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Markets snap three days winning streak
Jun-12-2019

Snapping three days winning streak, Indian equity benchmarks ended the Wednesday’s trade with a cut of around half a percent, as traders remained on sidelines ahead of macro-economic data. Retail inflation and industrial production data for May and April, respectively, due to be released later in the day. There is expectation that retail inflation likely accelerated to a seven-month high in May on rising food prices. Traders also remained anxious with former Chief Economic Advisor Arvind Subramanian’s statement that country’s growth has been overestimated by nearly 2.5 per cent under both UPA and NDA rule. The actual growth is likely to be lower, at nearly 4.5 per cent, down from 7 per cent between 2011-12 and 2016-17.

Market participants paid no heed to the Reserve Bank of India’s (RBI) statement that it will infuse Rs 15,000 crore into the financial system through bond purchases on June 13. 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 (six) Government securities under OMOs through multi-security auction using the multiple price method. Meanwhile, State Bank of India (SBI) in its research report ‘Ecowrap’ has underlined RBI’s new guidelines to deal with bad loans will provide lenders the headroom and flexibility for resolution of large ticket stressed asset cases under the Insolvency and Bankruptcy Code (IBC).

Global cues too remained sluggish with all the European counters are trading in early deals and most of the Asian markets ended in red terrain on Wednesday amid lingering uncertainties surrounding the US-China trade friction after US President Donald Trump said that he was holding up a trade deal with China and had no interest in moving ahead unless Beijing agrees to four or five ‘major points’ which he did not specify.

Back home, stocks related to software counters edged lower amid ICRA’s report that Indian IT services sector is expected to register a growth of 6-8 per cent in US dollar terms during 2019-20. It added Indian IT firms could also see higher wage bills and lower margins on account of increased onsite hiring as they tackle tighter visa scrutiny and reduction in H1-B visa approvals. Metal stocks remained in focus with report that the Steel Ministry has suggested its commerce counterpart to bring certain changes in norms used for imposing anti-dumping duties with a view to making them more effective for protecting domestic players from cheap imports. Textile sector also remained in focus with Dilip Gaur, chairman of the Confederation of Indian Industry (CII) national committee on textile and apparel stating that India, which is emerging as a global textile hub and aims to be a $350-billion industry by 2025 from $137 billion now, needs to focus on man-made fibres to stay globally competitive.

Finally, the BSE Sensex declined 193.65 points or 0.48% to 39,756.81, while the CNX Nifty was down by 59.40 points or 0.50% to 11,906.20.

The BSE Sensex touched a high and a low of 39,982.10 and 39,623.53, respectively and there were 7 stocks advancing against 23 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index declined 0.79%, while Small cap index was down by 0.48%.

The only gaining sectoral indices on the BSE were Metal up by 0.48% and FMCG was up by 0.01%, while Realty down by 1.94%, Telecom down by 1.55%, Capital Goods down by 1.15%, Auto down by 1.12% and Bankex was down by 1.01% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 2.60%, ONGC up by 0.86%, Vedanta up by 0.50%, Sun Pharma up by 0.47% and TCS up by 0.25%. On the flip side, Yes Bank down by 3.34%, Maruti Suzuki down by 1.79%, Tata Motors - DVR down by 1.71%, Kotak Mahindra Bank down by 1.65% and Hero MotoCorp down by 1.55% were the top losers.

Meanwhile, State Bank of India (SBI) in its research report ‘Ecowrap’ has underlined Reserve Bank of India’s (RBI) new guidelines to deal with bad loans will provide lenders the headroom and flexibility for resolution of large ticket stressed asset cases under the Insolvency and Bankruptcy Code (IBC). The RBI came out with a revised prudential framework for resolution of stressed assets after its February 2018 circular in this regard was struck down by the Supreme Court.

The report also highlighted that the new prudential framework provides some leeway to lenders and encourages them to refer cases to IBC. The report further said under the current and revised dispensation, an additional provisioning of 20 percent would have to be made in case resolution plan is not implemented within 180 days from the end of the review period, which is after 210 days of default.

Earlier, 100 percent consensus was required there, but with new framework in place 75 percent lenders by value and 60 per cent by numbers would be required for resolution. Further, lenders are to enter into inter-credit agreement.

The CNX Nifty traded in a range of 11,962.45 and 11,866.35. There were 14 stocks advancing against 35 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Tata Steel up by 2.70%, GAIL India up by 1.39%, ONGC up by 0.95%, Vedanta up by 0.71% and TCS up by 0.50%. On the flip side, Indiabulls Housing Finance down by 7.88%, Yes Bank down by 3.19%, Bharti Infratel down by 3.18%, Tech Mahindra down by 1.78% and Hero Moto Corp down by 1.66% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 35.17 points or 0.48% to 7,410.71, France’s CAC increased 40.95 points or 0.76% to 5,423.45 and Germany’s DAX increased 157.19 points or 1.3% to 12,202.57.

Asian markets ended mostly lower on Wednesday amid lingering uncertainties surrounding the US-China trade friction after US President Donald Trump said that he was holding up a trade deal with China and had no interest in moving ahead unless Beijing agrees to four or five ‘major points’ which he did not specify. Chinese shares ended lower after the release of weak factory inflation data and amid concerns over an escalation in the Sino-US trade war. China's consumer price inflation accelerated on food prices in May, while factory gate inflation slowed on weak commodity demand, data from National Bureau of Statistics showed. Consumer prices advanced 2.7 percent year-on-year in May, after gaining 2.5 percent in April. The rate was the fastest in more than a year and came in line with expectations. On the other hand, producer price inflation eased to 0.6 percent in May, as expected, from 0.9 percent in April. The decrease was largely due to the fall in manufactured industrial input prices. Further, Japanese shares ended down amid the yen’s rise slightly against the dollar as investors fretted about a worsening US-China relationship. Investors ignored data showing an unexpected increase in Japan's core machinery orders in April. The total value of core machine orders in Japan advanced a seasonally adjusted 5.2 percent sequentially in April - standing at 913.7 billion yen. That beat forecasts for a drop of 0.8 percent following the 3.8 percent gain in March.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

2,909.38
-16.34
-0.56

Hang Seng

27,308.46
-480.88
-1.73

Jakarta Composite

6,276.18
-29.81
-0.47

KLSE Composite

1,650.74

-0.46

-0.03

Nikkei 225

21,129.72
-74.56
-0.35

Straits Times

3,207.74
-1.84
-0.06

KOSPI Composite

2,108.75
-3.06
-0.14

Taiwan Weighted

10,615.66
7.90
0.07


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