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Sensex, Nifty pause four days gaining rally
Apr-18-2019

Indian equity benchmarks paused the four days gaining rally on Thursday, with Sensex and Nifty closing near their day’s low points. The start of day was positive, buoyed by the Securities and Exchange Board of India’s (SEBI) data report stating that the share of foreign portfolio investments (FPI) in domestic capital markets through participatory notes (P-notes) jumped to Rs 78,110 crore at the end of March from Rs 73,428 crore at the end of February. Of the total, P-notes holdings in equities at March-end were at Rs 56,288 crore, while in debts and derivatives were at Rs 20,999 crore and Rs 119 crore respectively. In early deals, traders also got comfort with the rating agency ICRA’s latest report showing that the issuance of government-fully serviced bonds (GoI-FSBs) has significantly shot up to Rs 64,192 crore during the financial year 2019 as compared to Rs 15,095 crore during FY18. The agency also noted that such borrowings are estimated to have accounted for 0.34 percent of Gross Domestic Product (GDP) for FY19, as against 0.09 percent of GDP for FY18.

However, key indices soon slipped in red terrain to trade lower for the rest of the session, amid reports that unemployment rate in India has doubled in eight years to 2018 as 50 lakh lost jobs in last two years beginning with demonetisation in November 2016. Further, adding more worries among investors, a private report stated that the first quarter of 2019 recorded 110 merger and acquisition deals worth $ 12.5 billion (about Rs 86,500 crore), a 33 per cent fall in value terms as against the year-ago period, due to factors such as global economic conditions and uncertainty around Brexit. Trading sentiments also got hit with former Reserve Bank of India Governor Raghuram Rajan’s statement that protectionism does not really help preserve jobs and offers little defence against the job-destroying effects of automation and Artificial Intelligence, asserting that industrial and developing nations cannot afford to ignore the democratic reaction from those left behind by globalisation and technological change.

On the global front, European markets were trading mostly in green, as Eurozone trade surplus increased in February to its highest level in nearly a year. The figures from Eurostat showed that the seasonally adjusted trade surplus rose to EUR 19.5 billion from EUR 17.4 billion in January. The surplus was the biggest since March 2018, when it was EUR 20.4 billion. Besides, UK retail sales grew at a faster rate than expected in March. As per data from the Office for National Statistics, retail sales grew 1.1 percent month-on-month in March, after a 0.6 percent rise in February. Sales rose to the highest in four months, when it was 1.5 percent.  Excluding auto fuel, retail sales grew 1.2 percent monthly in March after a 0.4 percent rise in February. Asian markets ended lower, tracking weak cues from Wall Street. Investors also looked for more clarity on the US-China trade negotiations.

Back home, stocks related to metal industry ended lower, even though World Steel Association said that steel demand in India is expected to grow above 7 per cent in the current as well as next year. The global steel body in its report, titled 'Short Range Outlook April 2019', said it forecasts that global steel demand may reach 1,735 million tonne (MT) in 2019, a rise of 1.3 per cent over 2018. Further, fast-moving consumer goods (FMCG) sector stocks also fell, amid a private report stating that the FMCG industry is likely to grow at a slower pace of 11-12 percent in 2019, almost 2 percentage points lower than in 2018, primarily driven by the steeply falling rural demand due to the lingering farm distress. The industry is also expected to grow at 12-13 percent in the June quarter.

Finally, the BSE Sensex slipped 135.36 points or 0.34% to 39,140.28, while the CNX Nifty was down by 34.35 points or 0.29% to 11,752.80.

The BSE Sensex touched a high and a low of 39,487.45 and 39,083.16, respectively and there were 09 stocks advancing against 22 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index fell 0.89%, while Small cap index was down by 0.99%.

The only gaining sectoral indices on the BSE were Energy up by 1.93% and Oil & Gas up by 0.75%, while Realty down by 2.33%, Power down by 1.34%, Metal down by 1.28%, Telecom down by 1.22% and Capital Goods down by 1.20% were the top losing indices on BSE.

The top gainers on the Sensex were Reliance Industries up by 2.79%, Tata Motors up by 2.32%, Tata Motors - DVR up by 2.20%, Asian Paints up by 0.77% and TCS up by 0.61%. On the flip side, Yes Bank down by 4.18%, Vedanta down by 3.51%, Indusind Bank down by 2.86%, Tata Steel down by 1.77% and Larsen & Toubro down by 1.57% were the top losers.

Meanwhile, the member of Prime Minister Narendra Modi's Economic Advisory Council, Rathin Roy has expressed the need to relook over the Reserve Bank of India’s (RBI) inflation target after the elections, given that the current mandate expires at the end of March 2021.

Rathin Roy also stressed that the government needs to decide what sort of macroeconomic framework is needed going forward and noted that those discussions and decisions will take time and a new administration should therefore start immediately to get the process going.

Further, the economic adviser said that authorities will need to decide whether the inflation target band of 2 percent to 6 percent is too wide. He also pointed that the current targeting regime -a rather uniquely broad range of 400 basis points within which the RBI has sanction to operate- should become a little more disciplined. Besides, he suggested that the decision should also be made on what interest rate is required to keep inflation in the middle of the band.

The CNX Nifty traded in a range of 11,856.15 and 11,738.50. There were 19 stocks advancing against 31 stocks declining on the index.

The top gainers on Nifty were Reliance Industries up by 3.15%, JSW Steel up by 2.88%, Tata Motors up by 2.30%, BPCL up by 1.52% and Wipro up by 1.30%. On the flip side, Indiabulls Housing Finance down by 4.44%, Yes Bank down by 4.09%, Hindalco down by 3.70%, Vedanta down by 3.54% and IndusInd Bank down by 3.17% were the top losers.

European markets were trading mostly in green; France’s CAC gained 20.33 points or 0.37% to 5,583.42 and Germany’s DAX rose 61.01 points or 0.5% to 12,214.08, while UK’s FTSE 100 was down by 7.11 points or 0.1% to 7,464.21.

Asian markets ended mostly lower on Thursday as investors adopted a cautious stance ahead of the Good Friday and Easter holidays. Chinese shares ended lower as investors booked some profits after recent strong gains amid signs of economic stabilization. Further, Japanese shares settled down as treasuries climbed alongside the yen and a Nikkei report said Canon would cut its earnings forecast. Meanwhile, investors looked to signs of progress in US-China trade talks.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

3,250.20
-12.92
-0.40

Hang Seng

29,963.26
-161.42
-0.54

Jakarta Composite

6,507.22
25.68
0.40

KLSE Composite

1,619.73

-1.17

-0.07

Nikkei 225

22,090.12
-187.85
-0.84

Straits Times

3,347.58
-1.06
-0.03

KOSPI Composite

2,213.77
-32.12
-1.43

Taiwan Weighted

10,962.02
-35.24
-0.32
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