Post Session: Quick Review

Indian equity markets that started their trade on a weak note in early deals continued reeling under pressure throughout the day before closing in red. The market started their trade on cautious note ahead of last monetary policy review by the outgoing RBI Governor Raghuram Rajan. The downside was however capped as the Lok Sabha late last night unanimously passed the amendments to the GST Bill recommended by the Rajya Sabha, all 443 member present in the house voted in favour of the bill. Finance Minister Arun Jaitley said that the tax rate under the GST regime will be kept at minimum workable rate as no state government can annoy its people by having a higher rate. The losses enlarged after Reserve Bank of India (RBI) at its policy meet kept key policy rates unchanged and retained FY17 GDP growth forecast at 7.6%. Inflation at a two-year high has prevented Rajan from cutting interest rates at his final policy review as head of the central bank. RBI warned of risk of inflation crossing target of 5% for March 2017. Going forward, RBI hinted that the full implementation of the recommendations of the 7th central pay commission (CPC) on allowances will affect the magnitude of the direct effect of house rents on the retail inflation. RBI also noted that prices of pulses and cereals are rising and services inflation remains somewhat sticky. The sentiments were further weighed down by private report that indicated consumer sentiment waned in July this year due to decreasing optimism towards personal finances, business environment, employment and the real estate market.  The MNI India Consumer Sentiment Indicator decreased 2.6 percent on month-on-month basis to 111.6 in July, offsetting last month’s pickup, which had left confidence running at a nine-month high of 114.7.

On the global front, Asian shares closed mostly in green, with Chinese index climbed for sixth straight session, as July consumer inflation data kept alive hopes of further monetary policy easing, while improving producer prices attracted bets on resources shares. European stocks nudged higher, with gains in telecommunication and oil shares helping keep the regional’s benchmark hovering around a two-week high.

Back home, the street continued their weak trade with little optimism after EEPC India, the apex organization of the engineering exporters, said that India has achieved a landmark milestone of economic reforms, which would help the government’s flagship programme of Make in India giving boost to the manufacturing. Interest rate-sensitive stocks from Banking, Real Estate and Auto stable displayed mixed response after RBI decided to maintain status quo on policy rate in its policy review.

The BSE Sensex ended at 28066.70, down by 115.87 points or 0.41% after trading in a range of 27956.77 and 28289.96. 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 0.41%, while Small cap index was down by 0.48%. (Provisional)

The top gaining sectoral indices on the BSE were Consumer Durables up by 0.29% and Bankex up by 0.04%, while Oil & Gas down by 0.85%, FMCG down by 0.81%, Metal down by 0.68%, Auto down by 0.60% and Capital Goods down by 0.28% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Coal India up by 1.49%, ONGC up by 1.19%, SBI up by 0.75%, Axis Bank up by 0.74% and Wipro up by 0.41%. (Provisional)

On the flip side, Lupin down by 5.48%, HDFC down by 1.94%, Hero MotoCorp down by 1.43%, Power Grid Corporation down by 1.37% and Mahindra & Mahindra down by 1.24% were the top losers. (Provisional)

Meanwhile, the country’s biggest ever spectrum auction will start on 29 September, 2016, in which the Department of Telecom (DoT) will put mobile phone airwaves worth Rs 5.63 lakh crore at the base price value for bidding. The DoT will hold a pre-bid meeting with companies on August 13, after which the final auction rules will be announced.

DoT has said that the government is giving a commitment of 30 days to assign spectrum from the day the payment is made, and has reduced the lock-in rules for diluting promoters’ equity from seven years to 1 year. It also said that large chunk of spectrum is being put for auction which address issue of fragmentation, improve quality of service and rules have been made bidder friendly.

For the forthcoming auctions, the spectrum usage charge (SUC) has been fixed at 3% or the minimum amount paid by operators during FY16 as floor. The operators will have the choice of both upfront and installments options. The service providers who win airwaves below 1 GHz bandwidth will have to pay 25% upfront, and those winning above that the upfront payment will be 50%. The remainder can be paid in equal annual instalments at a base rate of 9.3%, lower than the 10% fixed during the auctions held in 2015.

The department is putting on sale spectrum bands of 700MHz, 800MHz, 900MHz 1,800MHz, 2,100MHz, 2,300 MHz and 2,500 MHz. The 700 MHz band, which is the most expensive and most effective, is likely to generate less interest from telecom service providers. The total spectrum on the block also includes 197MHz of additional spectrum in the 1,800 MHz band and 37.5MHz in the 800 MHz band, released due to harmonization of spectrum in these bands.
The CNX Nifty ended at 8670.55, down by 40.80 points or 0.47% after trading in a range of 8638.20 and 8728.35. There were 17 stocks advancing against 33 stocks declining, while 1 stock remained unchanged on the index. (Provisional)

The top gainers on Nifty were Tata Power up by 3.57%, Zee Entertainment up by 2.22%, Coal India up by 1.52%, ONGC up by 1.19% and SBI up by 0.96%. (Provisional)

On the flip side, Idea Cellular down by 5.97%, Lupin down by 5.52%, Ambuja Cement down by 2.53%, Grasim Industries down by 2.22% and Eicher Motors down by 1.97% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 23.3 points or 0.34% to 6,832.43, Germany’s DAX increased 50.24 points or 0.48% to 10,482.60 and France’s CAC increased 19.96 points or 0.45% to 4,435.42.

Asian equity markets showed a mixed performance on Tuesday, as losses on Wall Street overnight and a decline in oil prices in Asian deals offset hopes that lower inflation figures will give Beijing room to ease monetary policy in the world's second-largest economy. Chinese shares rose notably as trade data released the previous day and today's inflation numbers offered scope for more growth-supportive policies by the Chinese authorities. Reports showed that China's consumer inflation rose 1.8 percent year-over-year in July, in line with expectations and down from 1.9 percent in June. The producer price index dropped 1.7 percent in the month, smaller than June's 2.6 percent decline. Japanese shares ended higher, touching a 2-week peak in thin trade thanks to a wobbly yen. Hong Kong shares ended little changed, taking a breather after hitting eight-month highs the previous session, as fall in IT and utility stocks offset gains in energy and property plays. Markets in Singapore were shut for a holiday.