Post Session: Quick Review

‘Railway Budget 2015’ turned out to be mood-dampener for local equity markets, which snapping two consecutive sessions gaining streak, ended down with cut of around a percent that dragged both Sensex and Nifty below psychologically crucial 28,800 and 8,700 levels respectively. Worries of railway budget being more focused towards populist measures such as no hike in heavily subsidized passenger fares, raising concerns about government's fiscal deficit mainly weighed on the sentiment. Further, participants also squared off their positions on final F&O expiry session on account of prevailing caution ahead of Union Budget 201-16, which is scheduled to be presented on February 28, 2015. The session also turned out to be daunting for broader indices which went home with losses of around 0.70-0.80%.

On the global front, Asian shares ended upbeat for yet another session on Thursday after Federal Reserve Chair Janet Yellen’s indication that the US central bank was in no hurry to hike interest rates and also on account of better than expected US housing and Chinese factory data. US new homes sales data showed solid sales in January despite snow storms in the Northeast in the country. The US data followed a survey showing activity in China’s factory sector edged up to four month high in February. Meanwhile, European shares were trading higher despite renewed worries over the country's ability to make debt repayments to the IMF and the European Central Bank this year.

Closer home, most of the sectoral indices on BSE succumbed to profit-booking, however only stocks from realty, Infra and Oil & Gas counter outperformed. On the flip side, massive brunt of profit-booking was witnessed by stocks from Auto, Information Technology and Capital Goods counters.  Among others cement, steel and PSU OMCs stocks too declined on reports railway freight rates have been hiked by 2.7% on transport of cement.  Hike in freight rates will increase transportation costs of raw materials for these companies. Meanwhile, Rail-related stocks, Texmaco Rail and Engineering, Stone India and Kalindee Rail Nirman among others slid between 4-9% after the railway minister Suresh Prabhu presented the Railway Budget. Besides, Shares of three telecom companies, namely Bharti Airtel, Idea Cellular and Reliance Communication rang off in trade after telecom regulator TRAI yesterday, 25 February 2015, issued 6th Amendment to the Telecommunication Mobile Number Portability Regulation, 2009. The overall market breadth on BSE concluded in the favour of declines which thumped advances in the ratio of 1750:1076; while 105 shares ended unchanged. (Provisional)

The BSE Sensex concluded at 28746.65, down by 261.34 points or 0.90% after trading in a range of 28693.82 and 29069.13. 6 stocks advanced against 24 stocks declining stocks on the index. (Provisional)

The broader indices too ended in red; the BSE Mid cap index was down by 0.79%, while Small cap index down by 0.81%. (Provisional).

The gaining sectoral indices on the BSE were Realty up by 0.33%, INFRA up by 0.18%, Oil & Gas up by 0.04% while, Auto down by 1.43%, IT down by 1.43%, Capital Goods down by 1.31%, TECK down by 1.21%, Metal down by 0.96% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were NTPC up by 4.28%, ONGC up by 1.21%, GAIL India up by 1.13%, Reliance Industries up by 0.66% and Hero MotoCorp up by 0.06%. On the flip side, Infosys down by 2.48%, Sun Pharma Inds. down by 2.40%, Bajaj Auto down by 2.33%, Cipla down by 2.26% and Hindalco down by 2.25% were the top losers. (Provisional)

Meanwhile, Global rating agency Moody's, in its report clarified that fiscal policies and structural reforms will determine India's sovereign credit profile and not recent revisions to the economic growth data. Although, it acknowledged that upward revision in India's economic growth highlight strength of economy, but at the same time clarified on the little impact this had on overall assessment of the credit profile since this did not change ratios for government finances, private external leverage and bank asset quality, all of which continued to pose sovereign credit risks. India's GDP growth in the fiscal year ended March 2014 is estimated at 6.9% under the new methodology, from 5% earlier.

In a report titled 'GDP Revisions underscore economic strength, but are credit neutral’, Moody's underscored that fiscal and structural reform policies would determine the extent to which accelerating growth could buttress the sovereign credit profile. It also noted that declining inflation called for a policy rate cut to boost investments.

It cautioned that India's wide fiscal deficits, poor infrastructure and regulatory complexity have combined creating a mismatch between domestic demand and supply, thereby contributing to inflation and current account pressures. The global rating agency, further warned that absence of government action to reduce fiscal deficits and structural supply constraints, a pick-up in domestic demand or rebound in global commodity prices could lead to renewed inflation and current account pressures over a three to five year horizon.

Notably, these comments come on heels of another rating agency Standard & Poor's warning that India’s weak fiscal and debt indicators coupled with low income levels could “constrain” the sovereign rating.

Rating agencies are keenly awaiting the 2015-16 Budgets to assess the government's commitment to fiscal consolidation and the direction of reforms. The government expects an upgrade in sovereign ratings from the near junk levels now due to reforms unleashed and economy's potential for faster growth

The CNX Nifty plunged 83.40 points or 0.95% to settle at 8683.85, after trading in a range of 8669.45 and 8786.05. 10 stocks advanced against 40 stocks declining ones on the index. (Provisional)

The top gainers on Nifty were NTPC up by 5.00% and DLF up by 2.07%, Lupin up by 2.00%, Cairn India up by 1.51% and GAIL India up by 1.28%. On the flip side, BHEL down by 3.56%, Bank Of Baroda down by 3.27%, Sun Pharma Inds. down by 2.81%, Asian Paints down by 2.70% and IDFC down by 2.69% were the top losers. (Provisional)

European markets were trading mostly higher; with UK’s FTSE 100 edging up by 2.82 points or 0.04% to 6,938.20; France’s CAC edging higher by 9.77 points or 0.2% to 4,891.99 and  Germany’s DAX gaining 20.72 points or 0.18% to 11,230.99.

The Asian markets ended mostly in green on Thursday, on Federal Reserve Chair Janet Yellen’s indication that the US central bank is in no hurry to hike interest rates. Bank of Japan board member Koji Ishida stated that any necessary adjustment to monetary policy should be saved for ensuring longer-term economic stability and should not be made just to hit the 2% inflation target in the near term. He added that it is too early to debate an exit strategy but BoJ will eventually need to go easy on massive stimulus as prices move upward. BOJ Governor Haruhiko Kuroda stated that there was no ceiling on how much the central bank would expand its balance sheet relative to the size of the country’s gross domestic product (GDP). Kuroda added that a median forecast of the BOJ’s nine board members produced in January, which is for core consumer inflation to hit 2.2 percent in fiscal 2016, showed that members of the board expect inflation to hit the central bank’s 2 percent target by the end of that year in March 2017. Malaysian Unemployment Rate remained unchanged at a seasonally adjusted 2.8% compared to the preceding month. Singaporean Industrial Production rose to an annual rate of 0.9%, from -1.9% in the preceding month.