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Bourses stage recovery to close flat

Indian equity benchmarks staged recovery to end flat on Thursday, with Sensex and Nifty reclaiming their crucial psychological levels of 39,700 and 11,900, respectively. The markets made a negative start of the day, as India’s retail inflation based on Consumer Price Index (CPI) jumped to a seven-month high of 3.05% in May. As per the data, the jump in the CPI was mainly due to rise in prices of kitchen items like vegetables, meat and fish. Domestic sentiments remained lackluster throughout the day, amid reports 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. There were 82 deals involving PE/VC investments of $2.8 billion in May. The dip comes amid data release of sagging GDP growth fuelled largely by a fall in consumption which has been the one of the favourite for investors as well.

But, in the last leg of the trade, key indices pared most of their losses, tracking firm European markets. Trading sentiments got improved after India has been lauded by a high-level panel on digital cooperation launched by UN chief General Antonio Guterres for undertaking revolutionary digital initiatives to ensure economic inclusion for its 1.3 billion citizens. Traders took some support with a report that India’s industrial production measured by Index of Industrial Production (IIP) picked up space and accelerated to a six-month high of 3.4% in April mainly on account of improvement in mining and power generation. As per the data released by the Central Statistics Office of the Ministry of Statistics and Programme Implementation, IIP with base 2011-12 for the month of April 2019 stood at 126.8.

On the global front, European markets were trading in green as Germany's consumer price inflation moderated as estimated in May from a five-month high on air tickets and holiday packages. The final data from Destatis revealed that consumer price inflation eased to 1.4 percent from 2 percent in April. The rate came in line with the estimate published on May 31. Asian markets ended in red as China's consumer price inflation accelerated on food prices in May. The data from National Bureau of Statistics showed that 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.

Back home, telecom stocks remained in focus, amid a report stating that the Telecom regulator TRAI extended the timeline for implementation of revised Mobile Number Portability (MNP) norms, by more than three months to September 30, providing relief to operators. Further, sugar stocks came under pressure with a private report indicating that sugar output in India may drop to a three-year low next season from a record as dry weather shrivels cane plants in some major growing areas of the country.

Finally, the BSE Sensex declined 15.45 points or 0.04% to 39,741.36, while the CNX Nifty was up by 7.85 points or 0.07% to 11,914.05.

The BSE Sensex touched a high and a low of 39,800.81 and 39,461.27, respectively and there were 13 stocks advancing against 18 stocks declining on the index.

The broader indices ended in red; the BSE Mid cap index declined 0.33%, while Small cap index was down by 0.50%.

The top gaining sectoral indices on the BSE were Realty up by 0.62%, Power up by 0.56%, Consumer Durables up by 0.30%, Utilities up by 0.23% and Capital Goods up by 0.22%, while IT down by 0.78%, TECK down by 0.57%, Auto down by 0.44%, Energy down by 0.38% and Healthcare down by 0.28% were the top losing indices on BSE.

The top gainers on the Sensex were Power Grid up by 1.54%, Kotak Mahindra Bank up by 1.33%, Mahindra & Mahindra up by 1.33%, Bharti Airtel up by 0.96% and Bajaj Finance up by 0.93%. On the flip side, Yes Bank down by 12.96%, Indusind Bank down by 4.96%, Infosys down by 1.49%, Vedanta down by 1.03% and Maruti Suzuki down by 1.03% were the top losers.

Meanwhile, commenting on the Gross Domestic Product (GDP) estimates shown by former CEA Arvind Subramanian, the Confederation of Indian Industry (CII) has said that growth estimates have excluded productivity and quality and are based on only volume. In a research paper, Subramanian has deduced that 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.

CII has stated that the Indian economy is a complex one and cannot be captured by just a few indicators. He also said that GDP data has to take a more robust and comprehensive approach where all growth drivers are included. For instance, it said agriculture, which is one-sixth of the Indian economy, has not been included in the study.

Moreover, industry chamber said that the service sector, which accounts for more than 50% of GDP, has been inadequately represented. It also pointed out that specifically, IT and telecom sectors which have been the most dynamic parts of the economy in the recent years have been missed out while many infrastructure sectors like rural roads that have posted double-digit growth for several years are missing in the report.

The CNX Nifty traded in a range of 11,931.35 and 11,817.05. There were 26 stocks advancing against 24 stocks declining on the index.

The top gainers on Nifty were Indiabulls Housing Finance up by 11.86%, Zee Entertainment up by 2.95%, BPCL up by 1.81%, Grasim Industries up by 1.65% and Kotak Bank up by 1.39%. On the flip side, Yes Bank down by 13.47%, Indusind Bank down by 4.62%, UPL down by 1.70%, IOC down by 1.32% and Maruti Suzuki down by 1.20% were the top losers.

European markets were trading in green; UK’s FTSE 100 increased 21.49 points or 0.29% to 7,389.11, France’s CAC rose 13.10 points or 0.24% to 5,388.02 and Germany’s DAX added 67.14 points or 0.55% to 12,182.82.

Asian markets ended mostly lower on Thursday in cautious trade, with tumbling oil prices and caution ahead of the upcoming G20 summit keeping investors on the sidelines. Hang Seng shares ended marginally lower as investors kept a close eye on violent protests in Hong Kong over an extradition bill that would allow people to be sent to mainland China for trial. Further, Japanese shares ended lower, dragged down by chipmakers after the Philadelphia Semiconductor index dropped 2.3 percent on concerns of a slowdown in China. Meanwhile, Chinese shares ended on a flat note as Vice-Premier Liu called for more measures to support the economy and central bank data showed the country's bank lending increased in May. Banks extended Yen 1.18 trillion new loans in May compared to Yen 1.02 trillion in April. However, this was below the forecast of Yen 1.3 trillion.

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