Post Session: Quick Review

The Indian equity markets once again showed a lackluster trade on Friday, though the start was marginally in green but volatility ruled the whole session. Markets once after dipping into red kept struggling and found it hard to enter the green even once, the mood across the globe remained dampened as investors dumped riskier assets and fled to safe havens ahead of Friday’s US payrolls report that could sway expectations for the timing of the Federal Reserve’s next interest-rate increase. Trade also turned cautious after four police officers were killed and others wounded in the United States. However, amid the negative global cues some support came with Economic Affairs Secretary Shaktikanta Das’ statement that the Finance Ministry is hoping that the prices of pulses will now be contained and help keep inflation under check due to the higher minimum support price for pulses. Also, from report of the rating agency CRISIL that India Inc is expected to see a two-year high growth rate of eight per cent in revenue during this financial year’s first quarter ended June 30, mainly driven by export-oriented units like information technology sector.

On the global front, after the mostly lower closing of the US markets overnight, the Asian markets made a weak closing with some of the indices in the region witnessing cut of around a percent, led by the Japanese Nikkei. However, the European stocks rose for a second day as the oil trimmed its biggest weekly decline in five months and dollar weakened against most of its major peers before a US jobs report that may set the tone for Federal Reserve monetary policy. European automakers climbed as China’s car sales grew faster in the first half of the year.

Back home, markets made some futile attempt of recovery in the late trade, but profit booking at every higher levels thwarted the attempts and the major averages could only manage to prune their losses by the end. The BSE Sensex which once looked slipping below the 27000 mark managed to hold the 27100 level on final hour modest recovery. The Nifty 50 too managed to retain the 8300 turf after briefly breaching it in the morning, dragged down by profit taking in infrastructure, PSU and capital goods stocks. Traders were eyeing the key US jobs report later in the day and were in wait and watch mood. Weakness in domestic currency too weighed on the markets, as the Indian rupee weakened against the US dollar due to increased demand for the American currency from importers amid foreign fund outflows. The broader markets though performed better and managed a mixed closing. On the sectoral front, apart from telecom, oil & gas, energy and capital goods were the major laggard. The telecom stocks remained under pressure from the very beginning with Comptroller and Auditor- General’s (CAG’s) findings that Rs 46,000 crore of revenue was under-reported by six telecom companies. CAG audit had found under-reporting by Bharti Airtel, Vodafone, Reliance, Idea, Tata and Aircel from 2006-07 to 2009-10. Meanwhile, the department of telecommunications (DoT) said that it will soon issue a demand notice of over Rs12,500 crore to six telecom operators who were found by the CAG to have under-reported revenues between 2006 and 2010.  On the other hand, the media companies came into lime light on report that government is considering a proposal to increase the limit on foreign direct investment in local newspapers and magazines. DB Corp, Jagran Prakashan, HT Media, TV18 Broadcast, Network18 Media & Investment, Zee Entertainment Enterprises, all moved higher in a range of 0.5-2%

The BSE Sensex ended at 27139.28, down by 62.21 points or 0.23% after trading in a range of 27034.14 and 27294.82. There were 14 stocks in green against 16 stocks in red on the index. (Provisional)

The broader indices made a mixed closing; the BSE Mid cap index ended up by 0.06%, while Small cap index was down by 0.24%. (Provisional)

The two gaining sectoral indices on the BSE were Auto up by 0.64% and IT up by 0.25%, while Oil & Gas down by 1.04%, Capital Goods down by 0.81%, PSU down by 0.81%, Metal down by 0.52% and Consumer Durables down by 0.33% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Asian Paints up by 2.39%, Hero MotoCorp up by 2.15%, Tata Motors up by 2.11%, Cipla up by 1.30% and Wipro up by 0.88%. On the flip side, GAIL India down by 2.57%, Bharti Airtel down by 2.26%, Adani Ports &Special down by 1.62%, Lupin down by 1.43% and Coal India down by 1.36% were the top losers. (Provisional)

Meanwhile, Labour Ministry is in favour of retirement fund body Employees Provident Fund Organisation (EPFO) increasing its investments in the stock markets through Exchange Traded Funds (ETFs). The, Labour Minister Bandaru Dattatreya has said that “We see the possibility of it increasing, but we want to discuss it with the Central Board of Trustees (CBT). I believe the investment in ETFs should rise.”

A meeting of EPFO’s apex decision making body, CBT headed by the Labour Minister is scheduled on July 8, where the issue of increasing investments in ETFs is expected to be taken up. Dattatreya however reiterated that the government will take the issue of investments in the stock markets “step by step” and maintain a “cautious approach”. The issue will also be discussed with the CBT.

In August last year, the EPFO had started investing 5 per cent of its investible deposits in ETFs and as it started giving good returns, there is a move to increase the proportion of such investments this fiscal. As per the Finance Ministry investment pattern, the investment can go up to 15 per cent. As on April 30, 2016 the amount invested was Rs 6,674 crore and this gave a return of Rs 6,786 crore, which is up by 1.68 per cent.

The CNX Nifty ended at 8325.55, down by 12.35 points or 0.15% after trading in a range of 8287.55 and 8353.30. There were 24 stocks advancing against 27 stocks declining on the index.(Provisional)

The top gainers on Nifty were Tata Motors up by 2.45%, Hero MotoCorp up by 2.33%, Asian Paints up by 2.31%, Indusind Bank up by 1.92% and Aurobindo Pharma up by 1.85%. On the flip side, Idea Cellular down by 2.63%, GAIL India down by 2.48%, Bank Of Baroda down by 2.31%, Bharti Airtel down by 2.30% and BHEL down by 1.43% were the top losers. (Provisional)

European markets were trading mostly in green, France’s CAC was up by 30.96 points or 0.75% to 4,148.81, Germany’s DAX increased by 92.02 points or 0.98% to 9,510.80, UK’s FTSE 100 was marginally down by 7.31 points or 0.11% to 6,526.48.

Asian markets ended lower in a cautious trade on Friday, as investors awaited the all-important US jobs report due tonight for clues on the trajectory of US interest rates. A slump in oil prices overnight on concerns of a gasoline oversupply, worries about the level of non-performing loans at Chinese banks, another terror attack in Bangladesh and a horrifying snipper attack in Dallas, Texas, also weighed on investor sentiment. After the dismal May jobs report in which only 38,000 jobs were added, today's report is expected to show an increase of about 180,000 jobs in June. A stronger-than-expected report on the labor market following two straight months of disappointing job growth would restore investor confidence in the health of the world's largest economy. At the same time, a surprisingly weak reading in light of continued uncertainties surrounding Brexit might force the Federal Reserve to cut rates rather than increase them. Chinese shares fell, as a weak yuan spurred fears of more capital outflows and the focus returned to emerging risks from non-performing loans at China's banks. Investors shrugged off central bank data showing a surprise increase in June foreign exchange reserves. Japanese shares fell sharply, as investors contended with a stronger yen and disappointing readings on labor cash earnings as well as nominal wage growth. Also, Japan's current account surplus shrank for the first time in 22 months in May as a firming yen curbed gains from investment overseas. The Taiwanese market was closed due to Typhoon Nepartak, while the Indonesian market remained closed for Eid-ul-Fitr.