Extending
losing streak for third straight day, Indian equity benchmarks ended the
Thursday's trade in red terrain with a cut of over half a percent, with
frontline gauges breaching their crucial 10,700 (Nifty) and 35,200 (Sensex)
levels, as doubts whether the Bharatiya Janata Party (BJP) could prove its
majority in the southern state of Karnataka weighed on investor sentiment.
State BJP president B S Yeddyurappa was sworn in as chief minister on Thursday
morning even though his party fell short of an outright majority. He has now 15
days to prove his majority in the state legislative assembly. Markets started
the session slightly in green terrain on report that the Centre has contained
its fiscal deficit for FY18 at 3.42% of gross domestic product (GDP), down from
3.5% estimated (RE) when Budget FY19 was presented on February 1. An Rs 85,000
crore (3.8%) reduction in expenditure from the RE level of Rs 22.18 lakh crore
and a marginal upward revision in nominal GDP in the second advance estimate
(the Budget relied on the first advance estimate) allowed the government to
curb the deficit. Key gauges pared all of their initial gains and entered into
red terrain on report that total investments via participatory notes (P-notes)
into Indian capital markets plunged to a 9-year low of Rs 1 lakh crore in April
amid stringent norms put in place by the Securities and Exchange Board of India
to check the misuse of these instruments. Investors shrugged off private report
that there was a 23% jump in venture investments in April at $2.4 billion, led
by e-commerce, infrastructure and realty plays by funds. The report added that
the increase in activity was driven largely by a jump in deal sizes, it said,
pointing out that going by the number of deals, there were 69 transactions this
April as against 66 in the year-ago period. Selling got intensified in last leg
of trade to drag benchmarks below their respective crucial levels. Finally, the
BSE Sensex declined 238.76 points or 0.67% to 35,149.12, while the CNX Nifty
was down by 58.40 points or 0.54% to 10,682.70.
The US markets closed lower on
Thursday, as selling in technology shares offset an advance in the energy
sector. A second round of US-China trade talks in Washington was in the
foreground, kicking off on Thursday. However, President Donald Trump cast some
doubt on a positive outcome for the pair of superpowers attempting to resolve
their trade differences after he said Beijing had become too spoiled and that
his expectations for the negotiations were low. Dallas Fed President Robert
Kaplan said that the US economy has reached the threshold for maximum
employment and it may already be lower than is sustainable. Kaplan is currently
in favor of two more interest rate rises this year, in line with Fed
policymakers' median estimate. On the economy front, the rate of layoffs in the
US rose in early May to the highest level in a month, but so-called initial
jobless claims are still near the lowest levels in half a century. Initial
jobless claims rose by 11,000 to 222,000 in the week ended May 12. The more
stable monthly average of claims, meanwhile, fell by 2,750 to 213,250. For the
second week in a row these claims were at the lowest level since 1969. The
number of people already collecting unemployment benefits, known as continuing
claims, fell by 87,000 to 1.71 million. The last time fewer people were
receiving jobless benefits was in 1973. Job openings are at a record high,
unemployment is unusually low at 3.9% and most companies are still hiring nine
years after an economic recovery got under way. The Dow Jones Industrial
Average lost 54.95 points or 0.22 percent to 24,713.98, the Nasdaq dropped
15.822 points or 0.21 percent to 7,382.47, and the S&P 500 was down by 2.33
points or 0.09 percent to 2,720.13.
Crude oil
futures ended almost flat on Thursday amid expectations that the US sanctions
on Iran would cut global crude supplies, extending a rally in oil prices. Ahead
of the re-imposition of US sanctions on Iran - expected to take place in two
separate waves - on August 06 and November 05, market participants continued to
expect the sanctions would cut Iran's oil exports enough to suppress global
crude supplies despite a lack of support from the EU and China. Besides, there
are reports that the European Commission is working on a law that bans European
companies and courts from complying with US sanctions against Iran. Benchmark
crude oil futures for June delivery settled unchanged at $71.49 a barrel on the
New York Mercantile Exchange. July Brent crude inched up 2 cents or 0.37
percent to settle at $79.30 a barrel on London's Intercontinental Exchange.
