Post Session: Quick Review

Indian equity markets traded with volatility for whole trading session and somehow managed to end in green terrain on Tuesday, on the back of buying by participants amid mostly positive trade in Asian equities. Markets started off with marginal gains, as traders took some encouragement with Niti Aayog CEO Amitabh Kant’s statement that circular economy has the potential to generate 1.4 crore jobs in next 5-7 years and create lakhs of new entrepreneurs. Buying further crept in with Reserve Bank of India Governor Shaktikanta Das’ statement that the central bank will not hesitate to take any required measure to maintain the financial stability of the economy. Traders also took a note of report that the government is in the process of fixing draft norms for individual insolvency and might come up with a three-tiered debt resolution system, depending on the amount of loan borrowed.

Volatility struck bourses in late afternoon trade as they reversed their entire gains and traded with marginal losses, as anxiety remained among the traders with Fitch lowered India's growth forecast to 6.6 per cent for the current fiscal from 6.8 per cent projected earlier, as manufacturing and agriculture sectors showed signs of slowing down over the past year. Some concern also came in as private report indicated that June may end up with a deficit, with monsoon remaining poor across the country so far. It added that there is a possibility of 40 per cent deficient monsoon in the month of June in 66 per cent districts across the country. But, markets bounced back from their losses in late trade as traders found solace with state Development Commissioner (Industries) Harshadeep Kamble’s statement that Maharashtra government will soon launch the Chief Minister's Employment Generation Programme for Micro, Small and Medium Enterprises (MSMEs), which will create 10 lakh jobs in the next five years. 

On the global front, Asian markets ended mostly higher on Tuesday, as investors awaited the start of a closely-watched meeting by the U.S. Federal Reserve, set to kick off later stateside. European markets were trading in green, after European Central Bank chief Mario Draghi promised more monetary stimulus if the economy does not improve, offsetting another warning on slowing sales from the chip sector. Back home, gem and jewellery stocks were in focus with report that CRISIL believes the withdrawal of benefits under the Generalized System of Preferences (GSP) effective June 5, as announced by the US earlier, will moderately hit gem and jewellery exports from India. The gems and jewellery sector is already under pressure on account of stringent lending rules and working-capital crunch.

The BSE Sensex ended at 39049.61, up by 88.82 points or 0.23% after trading in a range of 38870.96 and 39167.83. There were 19 stocks advancing against 12 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index rose 0.04%, while Small cap index was down by 0.41%. (Provisional)

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.16%, PSU up by 0.98%, IT up by 0.88%, TECK up by 0.80% and Metal up by 0.72%, while Healthcare down by 0.63%, Auto down by 0.41%, FMCG down by 0.34% and Consumer Discretionary Goods & Services down by 0.28% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Vedanta up by 2.59%, Power Grid up by 2.22%, Coal India up by 2.00%, ICICI Bank up by 1.71% and HCL Tech. up by 1.65%. (Provisional)

On the flip side, Yes Bank down by 6.02%, Maruti Suzuki down by 1.83%, Asian Paints down by 1.56%, Tata Motors - DVR down by 1.54% and Sun Pharma down by 1.29% were the top losers. (Provisional)

Meanwhile, amid cooling activity in the manufacturing and agriculture sector, credit rating agency Fitch Ratings in its latest Global Economic Outlook, has slashed India's growth forecast to 6.6% for the current financial year from 6.8% projected earlier.

According to the Fitch, the Reserve Bank of India (RBI) is likely to cut interest rate by another 25 basis points later in 2019, which will push the policy repo rate down to 5.50%. It also said that monetary and regulatory easing from the RBI, along with a recovery in portfolio inflows, should support a recovery in credit to the private sector and reverse the drag from the negative credit impulse.

However, the agency retained its gross domestic product (GDP) growth forecast for the next fiscal (2020-21) at 7.1% and 7.0% for 2021-22. Meanwhile, for the last fiscal (FY19), GDP growth stood at 6.8%, a five-year low after FY14, when the economy grew at 6.4%.

The CNX Nifty ended at 11700.50, up by 28.35 points or 0.24% after trading in a range of 11641.15 and 11727.20. There were 34 stocks advancing against 16 stocks declining on the index. (Provisional)

The top gainers on Nifty were Vedanta up by 2.62%, Power Grid up by 2.14%, BPCL up by 2.06%, Coal India up by 2.02% and Bajaj Finserv up by 1.78%. (Provisional)

On the flip side, Indiabulls Housing Finance down by 6.90%, Yes Bank down by 5.90%, Hindalco down by 1.86%, Maruti Suzuki down by 1.79% and Asian Paints down by 1.60% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 increased 39.72 points or 0.54% to 7,397.03, France’s CAC increased 55.07 points or 1.02% to 5,446.02 and Germany’s DAX increased 94.92 points or 0.79% to 12,180.74.

Asian markets ended mostly higher on Tuesday, although overall gains remained capped amid caution ahead of the US Federal Reserve and the Bank of Japan meetings due this week. The US central bank is unlikely to cut rates at its two-day meeting, but the Fed's statement on June 19 may offer fresh clues as to the timing around a possible interest-rate cut later this year. Markets have nearly priced in hopes for a rate cut eventually since the Fed chairman made remarks on June 4 suggesting a lower rate. Japanese shares dropped to a 1-1/2 week low in subdued trade as caution set in ahead of Fed and Bank of Japan (BoJ) meetings.