Post Session: Quick Review

Thursday turned out to be a disappointing session of trade for Indian equity benchmarks where frontline gauges ended the session with a cut of over half a percent. Markets soon after a positive start entered into red terrain and the indices even went on to test important psychological 24,500 (Sensex) and 7,450 (Nifty) levels, but the key gauges got some support near those intraday low levels as they trimmed their some of losses from thereon as investors continued hunt for fundamentally strong stocks. Traders opted to remain on sidelines ahead of Index of Industrial Production (IIP) for January slated to be released tomorrow. Sentiments remained subdued on the report from the global financial services major that the Big bang reforms will not be the operating template for India and the process will be a ‘slow and tedious one’.

Marketmen remained cautious with the report that India’s import of project goods has been adversely affected by the ongoing downturn in global trade and, in turn, may point to a slowdown in the infrastructure sector. Cautiousness also crept in after Ratings agency Crisil has said that there are no signs of Indian economy sharply rebounding in the next financial year as the fiscal policy remains restrictive. Investors failed to get any sense of relief with Prime Minister Narendra Modi making a fresh pitch for passage of GST and other legislations in the Rajya Sabha, considering the 'conducive atmosphere' that has been prevailing in Parliament this session with cooperation from the opposition.

On the global front, European markets made a sluggish start as investors wait to find out whether the European Central Bank will deliver on its hints of more stimulus for the eurozone economy. Asian markets ended mixed with Chinese benchmarks ending lower with government data showing exports fell by more than expected in February. Exports dropped sharply, falling by 25.4% from a year earlier, while imports slid 13.8%.

Back home, market participants failed to draw any solace with the Commerce Ministry informing that Investment commitments worth $45.68 billion have been made through Foreign Direct Investment (FDI) inflows after the launch of ‘Make in India’ initiative in September, 2014. The Ministry also pointed out that a little over 90 per cent of the total FDI received during April-December 2016 came through automatic route.

Software pack remained under selling pressure led by 2.5% fall in Infosys on reports that four shareholders have put up for sale a block of shares to raise up to Rs. 880 crore (around $131 million). However, upstream oil companies edged higher with Union Cabinet clearing new Hydrocarbon Exploration & Licencing Policy. The new policy contains several norms that will smooth the process of licencing to exploration, by steps such as offering a uniform licence for all fuels such as natural gas, crude oil or shale, and by streamlining revenue and production sharing models. Shares of metal companies too remained on buyers’ radar as the Union Cabinet has cleared amendments to the MMDR Act. The move would allow transfer of mining lease for captive mines, as compared to the present scenario where transfer of mining lease is only for auctioned mines.

The NSE’s 50-share broadly followed index -- Nifty -- declined by around fifty points to end below the psychological 7,500 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex -- dropped by over one hundred and seventy points to finish below the psychological 24,650 mark. Broader markets too traded under pressure and ended the session with a cut of around quarter a percent. 

The market breadth remained in the favour off decliners, as there were 1,190 shares on the gaining side against 1,408 shares on the losing side while 150 shares remain unchanged. (Provisional)

The BSE Sensex ended at 24623.34, down by 170.62 points or 0.69% after trading in a range of 24471.39 and 24817.48. There were 11 stocks advancing against 19 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.32%, while Small cap index down by 0.18%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 0.36% and Basic Materials up by 0.30%, while Capital Goods down by 1.70%, Energy down by 1.56%, IT down by 1.33%, TECK down by 1.21% and Oil & Gas down by 1.05%, were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were HDFC up by 1.95%, Asian Paints up by 1.80%, Maruti Suzuki up by 1.41%, NTPC up by 0.83% and Sun Pharma up by 0.80%. On the flip side, Reliance Industries down by 3.10%, Infosys down by 2.80%, BHEL down by 2.74%, GAIL India down by 2.51% and Larsen & Toubro down by 2.43% were the top losers. (Provisional)

Meanwhile, Finance Minister Arun Jaitley may have been forced to withdraw the proposal of taxation of Employee Provident Fund (EPF), but the government has not given up on the goal of creating a pensioned society. The government is now considering a proposal to make mandatory for employers to route most of their share toward the retirement savings of employees into the Employee Pension Scheme (EPS) rather than EPF for employees above the salary threshold of Rs 15,000 per month.

This proposal was discussed at a high level meeting in the Prime Minister's Office (PMO) last week. Government does not want to go wrong this time and would ensure that there is extensive consultation with all stakeholders on the proposal. Changing the rule on the employer's contribution would mean that a substantial portion of this would go toward a pension for the employee, rather than getting withdrawn at one shot from the EPF at retirement. Further it will maintain uniformity between EPF and the General Provident Fund as the former will continue to enjoy exempt-exempt-exempt (EEE) status at the stages of investment, accumulation and payout.

Employer of a private sector matches contributions made by an employee to EPF -- 12% of basic salary by each. While all of the employee's contribution goes to EPF, 8.33% of the employer's payment goes to EPS subject to a maximum of Rs 1,250 a month. That is 8.33% of Rs 15,000, the statutory limit for contributions. These and other EPS conditions may change if the proposal is implemented wherein those earning more than Rs 15,000 a month will see a higher share of the employer's contribution going to EPS.

The CNX Nifty ended at 7486.15, down by 45.65 points or 0.61% after trading in a range of 7447.40 and 7547.10. There were 20 stocks advancing against 30 stocks declining on the index. (Provisional)

The top gainers on Nifty were Hindalco up by 3.33% and Cairn India up by 2.82% and HDFC up by 2.17% and Asian Paints up by 2.12% and Maruti Suzuki up by 1.42%. On the flip side, Infosys down by 3.05%, BHEL down by 3.02%, Reliance Industries down by 2.88%, Bank of Baroda down by 2.69% and GAIL India down by 2.26% were the top losers. (Provisional)

European markets were trading in red; Germany’s DAX decreased 22.41 points or 0.23% to 9,700.68, UK’s FTSE 100 shed 18.28 points or 0.3% to 6,128.04 and France’s CAC was down by 13.34 points or 0.3% to 4,412.31.

Asian equity markets ended mixed on Thursday, as traders digested another round of Chinese data, as well as interest rate decisions from central banks in New Zealand and South Korea. The Reserve Bank of New Zealand delivered a surprise cut in interest rates, citing a weakening global outlook and tepid inflation expectations, the Bank of Korea and Malaysia's central bank left their key interest rates unchanged as expected. Chinese stocks ended lower on fading hopes of imminent stimulus measures as investors interpreted data showing consumer inflation rising faster than forecasted as being largely negative for an economy struggling to find momentum. Japanese stocks rose for the first time in four days after a bounce in oil prices overnight strengthened risk appetite, while exporters benefited from a weaker yen and expectations of further easing from the European Central Bank.