Key benchmark indices extended fall in early afternoon trade due to political uncertainty in Karnataka after the Supreme Court reportedly directed for floor test in Karnataka Assembly tomorrow, 19 May 2018. At 12:18 IST, the barometer index, the S&P BSE Sensex, was down 150.58 points or 0.43% at 34,998.54. The Nifty 50 index was down 46 points or 0.43% at 10,636.70. Sentiment also took a hit as crude oil prices hovered near the $80 per barrel mark and sustained selling from foreign funds.
Capital goods stocks edged lower. Cement stocks declined.
On the political front, Supreme Court has reportedly directed for floor test in Karnataka Assembly at 16:00 IST tomorrow, 19 May 2018 after hearing Congress-JDS plea against Karnataka Governor inviting Bharatiya Janata Party (BJP) to form government. BJP's B.S. Yeddyurappa was yesterday, 17 May 2018, sworn in as chief minister of Karnataka. The swearing-in came after a four-hour, post-midnight Supreme Court hearing on a Congress-JDS petition that sought to quash his candidature.
Karnataka delivered a hung assembly on Tuesday with no party getting a clear majority to form government in the state. While the BJP emerged as the single-largest party, winning 104 seats, falling marginally short of the 113 seats needed to form a government. The Congress and the Janata Dal Secular (JDS) stood second and third with wins on 78 and 38 seats respectively.
In global commodities markets, Brent crude oil futures edged higher. Brent for July 2018 settlement was up 24 cents at $79.54 a barrel. Higher crude oil prices could increase India's fiscal deficit and current account deficit and stoke fuel price inflation.
Foreign portfolio investors (FPIs) sold shares worth a net Rs 830.94 crore yesterday, 17 May 2018 as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) bought shares worth a net Rs 428.92 crore yesterday, 17 May 2018, as per provisional data.
Domestic stocks drifted lower in early trade. Stocks continued to trade with weakness in in morning trade. Key benchmark indices traded in a small range amid negative bias in mid-morning trade.
The S&P BSE Mid-Cap index was down 0.6%. The S&P BSE Small-Cap index was down 0.62%. Both these indices outperformed the Sensex.
The market breadth, indicating the overall health of the market, was weak. On the BSE, 1,411 shares fell and 921 shares rose. A total of 130 shares were unchanged.
ICICI Bank (down 2.21%), Tata Motors (down 2.27%) and Wipro (down 1.77%) edged lower from the Sensex pack.
Capital goods stocks edged lower. BEML (down 3.11%), Bharat Electronics (down 1.16%), L&T (down 1.56%), ABB India (down 0.33%), Bharat Heavy Electricals (Bhel) (down 0.88%), Siemens (down 1.18%) and Thermax (down 1.22%) fell.
Cement stocks declined. Ambuja Cements (down 2.03%), ACC (down 2.29%), UltraTech Cement (down 2.27%) declined. Shree Cement (up 0.42%) rose.
Grasim Industries was off 1.28%. Grasim has exposure to the cement sector through its holding in UltraTech Cement.
SRF lost 8.81% after consolidated net profit fell 4.11% to Rs 123.91 crore on 21.74% increase in net sales to Rs 1589.98 crore in Q4 March 2018 over Q4 March 2017. The result was announced after market hours yesterday, 17 May 2018.
JK Tyre & Industries rose 4.13% after consolidated net profit rose 77.55% to Rs 158.87 crore on 6.11% increase in net sales to Rs 2283.97 crore in Q4 March 2018 over Q4 March 2017. The result was announced after market hours yesterday, 17 May 2018.
Commenting upon the results, Raghupati Singhania, chairman and managing director of the company said that in the year 2017-2018, the sales volumes at JK Tyre grew by 11%. The company registered a growth higher than the industry at large, which helped JK Tyre increase its presence across categories especially in truck, light truck, small commercial vehicle (SCV), farm and off-the-road (OTR) tyres. Singhania further added that the year witnessed an unprecedented increase in oil prices which had a major impact on margins.
The UN World Economic Situation and Prospects (WESP) as of mid-2018, said GDP growth in India is expected to climb to 7.5 and 7.6% in fiscal years 2017-18 and 2018-19 respectively, 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. This is a substantial recovery from the 6.7% growth India registered in fiscal year 2017, according to a UN report.
Among the major economies, growth in India is gaining momentum, underpinned by robust private consumption, a slightly more supportive fiscal stance and benefits from past reforms, the report said.
Overseas, Asian stocks were trading on a mixed note as investors appeared to be readjusting their expectations about trade negotiations between the US and China.
As high-level meetings between the world's two largest economies were being conducted in Washington, President Donald Trump kept expectations low, reportedly saying that China had become spoiled and that he doubted negotiations would be successful.
The three main US equity benchmarks finished lower yesterday, 17 May 2018 as selling in technology shares offset an advance in the energy sector. In US economic data, initial jobless claims rose by 11,000 to 222,000 in the latest week, the highest level in a month. The Philadelphia Fed manufacturing index came in at 34.4 in May.
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