Last hour volatility pushes markets lower

Last hour volatility pushed the Indian equity markets lower on Thursday, with Sensex and Nifty closing flat with a negative bias. After a positive start, key indices traded higher for the most part of session, aided by Arvind Panagariya’s statement that the escalating trade war between the US and China is an opportune time for India to attract the large multinationals looking for alternative locations outside the Communist country. Traders remained optimistic with the department for promotion of industry and internal trade's (DPIIT) Secretary Ramesh Abhishek’s statement that National Retail Policy will streamline the retail trade in India and is poised to provide the ease of doing business, which may be to the advantage of both traders and Indian economy.

However, markets failed to hold gains in the last leg of trade and ended in red terrain, amid a report stating that the cumulative debt of the National Highway Authority of India (NHAI) has mounted to Rs 1.78 lakh crore in FY19 from around Rs 40,000 crore in FY14. The borrowing is expected to go up to Rs 3.31 lakh crore by FY23. Adding some more worries among market participants, Telecom Minister Ravi Shankar Prasad said that foreign direct investment (FDI) in the Indian telecom sector declined by around 43 percent to $2.6 billion in last financial year (FY19). The FDI equity inflow in the FY18 was $6,211.84 million whereas the FDI equity inflow in the FY19 was $2,667.91 million. 

On the global front, European markets were trading in red, after Eurozone economic sentiment deteriorated more-than-expected in June. The survey data from the European Commission showed that the economic sentiment index dropped to 103.3 in June from 105.2 in May. The score was forecast to fall to 104.7. The industrial sentiment index declined to -5.6 from -2.9 a month ago. The expected reading was -3.0. Asian markets ended in green, as retail sales in Japan were up a seasonally adjusted 0.3 percent on month in May.

Back home, metal industry stocks ended lower, amid reports that that India's finished steel exports in May fell to their lowest in three years as shipments to traditional markets in the European Union (EU) and Nepal shrank. Further, stocks related to the logistic industry remained in focus, after Minister of Commerce and Industry and Railways, Piyush Goyal reviewed the draft National Logistics Policy. The minister proposed an action plan for the implementation of the policy prepared by the Department of Logistics, which comes under the Commerce Ministry.

Finally, the BSE Sensex fell 5.67 points or 0.01% to 39,586.41, while the CNX Nifty was down by 6.00 points or 0.05% to 11,841.55.

The BSE Sensex touched a high and a low of 39,817.22 and 39,510.44, respectively and there were 18 stocks advancing against 13 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index surged 0.36%, while Small cap index was up by 0.53%.

The top gaining sectoral indices on the BSE were Realty up by 1.71%, Auto up by 1.15%, Telecom up by 0.78%, Consumer Disc up by 0.68% and Consumer Durables up by 0.68%, while IT down by 0.76%, Energy down by 0.74%, TECK down by 0.57%, Metal down by 0.27% and FMCG down by 0.26% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors - DVR up by 4.20%, Tata Motors up by 2.95%, Mahindra & Mahindra up by 2.37%, ONGC up by 1.46% and Axis Bank up by 1.44%. On the flip side, Tech Mahindra down by 2.26%, Reliance Industries down by 1.52%, HCL Tech. down by 1.52%, ITC down by 1.37% and Infosys down by 1.19% were the top losers.

Meanwhile, the Reserve Bank of India (RBI) has issued norms for setting up of financial benchmark administrator (FBA) for administering significant benchmarks in the markets for financial instruments. Benchmarks administered outside India do not fall under the scope of the guidelines.

No FBA will administer a 'significant benchmark' without obtaining authorisation of the RBI under these directions. However, FBAs that were already administering the 'significant benchmark' may continue to do so till the disposal of their applications by the RBI. FBA will be a company incorporated in India with a minimum net worth of Rs 1 crore at all times. FBAs will ensure that a 'significant benchmark' is designed to be an accurate and reliable representation of the referenced (specified) financial instrument.

FBA will also ensure that the data used to construct a 'significant benchmark' is based on an active market involving arm's length transactions. Where such transactions are not available, it shall record justification for any data, information or expert judgment used to construct the benchmark. FBAs will submit to the RBI such data and reports within such timelines and in such formats as advised from time to time. They should also submit periodic return or report on their compliance with the directions or instructions issued by the central bank within such timelines and in such formats as advised from time to time.

The CNX Nifty traded in a range of 11,911.15 and 11,821.05. There were 28 stocks advancing against 22 stocks declining on the index.

The top gainers on Nifty were Tata Motors up by 2.48%, Mahindra & Mahindra up by 2.32%, Indiabulls Housing Finance up by 2.07%, Eicher Motors up by 1.71% and Bharti Infratel up by 1.62%. On the flip side, Tech Mahindra down by 2.10%, UPL down by 1.62%, HCL Tech. down by 1.57%, Reliance Industries down by 1.40% and Hindalco down by 1.37% were the top losers.

European markets were trading mostly in red; UK’s FTSE 100 lost 8.37 points or 0.11% to 7,408.02 and France’s CAC decreased 10.80 points or 0.2% to 5,489.92, while Germany’s DAX was up 28.07 points or 0.23% to 12,273.39.

Asian markets ended mostly higher on Thursday as comments from US Treasury Secretary Steven Mnuchin generated optimism about a potential US-China trade deal. US Treasury Secretary Steven Mnuchin told the US and China had nearly completed a deal before talks broke down last month. However, he didn't shed any light on the sticking points to achieving the final 10 percent and refused to speculate on whether a deal would be completed. Separately, US President Donald Trump voiced optimism over the possibility of a trade agreement with China but said he is still considering imposing ‘very substantial’ tariffs on all Chinese imports if the two countries were unable to reach a deal during the G20 meeting that starts Friday. Chinese shares ended higher as investors digested positive industrial profits data and signs of a truce in the Sino-US trade war. Further, Japanese shares rose sharply amid the dollar hit one-week highs against the yen as investors cheered signs of a truce in the Sino-US trade war.