Bourses fail to hold gains; end in red terrain

Indian equity bourses failed to hold gains on Thursday and ended trading session lower for sixth straight day. Key indices started the day on firm note, as India improved its ranking on the global innovation index (GII) by five places to stand at 52nd in 2019 from 57th position last year and maintained its position as the top exporter of IT services. Traders were optimistic during morning deals, with Revenue Secretary Ajay Bhushan Pandey’s statement that the revised direct tax target of Rs 13.35 lakh crore is realistic and achievable with the help of economic growth and exchange of data amongst various agencies and wings of the government.

However, markets erased gains to turn volatile in afternoon deals, as India Meteorological Department said that monsoon rains were 35% below average in the week ending on July 24, with little rainfall over the central, western and northern parts of the country. But, downside remained restricted, amid a private report that recruiters are bullish about adding staff to their payrolls in the next six months of this year, and the maximum hiring is expected to be in the experience band of three-five years. Besides, the Government has introduced the Insolvency and Bankruptcy Code (Amendment) Bill 2019, that seeks to ensure timely completion of debt resolution process and provide more clarity on rights of stakeholders.

On the global front, European markets were trading in green, after Spain's producer prices declined for the first time since late 2016 in June. The data from the statistical office INE showed that producer prices dropped 0.6 percent year-on-year in June, following a 1.2 percent rise in May. Asian markets ended mostly in green, as South Korea's gross domestic product expanded a seasonally adjusted 1.1 percent on quarter in the second quarter of 2019. On the expenditure side, private consumption was up 0.7 percent, with expenditures on semi-durable goods rising.

Back home, banking stocks ended higher, aided by Moody's Investors Service’s statement that the proposed amendments to the Insolvency and Bankruptcy Code will improve its effectiveness and are credit-positive for Indian banks. Auto component industry stocks remained in focus, after Auto Component Manufacturers Association of India (ACMA) sought reduction in GST rate to a uniform level of 18 per cent for the entire automobile industry to stimulate demand and help save around 10 lakh jobs, which are at risk due to prolonged slowdown in vehicle sales.

Finally, the BSE Sensex lost 16.67 points or 0.04% to 37,830.98, while the CNX Nifty was down by 19.15 points or 0.17% to 11,252.15.

The BSE Sensex touched a high and a low of 38,169.87 and 37,775.51, respectively and there were 15 stocks advancing against 16 stocks declining on the index.

The broader indices ended mixed; the BSE Mid cap index gained 0.53%, while Small cap index was down by 0.09%.

The top gaining sectoral indices on the BSE were Healthcare up by 1.61%, IT up by 0.77%, TECK up by 0.75%, Consumer Durables up by 0.34% and Bankex up by 0.34%, while Energy down by 1.91%, Oil & Gas down by 1.28%, Metal down by 0.83%, PSU down by 0.70% and Industrials down by 0.60% were the top losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 3.82%, Sun Pharma up by 2.69%, Indusind Bank up by 2.26%, Axis Bank up by 1.72% and TCS up by 1.51%. On the flip side, Tata Motors down by 4.56%, Bajaj Finance down by 3.95%, Tata Motors - DVR down by 3.39%, Reliance Industries down by 2.11% and Yes Bank down by 1.68% were the top losers.

Meanwhile, the Economic Advisory Council to the Prime Minister (EAC-PM) in its report titled 'R&D Expenditure Ecosystem' has said that the growth in Research and development (R&D) expenditure should be commensurate with the country’s Gross domestic product (GDP) growth and should be targeted to reach at least 2 percent of GDP by the year 2022. It noted that the line ministries at the Centre could be mandated to allocate certain percentage of their budget for research and innovation for developing and deploying technologies as per the priorities of the respective ministries.

The report has pointed out that India's spending on R&D in terms of percentage of GDP has remained stagnant over the last two decades. It has remained constant at around 0.6 percent to 0.7 percent of GDP and this is well below that in major nations such as the US (2.8), China (2.1), Israel (4.3) and Korea (4.2). To ensure that India leaps into a leadership role in innovation and industrial R&D by stimulating private sector's investment in R&D from current 0.35 percent of GDP, it suggested that a minimum percentage of turn-over of the company may be invested in R&D by medium and large enterprises registered in India.

EAC-PM also recommended that to help and keep the industry enthused to invest in R&D, there is case for not enforcing the complete withdrawal of weighted deduction provisions on R&D investment by April 1, 2020. Noting that government expenditure on R&D is undertaken almost entirely by the central government, it said there is a need for greater participation of state government and private sector in overall R&D spending. Besides, it pitched for creating 30 dedicated R&D Exports Hub and a corpus of Rs 5,000 crore for funding mega projects with cross cutting themes which are of national interest.

The CNX Nifty traded in a range of 11,361.40 and 11,239.35. There were 22 stocks advancing against 27 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Vedanta up by 4.45%, Cipla up by 3.52%, Zee Entertainment up by 3.29%, Sun Pharma up by 2.75% and Indusind Bank up by 2.42%. On the flip side, Tata Motors down by 4.79%, Bajaj Finance down by 4.30%, Bajaj Finserv down by 4.18%, Coal India down by 3.34% and JSW Steel down by 2.47% were the top losers.

European markets were trading in green; UK’s FTSE 100 gained 18.79 points or 0.25% to 7,520.25, France’s CAC increased 30.35 points or 0.54% to 5,636.22 and Germany’s DAX was up by 7.07 points or 0.06% to 12,529.96.

Asian markets ended mostly higher on Thursday as disappointing manufacturing activity surveys from Europe and the United States helped reinforce expectations of a shift toward easier monetary policy by major central banks, including the European Central Bank and the Federal Reserve. Rising tensions between Tokyo and Seoul and news that North Korea fired two short-range missiles from its east coast into the sea served to cap the upside to some extent. Chinese shares ended higher as investors braced for the first high-level, face-to-face trade negotiations between top US and Chinese negotiators next week. Further, Japanese stocks closed up in line with record highs on Wall Street overnight on the back of encouraging earnings reports and on expectations of easy monetary policy. Though, Seoul shares ended lower as downbeat corporate earnings and escalating trade tensions with Japan overshadowed data showing that South Korea's economy swung back to growth in the second quarter.