Benchmarks end the session with modest cut; Infosys tanks over 8%

Indian stocks markets showed a volte-face on the last day of the trading week, as what started on a promising note ended as a dismal show. Earlier the market started the session on positive note tracking firm trade in other regional markets, but sentiments turned pessimistic in late morning session after IT major Infosys posted lower-than-expected dollar revenue growth in the first quarter and lower guidance of constant currency revenue growth in FY 17 to 10.5 percent -12 percent from 11.5 percent -13.5 percent earlier.  Infosys, which declined up to 10 percent intra-day, reported 4.5 percent drop in consolidated net profit at Rs 3,436 crore for the quarter ended June 2016 (Q1FY17) on sequential basis. Selling was also witnessed in TCS, which posted better-than-expected profit and operational performance in April-June quarter. Brexit remained a worry for TCS, given the fact that over 27 per cent of its revenue comes from Europe and 16 per cent from the UK.  Besides, weak trend in European stocks coupled with depreciation in rupee value against the US dollar also weighed on the sentiment. Indian rupee was trading lower by 15 paise at 67.06 against the US dollar at the time of equity markets closing on Friday on higher demand for the American currency from importers and banks.

Investors also remained cautious ahead of another major result announcement of Reliance Industries, as the company is expected to report a modest profit growth, while the income is likely to fall marginally, impacted by a planned refinery shut down and lower refining margins. However, auto and FMCG stocks firmed up in an otherwise weak market on expectation of volume growth in wake of above normal monsoon and renewed demand post the implementation of the 7th Pay commission. Banking stocks too edged higher after report that the government is likely to announce capital infusion in public sector banks.  Some support also came with hopes for smooth passage of much-awaited GST bill in the coming monsoon session of the parliament, after Congress leadership accepted the NDA government's invitation for further negotiations and discussion on alternative proposals on capping of the rate.

On the global front, Asian markets ended the session on positive note on Friday as investors turned optimistic after China released data showing the economy grew more than expected in the second quarter. China's economy grew 6.7 percent in the second quarter from a year earlier, steady from the first quarter and slightly better than expected as the government stepped up efforts to stabilise growth in the world's second-largest economy. Further, Japanese equities rallied and the yen fell on prospects for stimulus.  Meanwhile, European stock markets fell in early trade, with the shares of travel and leisure companies dropping after an attack in the French city of Nice that killed more than 80 people.

Back home, after getting a positive start, the local benchmark indices drifted into the negative zone in mid morning trades and slipped to intraday lows in early noon session post weak opening of European markets.  However, the psychological 8,500 and 27,750 levels proved as strong support levels for the key gauges as the benchmarks soon recovered from the lows and oscillated in a narrow band but failed to claw back into the green by the end. Finally the NSE’s 50-share broadly followed index Nifty, suffered a moderate cut of around a quarter percent to settle below the crucial 8,550 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex- slipped over hundred points and closed above the psychological 27,800 mark. On the BSE sectoral space, the IT index remained the top laggard in the space and settled with over five percent cuts followed by the TECK pocket which too went home with losses of around four percent. On the flipside, Auto stocks hogged the limelight, as they settled with gains of around a percent, while the Metal and Capital Goods counters too witnessed good buying interests.

The market breadth remained pessimistic as there were 997 shares on the gaining side against 1679 shares on the losing side, while 200 shares remained unchanged.

Finally, the BSE Sensex ended lower by 105.61 points or 0.38% to 27836.50, while the CNX Nifty dropped 23.60 points or 0.28% to 8,541.40. 

The BSE Sensex touched a high and a low 28048.70 and 27735.87, respectively. The broader indices made a mixed closing; the BSE Mid cap index ended up by 0.09%, while Small cap index was down by 0.74%.

The top gaining sectoral indices on the BSE were Auto up by 0.96%, Metal up by 0.60%, Capital Goods up by 0.45%, Bankex up by 0.29% and FMCG up by 0.03%, while IT down by 5.35%, TECK down by 3.94%, Power down by 0.83%, PSU down by 0.60% and Consumer Durables down by 0.40% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 3.80%, Bharti Airtel up by 3.32%, HDFC Bank up by 1.95%, HDFC up by 1.80% and Tata Motors up by 1.48%. On the flip side, Infosys down by 8.81%, TCS down by 3.11%, Wipro down by 2.81%, Coal India down by 1.48% and NTPC down by 1.20% were the top losers.

Meanwhile, the government has mobilized 3.1 tonnes of idle household and temple gold deposited under the monetisation scheme since its launch in November 2015. However, it’s much lower than 800-1,000 tonnes of annual gold import in which it is estimated that 300 tonnes are for investments, while the balance is jewellery.

The gold under monetisation scheme will facilitate its use for productive purposes, and in the long run, to reduce country’s reliance on the import of gold as well as to earn some regular interest on gold and save carrying costs. Under this scheme, banks are authorised to collect gold for up to 15 years to auction them off or lend to jewellers from time to time. Also depositors earn up to 2.50 per cent interest per annum.

All gold deposits under the scheme have to be made at Collection and Purity Testing Centres’ (CPTC). Currently, there are 46 assaying and hallmarking centres which are qualified to act as CPTC for handling gold under the scheme. Banks can also accept deposits at designated branches, especially from larger depositors.

India imports about 1,000 tonnes of gold every year and the precious metal is the second--highest component of the imports bill after crude oil. The gold monetisation scheme aims to mobilize around 20,000 tonne of idle gold lying with households and temples but not many households have shown interest in the schemes. So far, the government has collected much of the gold under the schemes from temple trusts with a major chunk coming from Tirumala Tirupati Devasthanam (TTD).

The CNX Nifty traded in a range of 8,594.80 and 8,510.05. There were 31 stocks advancing against 20 decliners on the index.

The top gainers on Nifty were Tata Steel up by 3.53%, Bharti Airtel up by 3.22%, Idea Cellular up by 2.83%, HDFC up by 2.79% and HDFC Bank up by 2.14%. On the flip side, Infosys down by 8.96%, TCS down by 3.05%, Wipro down by 2.64%, Tech Mahindra down by 2.54% and Aurobindo Pharma down by 2.17% were the top losers.European markets were trading in red, Germany’s DAX declined by 60.25 points or 0.60% to 10,008.05, France’s CAC was lower by 37.02 points or 0.84% to 4,348.50 and UK’s FTSE 100 lost 17.14 points or 0.26% to 6,637.33.

Asian markets ended higher on Friday, as better-than-expected Chinese economic data helped outweigh news of a horrific terrorist attack in Nice, France, which killed at least 84 people and wounded dozens of innocent civilians. Markets also took the Bank of England's surprise decision to keep rates on hold in their stride. Meanwhile, China's industrial output strengthened in June, retail sales rose at a faster pace, a broadest measure of new credit rose more than expected and GDP growth held steady at 6.7 percent in the second quarter on the back of Beijing's aggressive stimulus measures, helping ease worries about the country's economic slowdown. Japanese shares rose, with an extended rally on Wall Street, a weakening yen and Line Corp's strong debut in New York and Tokyo bolstering investor sentiment. The yen fell broadly to hit a three-week low versus the dollar. Though, Chinese shares ended unchanged as the latest data dented hopes of additional stimulus.