Markets settle near day’s low points on Friday

Indian equity benchmarks closed the last trading day of the week near their intraday low points, with Sensex and Nifty losing almost 300 and 100 points, respectively, on the back of heavy losses in Realty, Telecom and Banking stocks. The start of the day was weak, amid credit rating agency, ICRA’s latest research report stating that the earnings released by 642 companies in the Indian corporate sector revealed that the revenue growth in the fourth quarter (January-March) of FY18-19 hit a six-quarter low at 10 percent. It added that weak consumer sentiments and softening of commodity prices led to a fall in the revenue growth in the last quarter of FY19.

In the last leg of the trade, key indices extended theirs losses, tracking weak global markets. Market participants paid no heed towards a report that India’s Wholesale price index (WPI) inflation continued its easing trend for second straight month and hit 22-month low of 2.45% in the month of May 2019, the lowest level since July 2017, as prices of food articles cooled down. As per the data of Ministry of Commerce & Industry, WPI for All Commodities (Base: 2011-12=100) for the month of May, 2019 stood at 2.45% (provisional) as compared to 3.07% (provisional) for the previous month and 4.78% during the corresponding month of the previous year. 

On the global front, European markets were trading in red, as Hungary's industrial production grew at the slowest rate in three months in April. The data from the Hungarian Central Statistical Office showed that industrial production climbed 6.0 percent year-on-year in April, after a 7.8 percent increase in March. The latest growth in production was the lowest since January, when it was 3.6 percent. Asian markets ended in red, after China's industrial output grew at a slower pace, while growth in retail sales improved more-than-expected in May. The data from the National Bureau of Statistics showed that industrial production advanced 5 percent year-on-year in May, while growth was expected to remain stable at 5.4 percent.

Back home, stocks related to the auto industry ended lower, as Automobile dealers' body FADA said retail sales of passenger vehicles (PV) in May declined by 1 per cent to 2,51,049 units as compared to the same period last year. According to the Federation of Automobile Dealers Associations (FADA), PV sales stood at 2,53,463 units in May 2018. Further, telecom stocks remained in focus with a report that the apex decision making body at the Telecom Department has decided to refer to TRAI for reconsideration the recommendations on spectrum auction amid industry's concerns on pricing. The Digital Communications Commission (DCC) also approved the terms and conditions for 5G trials in the country.

Finally, the BSE Sensex declined 289.29 points or 0.73% to 39,452.07, while the CNX Nifty was down by 90.75 points or 0.76% to 11,823.30.

The BSE Sensex touched a high and a low of 39,799.90 and 39,363.45, respectively and there were 05 stocks advancing against 26 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index declined 1.02%, while Small cap index was down by 0.76%.

The lone gaining sectoral index on the BSE was Capital Goods up by 0.21%, while Realty down by 2.11%, Telecom down by 1.62%, Bankex down by 1.33%, Auto down by 1.05% and FMCG down by 1.01% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 0.80%, Vedanta up by 0.74%, Sun Pharma up by 0.58%, Power Grid up by 0.44% and TCS up by 0.09%. On the flip side, Indusind Bank down by 4.36%, Tata Motors - DVR down by 2.78%, Bharti Airtel down by 2.74%, Axis Bank down by 2.39% and Kotak Mahindra Bank down by 2.10% were the top losers.

Meanwhile, the Labour Ministry has said that the government has reduced the total rate of contribution made by workers and employers towards the Employees’ State Insurance (ESI) scheme to 4 percent from the existing 6.5 percent for the first time in over two decades. A move would results in an estimated annual saving of around Rs 5,000 crore for firms. The reduced rates will be effective from July 1, 2019. This would benefit 3.6 crore employees and 12.85 lakh employers.

The ministry has stated that said that the reduced rate of contribution will bring about a substantial relief to workers and facilitate further enrollment of workers under the Employees’ State Insurance (ESIC) scheme and bring more and more workforce into the formal sector. Similarly, reduction in the share of contribution of employers will reduce the financial liability of the establishments leading to improved viability of these establishments. This shall also lead to enhanced Ease of Doing Business. It is also expected that reduction in rate of ESI contribution shall lead to improved compliance of law.

The ESI Act provides for medical, cash, maternity, disability and dependent benefits to the Insured Persons under the Act. The ESI Act is administered by Employees’ State Insurance Corporation (ESIC). Benefits provided under the ESI Act are funded by the contributions made by the employers and the employees. Under the ESI Act, employers and employees both contribute their shares respectively. The Government of India through Ministry of Labour and Employment decides the rate of contribution under the ESI Act.

The CNX Nifty traded in a range of 11,911.85 and 11,797.70. There were 07 stocks advancing against 42 stocks declining, while 01 remain unchanged on the index.

The top gainers on Nifty were Bharti Infratel up by 1.53%, Larsen & Toubro up by 0.62%, Sun Pharma up by 0.50%, Power Grid up by 0.39% and Adani Ports up by 0.28%. On the flip side, Indusind Bank down by 4.59%, Indiabulls Housing Finance down by 4.53%, Zee Entertainment down by 4.50%, Bharti Airtel down by 2.75% and Eicher Motors down by 2.54% were the top losers.

European markets were trading in red; UK’s FTSE 100 decreased 26.83 points or 0.36% to 7,341.74, France’s CAC decreased 11.34 points or 0.21% to 5,364.29 and Germany’s DAX decreased 80.18 points or 0.66% to 12,088.87.

Asian markets ended mostly lower on Friday as worries about rising tensions in the Middle East and headlines related to US-China trade disputes kept underlying sentiment cautious. The US blamed Iran for the attacks in the Gulf of Oman and said it will defend its forces and interests in the Middle East. Chinese shares ended down as investors kept a cautious stance ahead of data that was released after market hours, while US tariff threats continued to weigh. Government data released late in the day showed that China's industrial output grew at a slower pace, while growth in retail sales improved more-than-expected in May. Industrial production advanced 5 percent year-on-year in May, while growth was expected to remain stable at 5.4 percent. Retail sales grew at a faster pace of 8.6 percent after rising 7.2 percent in the previous month. Sales were forecast to advance 8.1 percent. China's fixed-asset investment grew 5.6 percent year on year in the first five months, down 0.5 percentage points from the first four months. The unemployment rate remained stable at 5 percent in May. Though, Japanese shares ended higher, led by energy stocks as oil prices surged on supply concerns.