Indian
rupee ended stronger against dollar on Thursday, owing to dollar sale by
exporters and banks. This was the second day of consecutive gains for the
domestic currency. Traders took some support with report that the Centre has
contained its fiscal deficit for FY18 at 3.42% of gross domestic product (GDP),
down from 3.5% estimated (RE) when Budget FY19 was presented on February 1. An
Rs 85,000 crore (3.8%) reduction in expenditure from the RE level of Rs 22.18
lakh crore and a marginal upward revision in nominal GDP in the second advance
estimate (the Budget relied on the first advance estimate) allowed the
government to curb the deficit. However, dollar's strength against major global
currencies overseas along with heavy losses in the domestic equity market
restricted the further up move. On the global front, euro hovered near five-month
lows on Thursday, as investors fretted about the demands of Italian populist
parties and as a fresh rise in US government bond yields underpinned demand for
the dollar. Finally, the rupee ended at 67.68, 10 paise stronger from its
previous close of 67.78 on Wednesday.
The
FIIs as per Thursday's data were net sellers in equity and debt segments both.
In the equity segment, the gross buying was of Rs 4917.84 crore against gross
selling of Rs 5637.84 crore, while in the debt segment, the gross purchase was
of Rs 771.33 crore with gross sales of Rs 1807.59 crore. Besides, in the hybrid
segment, there was no buying and selling.
The US markets
ended lower on Thursday, as traders expressed some uncertainty about the second
round of trade talks between the U.S. and China. Asian markets are exhibiting
mixed trend in early deals on Friday, as investors appeared to be readjusting
their expectations about trade negotiations between the U.S. and China. Indian
equity benchmarks ended lower on Thursday after BJP's Yeddyurappa has been
given 15 days to prove the party has a legislative majority in Karnataka.
Today, the markets are likely to make flat-to-positive start as traders will
get some support with UN's report that India's economy is projected to grow
7.6% in fiscal year 2018-19, remaining the fastest growing economy in the
world, as robust private consumption and benefits from past reforms help the
country's GDP gain momentum but sustained recovery in private investment
remains a crucial challenge. Some support will also come with Niti Aayog CEO
Amitabh Kant's statement that crony capitalism in India will come to an end
with the new bankruptcy code though it was facing some teething troubles.
However, there will be some concern on private report stating that Reserve Bank
of India is likely to keep policy rates unchanged in the forthcoming monetary
policy review, but will have a hawkish tone on concerns over inflation and as
crude oil prices remain elevated. The Reserve Bank will announce its second
bi-monthly monetary policy on June 6. There will be buzz in Aviation related
stocks on reports that the Civil Aviation Ministry is likely to approach the
GST Council soon for bringing aviation turbine fuel (ATF) under the tax regime.
Currently, jet fuel or ATF is not under the GST ambit and the levy on it varies
from state to state. There will be some important earnings announcements too,
to keep the markets buzzing.
Support and
Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
10,682.70
|
10,639.05
|
10,751.80
|
BSE Sensex
|
35,149.12
|
34,987.96
|
35,410.15
|
Nifty Top volumes
Stock
|
Volume
|
Previous close
(Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
Hindalco
|
171.95
|
233.05
|
227.50
|
239.70
|
Tata Steel
|
160.37
|
610.30
|
598.03
|
626.68
|
SBI
|
117.21
|
242.70
|
240.57
|
245.42
|
ITC
|
107.55
|
278.95
|
275.37
|
285.62
|
ICICI Bank
|
106.68
|
296.00
|
293.38
|
299.28
|
L&T's construction arm -- L&T Construction -- has bagged EPC orders worth Rs 2,440 crore through Power Transmission & Distribution business unit.
Tata Steel has reported a net profit of Rs 14688.02 crore for Q4FY18 as compared to net loss of Rs 1168.02 crore for Q4FY17.
HDFC Bank's subsidiary HDB Financial Services is all set to raise $150 million from IFC through senior debt investment.
Kotak Mahindra Bank is planning to raise funds.