Post Session: Quick Review

Indian equity benchmarks ended the choppy day of trade on quiet note with negative bias as investors refrain from building large positions in a holiday-shortened week. Meanwhile, the sentiment remained dampened at the D-Street as the crucial GST bill failed to see the light of the day. Sentiments also remained downbeat with minister of State for Finance Jayant Sinha’s statement that 2016-17 would be a challenging term with headwinds from low farm sector growth, the global slowdown, and implementation of the Seventh Pay Commission report and the One Rank One Pension. However, losses remained capped as investors got some comfort with Niti Aayog Vice Chairman Arvind Panagariya’s statement that the Indian economy will grow over 8 percent this fiscal. He also added that in the first half of the current fiscal, the GDP growth stood at around 7.2 percent and is expected to cross the 8 percent-mark in 2015-16.

On the global front, European counters were trading mostly in green terrain in early deals, boosted by a rise in the shares of commodity companies which climbed on the back of a further rebound in oil prices. Asian markets ended mixed ahead of Christmas.  A rebound in the crude oil prices has improved the sentiments and has capped the losses on the Asian bourses after data released overnight showed US crude inventories has drooped unexpectedly previous week.

Back home, some support also came from reports that foreign portfolio investors (FPIs) bought shares worth a net Rs 386 crore on December 23, 2015. Appreciation in Indian rupee too supported the sentiments. Shares of metal and mining companies remained in limelight following a rebound in the commodity prices. Stocks related to defence sector such as Pipavav Defence and Offshore Engineering, Bharat Electronics, Walchandnagar Industries remained on buyers’ radar on report that the Ministry of Defence has initiated various policy measures to address the concerns of the industry for ease of doing business.

Telecom stocks too edged higher on report that contribution of telecom sector revenue to gross domestic product (GDP) increased marginally to 1.94 percent in 2014-15. Revenue generated by the telecom sector in 2014-15 increased to Rs 2,42,900 crore, accounting for 1.94 percent of total GDP, compared to previous fiscal's figure of Rs 2,19,553 crore or 1.93 percent of the GDP.  On the flip side, banking stocks remained under pressure after the RBI expressed concern about the debt servicing capability of large borrowers, saying that it was affecting the health of the banking sector. In its Financial Stability Report released, the RBI stated that there has been a sharp increase in the large borrowers' share of gross NPAs in the total gross NPAs to 87.4% in September from 78.2% in March.

The NSE’s 50-share broadly followed index Nifty edged marginally lower to hold its psychological 7,850 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex edged lower by over ten points to end below the psychological 25,850 mark. However, the broader markets outperformed benchmarks and ended the session with a gain of around half a percent. The market breadth remained in favour of advances, as there were 1,552 shares on the gaining side against 1,120 shares on the losing side while 233 shares remain unchanged.

The BSE Sensex ended at 25838.71, down by 11.59 points or 0.04% after trading in a range of 25763.40 and 25922.47. There were 15 stocks advancing against 13 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.28%, while Small cap index up by 0.49%. (Provisional)

The top gaining sectoral indices on the BSE were Telecom up by 1.02%, Metal up by 0.75%, Power up by 0.67%, Industrial up by 0.63% and Basic Material up by 0.63%, while Consumer Durables down by 0.91%, Bankex down by 0.42%, Realty down by 0.23% and Energy down by 0.03% were the few losing indices on BSE. (Provisional)

The top gainers on the Sensex were Bharti Airtel up by 1.99%, GAIL India up by 1.55%, Tata Motors up by 0.95%, ITC up by 0.78% and Bajaj Auto up by 0.66%. On the flip side, ICICI Bank down by 1.32%, Maruti Suzuki down by 0.80%, SBI down by 0.70%, ONGC down by 0.66% and HDFC down by 0.46% were the top losers. (Provisional)

Meanwhile, the Reserve Bank of India, in the twelfth issue of the Financial Stability Report (FSR), has expressed concerns on the debt servicing capability of large borrowers which, in turn, was affecting the health of the banking sector.  The FSR which was released along with the Report on 'Trend and Progress of Banking in India 2014-15' (RTP), said that the performance of the Indian banking sector remained subdued as it experienced a slowdown in balance sheet growth in 2014-15. While the PSBs registered deceleration in credit growth, the private sector banks (PVBs) and foreign banks (FBs) showed higher credit growth. Retail loan portfolio of the banks continued to grow at around 20 per cent during 2014-15.

