Markets end almost flat on Wednesday

Indian equity benchmarks staged recovery to end on a flat note on Wednesday, with Sensex and Nifty reclaiming their crucial psychological levels of 39,100 and 11,650, respectively. After a fabulous start, key indices remained positive for the most part of the session, aided by the Reserve Bank of India’s (RBI) statement that it will infuse Rs 12,500 crore of liquidity into the system through purchase of government bonds. Based on an assessment of prevailing liquidity conditions and also of the durable liquidity needs going forward, the RBI has decided to conduct purchase of five government securities. Traders took a note of a private report that seven million jobs were formalised between 2015 and 2018 because of various measures, including GST, demonetisation, Skill India policies, fixed-term contract, maternity leave enhancement, among others. The report estimated job formalisation to the tune of 11 million between 2018 and 2021.

In the last leg of the trade, markets turned volatile on account of weak cues from European markets. Domestic sentiments got cautious amid a private report stating that corporate investment remains a concern in India. But, key indices managed to erase losses, with a private report stating that the Centre is considering the establishment of a special purpose vehicle (SPV) to monitor, screen, and rate commercial borrowers. One of the initiatives the new government will work on in its first 100 days, the SPV, similar to the Goods and Services Tax Network (GSTN) will form a database compiling information from public sector banks (PSBs). Some support also came with a report that the Competition Commission of India (CCI) is conducting a Market Study on E-commerce in the country, in a view of the rapid growth of electronic commerce (e-commerce) and the rising importance of online trade in a large number of goods and services in India.

On the global front, European markets were trading in red after Australia's leading index dropped further in May and remained consistently negative for the past six months. The data from Westpac showed that the Westpac- Melbourne Institute Leading Index that indicates likely pace of economic activity over the next nine months, declined to -0.45 percent in May from -0.49 percent in April. In December 2018, the score was -0.37 percent. Asian markets ended in green, as Hong Kong's unemployment rate remained stable during the March to May period. The data from the Census and Statistics Department showed that the jobless rate remained steady at 2.8 percent during the March to April period, same as in the previous three-month period.

Back home, auto stocks remained in focus as automobile industry body SIAM proposed making petrol-powered two-wheelers and passenger vehicles material compatible with 10 per cent ethanol (E10) and 3 per cent methanol (M3) blends by 2025. Energy stocks also remained in limelight after ICRA in its latest report said that wind energy generation capacity addition may improve to 3.5-4.0 GW in current financial year (FY20), while land acquisition and transmission connectivity challenges will remain crucial.

Finally, the BSE Sensex rose 66.40 points or 0.17% to 39,112.74, while the CNX Nifty was down by 0.05 points to 11691.45.

The BSE Sensex touched a high and a low of 39,435.80 and 38,881.05, respectively and there were 15 stocks advancing against 16 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.69%, while Small cap index was down by 1.37%.

The top gaining sectoral indices on the BSE were Realty up by 1.20%, Consumer Durables up by 0.87%, Metal up by 0.55%, Power up by 0.46% and Utilities up by 0.23%, while Healthcare down by 1.29%, Auto down by 1.00%, Telecom down by 0.99%, Industrials down by 0.98% and Oil & Gas down by 0.64% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 4.60%, Kotak Mahindra Bank up by 2.44%, NTPC up by 1.58%, HDFC up by 1.11% and Power Grid up by 1.06%. On the flip side, Yes Bank down by 5.54%, Tata Motors down by 2.31%, Tata Motors - DVR down by 2.28%, Hero MotoCorp down by 1.99% and Indusind Bank down by 1.82% were the top losers.

Meanwhile, ICRA in its latest report has said that wind energy generation capacity addition may improve to 3.5-4.0 GW in current financial year (FY20), while land acquisition and transmission connectivity challenges will remain crucial. Improvement in wind power capacity addition will be mainly on account of large project awards by the nodal agencies and measures being taken to address some of the key challenges.

It highlighted that since February 2017, the overall wind power capacity awarded by the central nodal agencies and the state distribution utilities has been sizeable at more than 12 GW, providing a visibility for substantial capacity addition. However, it said the actual execution on the ground has been slow with only 1.6 GW added in last financial year (FY19), owing to delays in execution caused by land acquisition issues and securing transmission connectivity.

It further mentioned that the government initiated certain measures towards resolving the issues faced by the developers, such as offering incentives in the form of facilitation charge to state governments providing support for land acquisition and investments towards augmenting inter-state transmission infrastructure. Besides, the tariff discovered in the recent wind power auctions continue to remain at less than Rs 3 per unit. The average bid tariff declined from Rs 3.01 per unit in CY17 (calendar year) to Rs 2.64 per unit in CY 2018.

The CNX Nifty traded in a range of 11,802.50 and 11,625.10. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Tata Steel up by 5.40%, Zee Entertainment up by 5.14%, Kotak Mahindra Bank up by 2.75%, NTPC up by 1.85% and Titan up by 1.34%. On the flip side, Indiabulls Housing Finance down by 8.49%, Yes Bank down by 4.89%, UPL down by 4.64%, Adani Ports down by 3.32% and IndusInd Bank down by 2.70% were the top losers.

European markets were trading mostly in red; UK’s FTSE 100 decreased 25.49 points or 0.34% to 7,417.55 and France’s CAC fell 4.47 points or 0.08% to 5,505.26, while Germany’s DAX was up by 9.12 points or 0.07% to 12,340.87.

Asian markets ended higher on Wednesday after European Central Bank President Mario Draghi opened the door to more monetary stimulus and US President Donald Trump announced plans for an ‘extended’ meeting with Chinese leader Xi Jinping at the Group of 20 summit in Japan next week. Investors also waited for the outcome of the FOMC meeting amid increased expectations for dovish remarks. Chinese shares ended higher on expectations of monetary easing in both the United States and Europe. Further, Japanese shares closed up as dovish comments from ECB President Mario Draghi and Trump's upbeat tone on the trade front boosted investors' appetite for risk. Fed rate cut hopes also supported sentiment.