Post Session: Quick Review

Indian markets coming after a day of break showed a lackluster trade on Thursday and the benchmarks moved in a tight range throughout the day with Sensex holding its 27200 mark and Nifty despite remaining mostly in red, managing a close in green for the day. The mood of the markets looked sideways despite a positive start and bourses traded flat concerned over the US statement that India’s growth rate target of 7.5% seemed “overstated” due to “depressed investor sentiment” stemming from its failure to implement crucial market reforms, but it lauded Reserve Bank governor Raghuram Rajan for his “monetary stewardship”. The US State Department in its annual review of the Indian economy along with those for other nations, said the general view is that things are getting better but then again, could be better than that. It said that the 7.5% annual GDP growth rate might be a little more than is actually happening but in general, good things are happening. However, any major impact of the US concern was not seen on the markets as traders rejoiced the IMD’s report that the monsoon rain is now 1 per cent in surplus. IMD stated that the Southwest monsoon rainfall has shown a marginal rise of one per cent with a good amount of precipitation in several parts of the country for the period between June 1 and July 6. Also, there was some cheer with the newly appointed Minister of State for Finance Santosh Gangwar has said that the government is confident of getting the much-delayed GST Bill passed in the upcoming Monsoon session of Parliament, beginning later this month.

On the global front, while the US markets rebounded from their early fall on upbeat economic data, it could not provide any relief to the Asian markets, which made a mixed closing, as the fallout from Britain’s vote to leave the European Union continued playing its part, some of the Asian markets though rebounded from one-week lows as oil rallied. The European markets made mostly a positive start taking some support with the release of dovish Federal Reserve minutes and reassuring comments from Fed Governor Daniel Tarullo on the prospects of future rate hikes.

Back home, markets mood hardly looked confident for the day, lacking any major cues, there were sector and scrip specific movements only and the investors treaded cautiously trying to assess the long-term fallout of Britain’s vote to leave the European Union. Also, the traders were eyeing the Reserve Bank's Central Board meeting which discussed macro-economic developments and constitution of Monetary Policy Committee (MPC), a broad based panel that would determine the benchmark interest rates.  In the late hours the markets broke out of narrow trading range and surged to the highest points of the day, as buying emerged in FMCG stocks, leading the markets higher. The rupee strength too supported the equity markets, the domestic currency traded strong on fresh dollar selling by banks and exporters amid foreign fund inflows. However, the final hour of trade witnessed sharp profit taking and dragged the markets into red again, but some lower level buying ensured that markets could end in green.

On the sectoral front, the Realty index remained in limelight through the day with state-run construction company NBCC surging after the government approved the redevelopment of three government residential colonies in New Delhi. The IT sector, however remained one of the biggest laggard and lost further ground, continuing its underperformance after the Brexit vote. In the non sectoral gauges, sugar surged with reports of rise in international perices.

The BSE Sensex ended at 27201.49, up by 34.62 points or 0.13% after trading in a range of 27146.95 and 27288.22. There were 12 stocks in green against 18 stocks declining on the index. (Provisional)

The broader indices made a mixed closing; the BSE Mid cap index was down by 0.41%, while Small cap index ended up by 0.04%. (Provisional)

The top gaining sectoral indices on the BSE were FMCG up by 0.92%, Power up by 0.30%, Bankex up by 0.24%, Realty up by 0.20%, while IT down by 1.63%, TECK down by 1.58%, Capital Goods down by 0.79%, Metal down by 0.66%, Auto down by 0.52% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Lupin up by 7.83%, Dr. Reddys Lab up by 2.97%, Hindustan Unilever up by 2.82%, HDFC up by 2.50% and HDFC Bank up by 1.76%. On the flip side, Tata Steel down by 5.18%, TCS down by 2.04%, Adani Ports &Special down by 2.01%, Coal India down by 1.85% and ONGC down by 1.76% were the top losers.(Provisional)

Meanwhile, some 150 years after the British set India’s financial year from April 1 to March 31, the government is now looking to reset the fiscal time-cycle. The government has set up a committee to examine the desirability and feasibility of having a new financial year. Finance Ministry, Arun Jaitley said that the four member committee will be headed by former Chief Economic Advisor Shankar Acharya and will examine the merits and demerits of various dates for commencement of financial year including the existing dates. The committee will have to provide reasoning for the suitability of the financial year from the point of view of correct estimation of receipts and expenditure of central and state governments.

The other members of the panel include former Cabinet Secretary KM Chandrasekhar, former Finance Secretary to Tamil Nadu PV Rajaraman, and Senior Fellow at the Centre for Policy Research Rajiv Kumar. The panel will take into account the genesis of current financial year, suitability of financial year from point of view of correct estimation of receipts and expenditure of Central and State governments. It will also consider the effect of the different agriculture crop periods, impact on business, taxation systems and procedures, statistics and data collection and convenience of legislatures for transacting budget work.

The committee has been asked to submit its reports by 31st of December this year. In case the committee decides to recommend a change in the Financial Year, it will also work out the modalities for effecting the change. Currently, India follows the April-March fiscal year and all macroeconomic and company data, including the government’s budget, are compiled and prepared for the same period. Most countries follow a January-December fiscal year, so a committee of secretaries headed by the cabinet secretary had earlier this year recommended changing the fiscal year to January-December.

The CNX Nifty ended at 8337.90, up by 1.95 points or 0.02% after trading in a range of 8317.70 and 8361.95. There were 22 stocks on gainers side against 29 stocks on losers side on the index. (Provisional)

The top gainers on Nifty were Lupin up by 5.94%, Hindalco up by 3.28%, Hindustan Unilever up by 3.16%, HDFC up by 2.37% and Dr. Reddys Lab up by 2.15%. On the flip side, Tata Steel down by 4.78%, Zee Entertainment down by 3.05%, HCL Tech. down by 2.88%, TCS down by 2.23% and Adani Ports &Special down by 2.10% were the top losers. (Provisional)

European markets were trading in green, France’s CAC was up by 63.24 points or 1.55% to 4,148.54, Germany’s DAX gained 99 points or 1.06% to 9,472.26, while UK’s FTSE 100 was higher by 99.08 points or 1.53% to 6,562.67.

Asian equity markets ended mixed on Thursday after the latest Federal Reserve minutes showed that prospects of an interest rate hike have diminished. Minutes from the Federal Reserve's June board meeting suggested that board members last month were increasingly worried about the outlook for the US economy and the possible consequences of Britain's vote on EU membership. Comments from Fed Governor Daniel Tarullo on inflation and unemployment also reinforced expectations the Fed will not hike rates this year. A stronger than expected US ISM Services figure helped outweigh lingering uncertainty over the impact of last month's Brexit vote. US service-sector activity picked up in June, the Institute for Supply Management revealed in a report released on Wednesday, signaling Friday's nonfarm payrolls report for June could reveal a strong rebound in job growth after anemic showings in April and May. Japanese shares fell for the third straight session as renewed strength in the yen kept investors nervous. Chinese shares erased early losses to end on a flat note, as concerns about further yuan weakness and instability in Europe after Brexit offset expectations of more stimulus measures to support the economy. Markets in Malaysia and Indonesia were closed for Eid-ul-Fitr.