks higher across the board. Automakers are gaining on news of the US-Mexico deal, as several Japanese automakers use Mexico as a production base.