Benchmarks witness bearish trend in early deals

Indian equity benchmarks have made a cautious start and are trading with a cut of around half a percent in early deals on Friday, with frontline gauges breaching their crucial 39,600 (Sensex) and 11,900 (Nifty) levels amid rising global geopolitical tensions and higher oil prices. Sentiments remain dampened with ICRA’s 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. Traders paid no heed towards the Reserve Bank of India’s statement that it will infuse Rs 12,500 crore into the financial system through bond purchases on June 20. The decision has taken based on a review of the evolving liquidity conditions and assessment of the durable liquidity needs going forward.

On the global front, most of the Asian markets are trading in red at this point of time as investors weighed a variety of factors, including suspected attacks on two oil tankers in the strategic Strait of Hormuz and lingering worries about trade conflict between the US and China. The US markets ended in green on Thursday with petroleum-linked shares gaining after suspected attacks on a pair of tankers boosted oil prices.

Back home, telecom stocks remained in focus with 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. Insurance related stocks also remained buzzing with report that the annualised premium equivalent of private sector life insurers saw a 28 percent year-on-year growth in May.

The BSE Sensex is currently trading at 39576.57, down by 164.79 points or 0.41% after trading in a range of 39560.47 and 39799.90. There were 7 stocks advancing against 24 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.25%, while Small cap index was down by 0.07%.

The top gaining sectoral indices on the BSE were Metal up by 0.51%, Capital Goods up by 0.39%, Power up by 0.31%, Utilities up by 0.22% and Industrials was up by 0.15%, while Realty down by 1.71%, Bankex down by 0.64%, Healthcare down by 0.54%, Auto down by 0.46% and Energy was down by 0.43% were the top losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 1.04%, Power Grid Corporation up by 0.85%, Larsen & Toubro up by 0.54%, ONGC up by 0.47% and Tata Steel up by 0.41%. On the flip side, Indusind Bank down by 1.39%, Yes Bank down by 1.32%, Bajaj Auto down by 1.29%, Kotak Mahindra Bank down by 1.16% and Bharti Airtel down by 0.74% were the top losers.

Meanwhile, in order to meet the durable liquidity needs of the system going forward, the Reserve Bank of India (RBI) has said that it will infuse Rs 12,500 crore into the financial system through purchase of government securities (G-sec) under the Open Market Operation (OMO) on June 20, 2019.

It added that the decision has been taken based on a review of the evolving liquidity conditions and assessment of the durable liquidity needs going forward. The government securities to be purchased in the auction.

Recently, the RBI had injected Rs 15,000 crore into the system through bond purchases. The RBI uses OMO for injecting liquidity into the system through the purchase of government bonds (G-sec) to regulate money supply in the market. The sale or buying of g-secs infuses or reduces liquidity.

The CNX Nifty is currently trading at 11858.90, down by 55.15 points or 0.46% after trading in a range of 11849.55 and 11911.85. There were 14 stocks advancing against 36 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 1.04%, Power Grid Corporation up by 0.80%, Bharti Infratel up by 0.72%, Wipro up by 0.54% and Tata Steel up by 0.53%. On the flip side, Indiabulls Housing down by 2.51%, Zee Entertainment down by 2.30%, Yes Bank down by 1.49%, Dr. Reddys Lab down by 1.40% and Bajaj Auto down by 1.35% were the top losers.

Most of the Asian markets are trading in red; Hang Seng decreased 141.08 points or 0.52% to 27,153.63, Taiwan Weighted dropped 25.82 points or 0.24% to 10,535.19, Jakarta Composite lost 22.30 points or 0.36% to 6,250.78, Shanghai Composite declined 7.59 points or 0.26% to 2,903.15 and KOSPI was down by 7.06 points or 0.34% to 2,096.09. On the flip side, Straits Times advanced 1.29 points or 0.04% to 3,221.95 and Nikkei 225 was up by 74.09 points or 0.35% to 21,106.09.