Key benchmark indices were trading with small losses in morning trade as investors digested the Karnataka government formation. At 10:22 IST, the barometer index, the S&P BSE Sensex, was down 2.60 points or 0.01% at 34,845.70. The Nifty 50 index was down 20.35 points or 0.19% at 10,576.05.
After starting on a weak note, the market bounced back for a brief period in morning trade. Gains were unable to sustain at higher levels and the indices slipped into negative terrain in morning trade. The Sensex rose 125.65 points, or 0.36% at the day's high of 34,973.95 in morning trade. The index fell 89.46 points, or 0.26% at the day's low of 34,758.84 in early trade. The Nifty rose 25.30 points, or 0.24% at the day's high of 10,621.70 in morning trade. The index fell 29.30 points, or 0.28% at the day's low of 10,567.10 in early trade.
Among secondary barometers, the BSE Mid-Cap index was down 0.74%. The BSE Small-Cap index was down 0.82%. Both these indices underperformed the Sensex.
The market breadth, indicating the overall health of the market, was negative. On BSE, 760 shares rose and 1,273 shares fell. A total of 102 shares were unchanged.
Most metal shares rose. National Aluminium Company (up 1.34%), JSW Steel (up 0.91%), Hindustan Copper (up 0.65%), Steel Authority of India (up 0.54%), Vedanta (up 0.41%) and NMDC (up 0.35%), edged higher. Jindal Steel & Power (down 0.04%), Hindustan Zinc (down 0.25%) and Hindalco Industries (down 0.71%), edged lower.
Tata Steel was up 0.85%. The company announced that Bamnipal Steel (BNPL), a wholly-owned subsidiary of Tata Steel has successfully completed the acquisition of controlling stake of 72.65% in Bhushan Steel (BSL) in accordance with the approved Resolution Plan under the Corporate Insolvency Resolution Process (CIRP) of the Insolvency and Bankruptcy Code 2016 (IBC). The announcement was made after market hours on Friday, 18 May 2018.
The admitted CIRP cost and employee dues have been paid, as required under IBC. Further, settlement of the amounts equivalent to Rs 35200 crore towards financial creditors of BSL is being undertaken as per the terms of the resolution plan and corresponding transaction documents Rs 1200 crore will be paid to the operational creditors of BSL over a period of 12 months as per their admitted claims and as per the terms of the approved Resolution Plan.
Most FMCG shares rose. Jyothy Laboratories (up 1.98%), Godrej Consumer Products (up 1.22%), Bajaj Corp (up 0.81%), Britannia Industries (up 0.75%), Tata Global Beverages (up 0.57%), Hindustan Unilever (up 0.56%), Dabur India (up 0.31%), Colgate Palmolive (India) (up 0.29%) and Nestle India (up 0.18%), edged higher. GlaxoSmithKline Consumer Healthcare (down 0.14%), Marico (down 0.46%) and Procter & Gamble Hygiene & Health Care (down 0.95%), edged lower.
Indiabulls Real Estate lost 4.47% after the company's board of directors approved the proposal of buy-back of up to 2.6 crore fully paid-up equity shares of Rs 2 each of the company, being approx. 5.45% of existing paid-up share capital of the company, at prevailing market price on stock exchanges subject to a price not exceeding Rs 240 per equity share, aggregating up to an amount not exceeding Rs 624 crore, being less than 10% of total paid-up share capital and free reserves of the company from the open market through the stock exchange mechanism. The proposed buy-back will make the balance sheet of the company leaner by reduction in the overall capital employed in its business, which in turn will lead to higher earnings per share and enhanced return on equity, Indiabulls Real Estate said. The announcement was made after market hours on Friday, 18 May 2018.
On the political front, the much-awaited Karnataka floor test ended in an anti-climax of sorts with BS Yeddyurappa, who took oath as the Chief Minister on Thursday, 17 May 2018, resigned on Saturday, 19 May 2018, after he failed to secure the magic number of 112 required to form the government. Janata Dal (Secular) leader HD Kumaraswamy will now be sworn in as Chief Minister on Wednesday, 23 May 2018.
HD Kumaraswamy will reportedly be meeting former Congress president Sonia Gandhi and Congress president Rahul Gandhi in Delhi today, 21 May 2018, to discuss the modalities of government formation.
Overseas, most Asian shares were trading higher as weekend developments in the US-China trade relationship were digested by investors.
The US trade war with China is on hold after the world's largest economies agreed to drop their tariff threats while they work on a wider trade agreement, US Treasury Secretary Steven Mnuchin reportedly said on Sunday. Mnuchin and US President Donald Trump's top economic adviser, Larry Kudlow, said the agreement reached by Chinese and American negotiators on Saturday set up a framework for addressing trade imbalances in the future, reports added.
US stocks closed mostly lower on Friday, 18 May 2018, as investors grappled with lingering uncertainty over trade negotiations between the US and China, as well as bond yields that climbed this week to the highest level since 2011.
A focus for global markets this week is Wednesday's release of minutes from the Federal Reserve's latest monetary policy meeting. Investors will be watching the minutes for clues about the pace of the current tightening cycle.
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