Market drops as key pivotals slide

Key benchmark indices logged modest losses weighed by selling pressure in index pivotals ITC, HDFC and Reliance Industries. The barometer index, the S&P BSE Sensex, lost 187.76 points or 0.53% at 34,915.38, as per the provisional closing data. The Nifty 50 index fell 61.40 points or 0.57% at 10,618.25, as per the provisional closing data. Auto stocks saw mixed trend.

The Sensex provisionally settled below the psychological 35,000 mark after falling below that level in morning trade. Stocks hovered in negative zone throughout the day's trading session. The market sentiment was hit by data showing that foreign funds and domestic institutional investors turning net sellers of Indian stocks yesterday, 3 May 2018. The trading activity showed that the foreign portfolio investors (FPIs) sold shares worth a net Rs 148.42 crore yesterday, 3 May 2018, as per provisional data released by the stock exchanges. Domestic institutional investors (DIIs) sold shares worth a net Rs 578.92 crore yesterday, 3 May 2018, as per provisional data.

The S&P BSE Mid-Cap index provisionally fell 0.35%. The S&P BSE Small-Cap index was off 0.25%. Both these indices outperformed the Sensex.

The market breadth, indicating the overall health of the market, was negative. On the BSE, 1,565 shares fell and 1,129 shares rose. A total of 131 shares were unchanged.

Sun Pharmaceutical Industries (down 2.95%), ITC (down 2.37%) and Axis Bank (down 2.27%) edged lower from the Sensex pack.

Auto stocks saw mixed trend. Eicher Motors (down 2.36%), Maruti Suzuki India (down 0.87%), Mahindra & Mahindra (M&M) (down 0.93%), Bajaj Auto (down 2.76%) and TVS Motor Company (down 3.34%) fell. Escorts (up 0.2%) and Ashok Leyland (up 0.37%) gained.

Hero MotoCorp rose 0.08% after the company said its total vehicles sales rose 16.50% to 6.94 lakh units in April 2018 over April 2017. With the forecast of a normal monsoon this year and a strong pipeline of new products coming up, Hero MotoCorp is confident of sustaining its growth momentum in the coming months. The announcement was made after trading hours yesterday, 3 May 2018.

Tata Motors (TML) rose 0.21%. TML announced after trading hours yesterday, 3 May 2018, that its board approved the sale of its defense business to group entity Tata Advanced Systems (TASL). This will not include the pure civilian vehicles which will continue to be with TML. TML will receive an upfront consideration of Rs 100 crore, adjusted for capex incurred and changes in working capital in the intervening period until closure date, and a deferred consideration of 3% of the revenue generated from identified specialized defence projects for upto 15 years from FY 2020 subject to a maximum of Rs 1750 crore.

Further, the board also approved the sale of its shareholding in its wholly-owned subsidiary, TAL Manufacturing Solutions (TAL) to TASL at an enterprise value of Rs 625 crore. As a condition precedent, Tata Motors will acquire the non-aerospace business from TAL at a value of Rs 10 lakh. This is in line with Tata Motor's plan to drive Turnaround 2.0, take necessary steps to further its defense business by leveraging the scale and strengths of the unified aerospace and defense entity at the group level, while monetizing its non-core assets to reduce net-debt.

On the macro front, India's service sector continued to improve in April, with business activity rising at a faster pace, supported by new order growth, data released today, 4 May 2018 showed. Inflationary price pressures continued to ease further, with input and output charge inflation registering below their respective historical averages. The seasonally adjusted Nikkei India Services Business Activity Index rose to 51.4 in April from 50.3 in March.

Overseas, European shares were trading higher while Asian stocks fell as investors monitored trade talks between the US and China. Investors are now awaiting US jobs for April and wage growth data due later in the day. The Nikkei in Japan remained closed for a holiday.

Activity in China's service sector expanded at a faster pace in April, a private gauge showed Friday, a reading in line with official data last month. The Caixin China services purchasing managers' index rose to 52.9 in April from 52.3 in March, Caixin Media Co. and research firm Markit said. A reading above 50 indicates an expansion in activity from the previous month while a level below that points to a contraction.

US stock benchmarks ended off their lows yesterday, 3 May 2018 and the Dow ended higher in choppy trade. The Dow Jones Industrial Average rose 5.17 points, or less than 0.1%, to 23,930.15. The S&P 500 index declined 5.94 points, or 0.2%, to 2,629.75. The Nasdaq Composite Index closed 12.75 points, or 0.2%, lower at 7,088.15.

On the economic data front, the Markit services purchasing managers index for April came in at 54.6, compared with 54 in March. The Institute for Supply Management's nonmanufacturing index fell more than expected in April, dropping to 56.8, while factory orders rose 1.6% in the month.

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