Post Session: Quick Review

Friday turned out to be a disappointing session of trade for Indian equity benchmarks where key gauges ended the session with modest cut. Indian equity benchmarks had started the trade in green as Moody’s Investors Service retained India’s growth forecast at 7.5% for 2016 and revised upwards estimates for China to 6.6% citing strong fiscal and monetary support. Closer home, foreign portfolio investors (FPIs) bought shares worth a net Rs 162.17 crore on August 18, 2016, as per provisional data released by the stock exchanges. K. Balamurugan, Additional Commissioner, Ministry of Finance, said that the Goods and Services Tax is one of the biggest tax reforms since Independence. The GST will not have any problem for those who are paying tax sincerely but it will affect those who are not paying properly. The markets pared its gains in afternoon session and moved into negative territory on account of selling in front line blue chip counters. The sentiments were also dampened as Indian rupee weakened for the second consecutive session against the US dollar, tracking losses in the Asian currencies markets. Investors remained cautious ahead of the announcement of a new governor for the Reserve Bank of India (RBI) expected anytime now.

On the global front, Asian shares ended mixed, as crude oil rally was offset by some Federal Reserve officials who reiterated the case for raising interest rates in coming months. Home price rises in China’s biggest cities showed signs of easing in July, adding to concerns that one of the economy’s key growth drivers is losing steam but offering some relief for policymakers worried about property bubbles. European shares were poised to post their biggest weekly loss in two months on back of a weaker dollar and hopes of a production cut.

Back home, the street continues their weak trade tracking European counterparts. Buying was witnessed in metal stocks as India has slapped anti-dumping duty on certain cold-rolled flat steel products from four nations including China and South Korea to guard domestic industry from cheap imports. Mixed response were seen in State Bank of India (SBI) and its associate banks on approval of the share swap ratios for the merger of five associate banks and Bharatiya Mahila Bank with SBI. SBI will issue 28 shares of Rs 1 each for 10 shares of Rs 10 each for the State Bank of Bikaner and Jaipur, and 22 shares for 10 shares of the State Bank of Mysore. Likewise, shareholders of State Bank of Travancore (SBT) will also get 22 shares in SBI for every 10 shares held by them in SBT. SBI will also issue 44.2 million shares to the government for one billion shares of Bharatiya Mahila Bank, a Delhi-based bank started in 2013 and wholly-owned by the government.

The BSE Sensex ended at 28081.63, down by 41.81 points or 0.15% after trading in a range of 28026.12 and 28212.30. There were 9 stocks advancing against 20 stocks declining, while 1 stock remained unchanged. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.49%, while Small cap index up by 0.37%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 0.90%, PSU up by 0.70%, Consumer Durables up by 0.68%, Oil & Gas up by 0.56% and Bankex up by 0.45% while, Realty down by 0.75%, Auto down by 0.55%, TECK down by 0.49% and IT down by 0.45% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were SBI up by 4.13%, Tata Steel up by 0.98%, Hindustan Unilever up by 0.83%, Cipla up by 0.53% and Larsen & Toubro up by 0.43%. (Provisional)

On the flip side, Coal India down by 1.27%, TCS down by 1.13%, Lupin down by 1.06%, Sun Pharma down by 0.79% and Power Grid Corporation down by 0.71% were the top losers. (Provisional)

Meanwhile, in the spirit of Co-operative federalism and in order to bring in the transparency and predictability in the Open Market Borrowings (OMBs) by the states, government has decided to simplify the consent mechanism for OMBs under Article 293 (3) of the Constitution. Finance Ministry said that under the simplified mechanism, states would be given one-time consent to borrow funds based on their borrowing calendar for the first nine months of the fiscal.

The simplified procedure will ensure that consent under Article 293 (3) is issued only on three occasions during the year, one in the month of April for first nine months after fixation of borrowing ceilings, second in the month of December for the first two months of the fourth quarter and last in the month of March after the assessment of actual borrowings by the States.

Ministry further said based on the assessment of details of borrowings and repayment thereof actual for first 3 quarters and estimates for last quarter, consent for the first two months of Fourth Quarter will be given. The consent for the last month that is March will be given based on the re-assessment of actual borrowings for the first 11 months by the States. Till now, states were required to obtain quarterly consent from the Central Government for raising OMBs within the Net Borrowing Ceiling fixed for each of the States as per the formula prescribed by the Fourteenth Finance Commission.
 
The CNX Nifty ended at 8667.15, down by 6.10 points or 0.07% after trading in a range of 8647.10 and 8696.60. There were 21 stocks advancing against 30 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bank of Baroda up by 4.08%, SBI up by 4.07%, Hindalco up by 2.82%, Aurobindo Pharma up by 1.57% and Ambuja Cement up by 1.45%. (Provisional)

On the flip side, Eicher Motors down by 1.89%, Bharti Infratel down by 1.71%, TCS down by 1.36%, Coal India down by 1.34% and Lupin down by 1.16% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 11.34 points or 0.17% to 6,857.62, Germany’s DAX decreased 73.54 points or 0.69% to 10,529.49 and France’s CAC decreased 37.44 points or 0.84% to 4,399.62.

Asian equity markets showed a mixed closing on Friday as a rally in crude prices was offset by hawkish comments from New York Fed President William Dudley and San Francisco Fed President John Williams over US interest-rate increases. Fed Chair Janet Yellen speaks at a meeting of global policy makers in Jackson Hole, Wyoming next week, with investors looking for clues over the timing of the next rate hike. Japanese shares closed modestly higher as the strong yen trend paused. Meanwhile, Chinese shares closed on a flat note after rising earlier in the week on hopes of additional stimulus as a slew of data underscored persisting weakness in the world's second-largest economy.