Post Session: Quick Review

Friday turned out to be disappointing session for the Indian equity indices which got pounded by around half a percentage point, amid growing anxiety over the passage of the GST Bill weighed on investors’ sentiment. After a negative opening, the domestic bourses never looked in recovery mood and ended the trade near intraday lows, breaching their crucial support levels of 28,100 (Sensex) and 8,650 (Nifty). Selling was both brutal and wide-based as most of sectoral indices on BSE ended in red terrain. Counters which featured in the list of worst performers included telecom, capital goods and banking.

Sentiments also remained dampened after Credit rating agency, ICRA stated that the Reserve Bank of India (RBI) is unlikely to cut policy rates in its upcoming monetary policy review on August 9, but a 0.25 per cent cut is on cards in 2016. It said the central bank is expected to keep rates unchanged for now as the Consumer Price Index (CPI) inflation at around 5.8 per cent in June is close to upper end of the RBI’s target of 4 per cent (+/- 2 per cent). Traders failed to get any sense of relief with Finance Minister Arun Jaitley stating that India registered 53 per cent increase in Foreign Direct Investment (FDI) in last two years as the investment climate brightened due to steps taken to foster growth, price stability and fiscal prudence which also improved the overall macroeconomic stability.

Weakness in regional peers too dampened, with most of the Asian counters ending in red on the back of BOJ disappointment and the oil price downturn, with U.S. crude futures falling further towards the $40 mark. European markets were trading mostly in red in early deals after GDP growth in the eurozone fell to 0.3% in the second quarter. This was down from growth of 0.6% in the first quarter of the year.

Back home, emergence of profit-booking by participants despite the beginning of August futures and options series, snapped the two-day winning streak. Traders failed to take any comfort with India Meteorological Department’s (IMD) prediction that with reduced chances of La Nina weather event, the monsoon rainfall this year is likely to be normal and not ‘above normal’, even though monsoon rains in India were 4 percent below average in the last one week.

Selling in banking counter too dampened sentiment, as their quarterly profits will be hit by increasing NPAs. However, stocks of logistic companies edged higher on expectations that the government would be able to pass the Goods and Services Tax Bill in the current session of Parliament. Sugar stocks too remained on buyers’ radar, as the government is mulling imposing stock limit for sugar millers and restricting domestic sales by fixing quota on each mill to tame sweetener’s retail prices.

The NSE’s 50-share broadly followed index -- Nifty -- fell by around thirty points to end below the psychological 8,650 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex -- declined by around one hundred and sixty points to finish below the psychological 28,100 mark. However, broader markets outperformed benchmarks and ended the session with a gain of around half a percent.

The market breadth remained in the favour of decliners, as there were 1,235 shares on the gaining side against 1,446 shares on the losing side while 214 shares remain unchanged. (Provisional)

The BSE Sensex ended at 28051.86, down by 156.76 points or 0.56% after trading in a range of 28037.87 and 28233.47. There were 15 stocks advancing against 15 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.70%, while Small cap index up by 0.23%. (Provisional)

The top gaining sectoral indices on the BSE were Auto up by 0.79%, Consumer Discretionary Goods & Services up by 0.79%, Healthcare up by 0.72%, Oil & Gas up by 0.51% and Utilities up by 0.39%, while Telecom down by 1.64%, Consumer Durables down by 0.92%, Capital Goods down by 0.73%, Bankex down by 0.63% and Metal down by 0.63% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Adani Ports &Special up by 2.89%, Lupin up by 2.29%, Bajaj Auto up by 1.89%, Cipla up by 1.83% and Hindustan Unilever up by 1.73%. On the flip side, ICICI Bank down by 3.55%, Bharti Airtel down by 3.12%, HDFC down by 1.82%, Larsen & Toubro down by 1.33% and Wipro down by 1.32% were the top losers. (Provisional)

Meanwhile, Railways has to perform its dual role of commercial organization and vehicle for fulfillment of social obligations. Railway Minister Suresh Prabhu has emphasized that and said that if we run it as a commercial enterprise, we cannot fulfill social obligations and if we fulfill the social obligations, we cannot run it as a commercial enterprise. But we have to fulfill our social obligations while running this as a commercial enterprise.

Suresh Prabhu said that constant efforts should be on to find ways to increase passenger and freight traffic and also the share of non-fare revenue as railways is facing challenges. Minister said that “If we do not think about competition, we cannot improve. At the micro level, we should see how the competition is faring. We therefore, have to properly make our pricing policy for both passenger and freight traffic. And at the same time we have to keep long term interest of the railways in mind”.

Emphasizing on station redevelopment through PPP route, he said it is a priority for us because Railways cannot work only with our own resources. Joint ventures with states are very much necessary Hence PPP route should be explored wherever possible to benefit the states and to fund the joint venture projects. He said railways needs to strike a balance between Japanese and Chinese railway financial models as China invests heavily for the development of their railways. Extra Budgetary resources are necessary for the development of railways.

The CNX Nifty ended at 8638.50, down by 27.80 points or 0.32% after trading in a range of 8631.15 and 8670.35. There were 24 stocks advancing against 27 stocks declining on the index. (Provisional)

The top gainers on Nifty were Eicher Motors up by 6.45%, Adani Ports & Special up by 3.17%, Zee Entertainment up by 2.57%, Lupin up by 2.05% and Tata Power up by 1.84%. On the flip side, ICICI Bank down by 3.35%, Bharti Airtel down by 2.65%, BHEL down by 2.38%, HDFC down by 1.97% and Bank Of Baroda down by 1.81% were the top losers. (Provisional)

European markets were trading mostly in red; UK’s FTSE 100 decreased 21.97 points or 0.33% to 6,699.09 and France’s CAC was down by 2.45 points or 0.06% to 4,418.13, while Germany’s DAX was up by 42.69 points or 0.42% to 10,317.62.

Asian equity markets ended mostly lower on Friday on the back of Bank of Japan’s disappointment and the oil price downturn, with US crude futures falling further towards the $40 mark in Asian trade on concerns over a supply glut and waning demand from key international markets. The safe-haven Japanese yen soared after the Bank of Japan's fresh stimulus measures disappointed markets. Bank of Japan raised the target for exchange-traded fund purchases and doubled its dollar lending program, but kept its interest rate and the pace of monetary base expansion unchanged. The central bank also downgraded its projections for inflation and growth for fiscal 2016. Chinese shares closed lower on worries that regulatory changes are coming to restrict investments by small banks in the rapidly growing $3.5 trillion wealth management product industry. However, Japanese shares themselves rose in volatile trade, with banks and insurers pacing gainers, after the central bank refrained from expanding negative interest rates and ensured smooth funding in foreign currencies.