The FSR has highlighted that the business of scheduled commercial banks (SCBs) slowed as reflected in further decline in both deposit and credit growth. Between March and September 2015, the gross non-performing advances ratio increased, whereas restructured standard advances ratio declined. Sectoral data as of June 2015 indicates that ‘industry’ continued to record the highest stressed advances ratio of about 20 per cent, followed by ‘services’ at 7 per cent. The capital to risk-weighted asset ratio (CRAR) of SCBs registered some deterioration during the first-half of 2015-16.

The report further said that among other financial institutions, the asset quality of both scheduled urban co-operative banks (SUCBs) as well as non-banking financial companies (NBFCs) deteriorated during the first-half of 2015-16 and the banking stability indicator showd that risks to the banking sector increased since the publication of the previous FSR, mainly on account of deteriorating asset quality, lower soundness and sluggish profitability.

The RBI analysed 2,711 listed non-government and non-financial listed companies from FY11 to first half of FY16. Of the companies studied, 19.4% have either negative net worth or a debt-to-equity ratio of more than or equal to two and 15.3% have a debt-to-equity ratio of greater than or equal to three. It also said capital expenditure (capex), which had risen sharply, was declining despite rising debt. This is because corporate profitability has declined and consequently companies’ debt-servicing capabilities. Capex by Indian companies in 2014-15 was at a five-year low of Rs 2.76 lakh crore.

The report also raised concerns over volatility in global financial and commodities markets. Uncertainty related to the US Federal Reserve’s interest rate hike has roiled India and other emerging markets even as markets cheered when the actual hike occurred. It also said that while the first Fed rate hike since 2006 appeared to have been factored in by the markets, the pace of further increase may have a significant bearing on market behaviour.

RBI governor Raghuram Rajan has said that corporate sector vulnerabilities and the impact of their weak balance sheets on the financial system need closer monitoring. Rajan had earlier too said that large wilful defaulters should be recognised as freeloaders and should not be lionised as industry captains.

The CNX Nifty ended at 7863.00, down by 2.95 points or 0.04% after trading in a range of 7835.50 and 7888.75. There were 27 stocks advancing against 22 stocks declining on the index. (Provisional)

The top gainers on Nifty were Vedanta up by 3.36%, Cairn India up by 2.33%, Hindalco up by 1.97%, Bharti Airtel up by 1.62% and GAIL India up by 1.27%. On the flip side, Zee Entertainment down by 1.99%, ICICI Bank down by 1.28%, PNB down by 1.03%, Grasim Industries down by 0.81% and HDFC down by 0.78% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 increased 10.99 points or 0.18% to 6,251.97 and Germany’s DAX was up by 238.89 points or 2.28% to 10,727.64, while France’s CAC was down by 14.2 points or 0.3% to 4,660.33.

Asian equity markets ended mixed on Thursday as regional gains were tempered by losses in mainland China and Japan before the holiday period. Energy and material stocks outperformed amid a rebound in oil prices and a rise on Wall Street overnight for the third day running. China's stock market posted its biggest one-day fall in two weeks, as investor interest in blue chips suddenly cooled after China Insurance Regulatory Commission tightened rules for insurers investing in listed firms. Japanese stocks ended lower after giving up earlier gains as the strong yen hurt overall sentiment while trading was subdued ahead of the Christmas holiday. The markets in Malaysia and Indonesia were closed in observance of the birth of Prophet Mohammad.