Indian equity market indices end in red despite rate cut news

Taking a cue from global markets, the key Indian equity market indices on Tuesday opened lower. The Sensitive Index (Sensex) of the BSE, which had closed at 40,267.62 on Monday, opened lower at 40,196. Minutes into trading, it was quoting at 40,155.50, down by 112.12 points, or 0.28 per cent.

At the National Stock Exchange (NSE), the broader Nifty 50, which had closed at 12,088.55 on Monday, was quoting at 12,054.65, down by 33.90 points or 0.28 per cent.

As many as 17 stocks advanced in the Nifty 50 index while 33 stocks declined. In the BSE Sensex, 15 stocks including Tata Steel, ITC were trading in green while 15 stocks, including TCS, HDFC were trading in red at 9.20 a.m.

The key Indian equity indices surged to fresh benchmarks on Monday and eventually settled at record closing levels on the back of expectations of a rate cut in the upcoming Reserve Bank of India monetary policy on June 5-6.

The Sensex was up by 553.42 points or 1.39 per cent at the Monday’s closing. In the day’s trade, the barometer 30-scrip sensitive index had touched a high of 40,308.90 and a low of 39,711.02. The Nifty, too was up by 165.75 points or 1.39 per cent.

On Tuesday, Asian indices were showing a negative trend. Japan’s Nikkei 225 was quoting in red, down by 0.12 per cent, Hang Seng was also down by 0.38 per cent. South Korea’s Kospi was quoting in red, down by 0.05 per cent. China’s Shanghai Composite was also trading in red, down by 0.97 per cent.

Overnight, Nasdaq closed in red, down by 1.61 per cent while FTSE was up by 0.32 per cent at the closing on Monday.

Meanwhile, the key Indian equity indices surged to fresh benchmarks on Monday and eventually settled at record closing levels on the back of expectations of a rate cut in the upcoming RBI monetary policy on June 5-6.

The BSE Sensex settled at a record closing of 40,267.62 after touching a intra-day all-time high of 40,308.90 points. Similarly, the Nifty50 on the National Stock Exchange closed at 12,088.55 after touching an all-time high of 12,103.05 points earlier in the day.

“Today Auto, FMCG, IT and Realty pulled the market to a new all-time high as they are trying to catch up the rally on the back of the expected rate cut by the Reserve Bank of India (RBI) and increase in demand from the domestic sectors,” said Romesh Tiwari, Head of Research, CapitalAim. “Traders can go long on these sectors with caution as the rally is limited to market leaders, and midcaps and smallcaps are still not matching the gains. Investors should avoid buying at this level,” he added.

Reduction in interest rates is likely to infuse liquidity and boost consumption.

The Sensex ended 553.42 points or 1.39 per cent higher to close at 40,267.62 against the previous close of 39,714.20. It had opened at 39,806.86 and touched an intra-day low of 39,711.02 points. The major contributors to the surge included Hero MotoCorp, Bajaj Auto and IndusInd Bank, which rose by 6.01 per cent, 3.92 per cent and 3.70 per cent, respectively.

The Nifty50 settled at 12,088.55, higher by 165.75 points or 1.39 per cent from its previous close.

Deepak Jasani of HDFC Securities said that decline in crude oil prices also helped the market sentiments and auto stocks surged on the back of strong sales in May.

Further, strong manufacturing data supported the investor sentiment. The Nikkei India Manufacturing Purchasing Managers’ Index expanded to 52.7 per cent in May from 21.8 per cent in April.

Strong investment by Foreign Portfolio Investors (FPIs) also boosted the Indian indices on Monday. Data from the BSE website show that FPIs pumped in Rs 3,068.88 crore during the day, whereas the Domestic Institutional Investors (DIIs) sold stocks worth Rs 462.69 crore.

Meanwhile, India’s tea exports increased by 11.5 per cent to 17.93 million kgs in April this year against 16.08 million kgs in the year-ago month, according to the Tea Board India data.

In value terms, it increased nearly 30 per cent to Rs 401.32 crore against Rs 308.76 crore in April 2018. According to the provisional data, price realisation per kg of tea at Rs 223.83 was 16.57 per cent higher than Rs 192.01 a kg fetched in the year-ago month.

Meanwhile, during the month, tea exports to Pakistan stood at 0.85 million kgs, up marginally from 0.83 million kgs exported in the corresponding month of 2018. In case of China, it was down at 0.64 million kgs in April against 0.73 million kgs in the same month last year.

Tea shipments to CIS countries, including Russia, Ukraine and Kazakhstan, were at 3.7 million kgs in April, down from 4.25 million kgs in the same period of last year. At 0.42 million kgs, exports to the UK were marginally up against 0.41 million kgs shipped in April 2018. At 0.46 million kgs, exports to Germany were down from 0.65 million kgs shipped in April 2018.

Indo-Asian News Service