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Volatility hits over markets on Friday; key gauges end in red

Volatility hit over Indian equity benchmarks on Friday, with both larger peers, the Sensex and the Nifty ending lower by losses of 86 and 30 points, respectively. The markets made a cautious start of the day, after former finance minister P Chidambaram said that the Union Budget 2019-20 does not chalk out a clear roadmap to take India on the path of high economic growth and lacks bold steps and structural reforms. The street also remained concerned with US Commerce Secretary Wilbur Ross’ statement that India must recognize that its protectionist policies and tariff rules are hurting its companies and are a big impediment to attracting foreign direct investment.

The markets staged recovery in the second half of the session, supported with Finance Minister Nirmala Sitharaman’s statement that the big picture presented in the Budget is backed with a plan to increase investment without compromising on the fiscal consolidation roadmap. Some relief also came with a report stating that as rainfall in the first 11 days of this month was 24% more than ‘normal’, the overall season’s rain deficit came down to 12%, from 33% witnessed in June. But, key indices failed to hold gains and slipped into red terrain, as traders got cautious ahead of release of index of industrial production (IIP) for May and consumer price index-based inflation for June.

On the global front, European markets were trading in green, as Eurozone industrial production rebounded at a faster than expected pace in May largely driven by consumer goods output. The figures from Eurostat revealed that industrial output grew 0.9 percent month-on-month in May after declining 0.4 percent in April. This was the first increase in four months. Asian markets ended mixed, after Japan's industrial production grew at a less-than-initially-estimated rate in May. The final data from the Ministry of Economy, Trade and Industry showed that industrial production rose 2.0 percent month-on-month in May instead of 2.3 percent estimated previously.

Back home, textile stocks remained in focus, as the Cotton Association further lowered its crop estimate by 3 lakh bales to 312 lakh bales for the 2018-19 season, mainly due to poor rainfalls in the South. Besides, stocks related to realty companies remained in watch, after the Reserve Bank of India (RBI) in its latest survey showed that housing affordability worsened over the past 4 years as the house price-to-income (HPTI) ratio increased from 56.1 in March 2015 to 61.5 in March 2019. As per the survey report, Mumbai remains the least affordable city in India, while Bhubaneswar remains the most affordable city.

Finally, the BSE Sensex fell 86.88 points or 0.22% to 38,736.23, while the CNX Nifty was down by 30.40 points or 0.26% to 11,552.50.

The BSE Sensex touched a high and a low of 39,021.84 and 38,684.85, respectively and there were 14 stocks advancing against 17 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.41%, while Small cap index was up by 0.16%.

The top gaining sectoral indices on the BSE were Metal up by 0.91%, Basic Materials up by 0.60%, Realty up by 0.55%, Healthcare up by 0.50% and IT up by 0.33%, while Capital Goods down by 1.22%, Telecom down by 0.97%, Oil & Gas down by 0.77%, PSU down by 0.57% and Industrials down by 0.50% were the top losing indices on BSE.

The top gainers on the Sensex were Vedanta up by 2.44%, Sun Pharma up by 2.41%, Tata Steel up by 2.34%, Asian Paints up by 2.05% and Hero MotoCorp up by 2.04%. On the flip side, Bajaj Finance down by 2.08%, ONGC down by 2.06%, Indusind Bank down by 1.98%, Power Grid down by 1.87% and Larsen & Toubro down by 1.85% were the top losers.

Meanwhile, with an aim to ensure rapid transition towards electric mobility, Road Transport and Highways Minister Nitin Gadkari has said the Niti Aayog has proposed that two-wheelers below the capacity of 150 cc sold in the country after March 31, 2025, should be electric ones only and also proposed that three-wheelers sold in the country should be electric ones only after March 31, 2023.

The minister said the government has started working on meeting the demands of electricity for the new set of electric vehicles (EVs). He also stated that this has been decided after detailed deliberations with key stakeholders of different ministries for cleaning up Indian cities and to ensure rapid transition towards EVs and making India a manufacturing base for electric two-wheelers and three-wheelers.

He said that the road map for implementation shall be finalised in consultation with stakeholders and adding that currently, there are 3,97,184 EVs in the country.

The CNX Nifty traded in a range of 11,639.55 and 11,538.60. There were 22 stocks advancing against 28 stocks declining on the index.

The top gainers on Nifty were Vedanta up by 2.41%, Sun Pharma up by 2.36%, Tata Steel up by 2.29%, Asian Paints up by 2.28% and Yes Bank up by 2.06%. On the flip side, Wipro down by 2.97%, ONGC down by 2.74%, Bajaj Finance down by 2.00%, Coal India down by 1.87% and Larsen & Toubro down by 1.82% were the top losers.

European markets were trading mostly in green; UK’s FTSE 100 increased 20.47 points or 0.27% to 7,530.29 and France’s CAC rose 25.99 points or 0.47% to 5,577.94, while Germany’s DAX was down by 6.25 points or 0.05% to 12,325.87.

Asian markets ended mixed on Friday as underlying sentiment remained cautious as investors awaited China trade, lending and growth data, and as worries over Sino-US trade tensions deflated optimism rooted in expectations of a Federal Reserve rate cut this month. US President Donald Trump on Thursday accused China of backsliding on its promises to increase purchases of American farm products. Japanese shares ended higher in choppy trade ahead of a holiday on Monday and quarterly earnings results from US and Japanese companies due next week.

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