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Local equities continue weak trade; Sensex below 39,600 mark

Following weak global cues, local equity benchmarks continued to show a weak trend in morning session, with losses of around half a percent. A level of pressure was seen on frontline stocks, especially Yes Bank and IndusInd Bank. Traders were on the slide lines with Central Statistics Office’s (CSO) report that retail inflation spiked to a seven-month high of 3.05 per cent in May, though remaining within RBI’s comfort level, as kitchen items like vegetables, meat and fish turned dearer. The consumer price index (CPI) based retail inflation for April was revised marginally upwards to 2.99 per cent from the earlier estimate of 2.92 per cent. Traders were also concerned with a private report that deal making through the private equity/venture capital routes saw a sharp 54 percent dip in May at a low $2.8 billion due to fewer large deals. It added that rainmakers are hopeful that formation of a strong government can help the scenario. Though, losses remain capped with United Nations trade report that India received foreign direct investments worth $42 billion in 2018, helped by robust inflows in manufacturing, communication and financial services. India attracted over 77 per cent of the total foreign direct investments that came to the South Asian region. On the sectoral front, a survey report stated that the financial services sector is likely to add 47,800 new jobs in the first half of this financial year following increasing focus on lending by banks and NBFC's.

On the global front, Asian markets were trading in red with Hong Kong suffering heavy losses as traders were concerned over the impact of protests in the city and plans to introduce a controversial law allowing extradition to China. Back home, Confederation of Indian Industry (CII) has reported that growth estimates have excluded productivity and quality and are based on only volume. India’s economic growth rate has been overestimated by around 2.5 percentage points between 2011-12 and 2016-17 due to a change in methodology for calculating GDP.

The BSE Sensex is currently trading at 39591.01, down by 165.80 points or 0.42% after trading in a range of 39528.77 and 39724.47. There were 9 stocks advancing against 22 stocks declining on the index.

The broader indices were trading in red; the BSE Mid cap index slipped 0.72%, while Small cap index was down by 0.68%.

The top gaining sectoral indices on the BSE were Capital Goods up by 0.72%, Power up by 0.38%, Realty up by 0.20%, Industrials up by 0.09% and Utilities was up by 0.02%, while Basic Materials down by 0.81%, Metal down by 0.73%, BANKEX down by 0.70%, Auto down by 0.67% and Healthcare was down by 0.50% were the top losing indices on BSE.

The top gainers on the Sensex were Larsen & Toubro up by 1.31%, Power Grid up by 1.05%, Asian Paints up by 0.68%, TCS up by 0.49% and NTPC was up by 0.48%. On the flip side, Yes Bank down by 9.17%, IndusInd Bank down by 5.02%, Tata Motors - DVR down by 2.47%, Vedanta down by 1.91% and Tata Motors was down by 1.63% were the top losers.

Meanwhile, the UN Conference on Trade and Development (UNCTAD) in its report ‘The World Investment Report 2019’ has said that Foreign Direct Investment (FDI) to India surged by 6% to $42 billion in 2018, with strong inflows in the manufacturing, communication and financial services sectors, and cross-border merger and acquisition activities. The report ranked India among the top 20 host economies for FDI inflows in 2017-18. It also emphasized that prospects for FDI inflows into South Asia are largely determined by expectations of growing investment into India.

The report mentioned that India has historically accounted for 70 to 80% of inflows to the subregion. Further, the growth in cross-border M&As for India from $23 billion in 2017 to $33 billion in 2018 was primarily due to transactions in retail trade ($16 billion), which includes e-commerce, and telecommunication ($13 billion). The report added that India and the UAE, not traditionally in the top 20 outward investor countries, were also considered as among the top 10 most important sources of FDI for the 2019 to 2021 period.

Besides, the report showed that FDI inflows to developing countries in Asia rose by 3.9% to $512 billion in 2018, with growth occurring mainly in China, Hong Kong, Singapore, Indonesia and other ASEAN countries, as well as India and Turkey. The Asian region remained the world's largest FDI recipient, absorbing 39% of global inflows in 2018, up from 33% in 2017. FDI inflows to South Asia increased by 3.5 per cent to $54 billion. However, global FDI flows slid by 13% in 2018 to $1.3 trillion from $1.5 trillion the previous year -the third consecutive annual decline.

The CNX Nifty is currently trading at 11852.00, down by 54.20 points or 0.46% after trading in a range of 11835.20 and 11897.40. There were 13 stocks advancing against 37 stocks declining on the index.

The top gainers on Nifty were Larsen & Toubro up by 1.30%, BPCL up by 1.23%, Power Grid up by 0.76%, Asian Paints up by 0.67% and NTPC was up by 0.48%. On the flip side, Yes Bank down by 9.39%, IndusInd Bank down by 5.26%, Vedanta down by 1.97%, Tata Motors down by 1.80% and Grasim Industries was down by 1.61% were the top losers.

Asian markets were trading in red; Hang Seng decreased 216.14 points or 0.79% to 27,092.32, Nikkei 225 slipped 136.26 points or 0.64% to 20,993.46, Taiwan Weighted dropped 59.19 points or 0.56% to 10,556.47, Jakarta Composite lost 13.70 points or 0.22% to 6,262.48, KOSPI fell 13.61 points or 0.65% to 2,095.14 and Straits Times trembled 5.43 points or 0.17% to 3,202.31. On the global front, Shanghai Composite was up by 3.44 points or 0.12% to 2,912.82.

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