After opening the day in red, share markets in India witnessed volatile trading activity throughout the day and ended the day in above the dotted line. Sectoral indices traded mixed, with stocks in the auto sector and stocks in the realty sector, leading the gains.
At the closing bell, the BSE Sensex stood higher by 83 points (up 0.2%) and the NSE Nifty closed up by 23 points (up 0.2%). The BSE Mid Cap index ended the day up 0.6%, while the BSE Small Cap index ended the day up by 0.5%.
The rupee was trading at Rs 68.97 against the US$ in the afternoon session. Oil prices were trading at US$ 76.89 at the time of writing.
Asian stock markets too finished in green. As of the most recent closing prices, the Hang Seng was up by 0.5% and the Shanghai Composite was up by 0.5%. The Nikkei 225 was up by 1.1%. Meanwhile, European markets were trading on a flat note. The FTSE 100 was down by 0.2%. The DAX, was up by 0.1% while the CAC 40 was up by 0.1%
In news from global markets. A global trade war seems to be heating up as US tariffs on US$34 billion worth of Chinese goods took effect as the set deadline passed today and China vowing to respond back in kind.
China's commerce ministry said in a statement shortly after the deadline passed that it was forced to retaliate, meaning US$34 billion worth of imported US goods including autos and agricultural products also faced 25% tariffs.
Other than the pre-planned tariffs applicable from today, US President Donald Trump warned that the United States may ultimately target over US$500 billion worth of Chinese goods, or roughly the total amount that the United States imported from China last year.
This has set the world's two biggest economies on a path towards all-out trade conflict.
Trade wars and the resultant tariffs affect India too. India's steel industry could fall victim to Donald Trump's trade wars.
India's steel industry was just coming out of a rough patch.
Demand was picking up. Steel prices were on the rise. Buyers were lining up to pick up stressed assets. With the expected pick up in the investment cycle, the sector was on the upswing.
India's Steel exports were on a roll.
Is the Steel Sector's Recovery Under Threat?
Then Donald Trump spoiled the party. The US government plans to impose a 25% tariff on steel and a 10% tariff on aluminum.
India produces a lot of both commodities but internationally, we are not a big player. The US imports only 2.4% of steel and 2% aluminum from India.
But it's not so simple.
With the new US tariffs, major exporters like South Korea will look to sell in other countries. This would lead to a glut and as a result, lower prices.
This could threaten the nascent recovery in the industry.
In news from stocks in the aviation sector. According to data from the International Air Transport Association (IATA), domestic air traffic was up by over 16.6% in May, compared to the same month last year. Notably, the traffic was more than two-fold of the global average, propelled by the launch of new flights and routes by the local airlines during the period.
May was also the 45th month of double-digit year-on-year growth on a trot, with a record more than 90% cent occupancy on aircraft operated by the domestic airline.
Air travel has recorded double-digit growth for 45 consecutive months, thanks to low fares, the addition of new flights/destinations, and overall growth in the economy.
What's foreseeable for India's aviation traffic in 2018 is some pressure on the back of the consistent rise in crude oil prices. Earlier this month, Brent crude oil briefly breached US$80 per barrel and touched its highest level since December 2014. Crude prices have been driven up by production curbs in OPEC nations and Russia, as well as by robust demand on the back of healthy global economic growth.
Oil prices are closely monitored by the Indian air carriers, as aviation turbine fuel is their single largest input cost. A sharp rise in the cost of fuel puts pressure on margins, and consequently an increase in air fares.
Although air travel is becoming the new normal, investors need to understand the industry dynamics before buying up aviation stocks.
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