Post Session: Quick Review

Indian equity benchmarks displayed a firm trade throughout the session but final hour of selling pulled the stocks lower with modest losses. The benchmarks made a positive start in early deals on account of buying in frontline blue chip counters. The sentiments were on optimistic note with statement of Ravindra Dholakia, one of the three government appointees to the newly formed Monetary Policy Committee (MPC) that there will be no tug of war in the MPC. The tax department just within the week after the first meeting of the GST Council has come out with three draft rules and their formats relating to registration, invoice and payments which would be finalized by week-end. Some support came after Indian rupee strengthened in the opening trade against the dollar at the Interbank Foreign Exchange following selling of American currency by exporters and bankers amid higher opening at domestic equity markets. Meanwhile, according to the latest Asian Development Outlook (ADO) 2016 prediction, India’s economy will remain on a strong growth path this fiscal and clock a growth of 7.4% aided by implementation of key structural reforms, robust consumer demand and higher agricultural output driven by a good monsoon. The update enlightened that as corporates successfully deleverage and bank reform boosts lending, recovery in private investment will help drive growth to 7.8% in 2017. However, selling crept in after WTO estimates showed that world trade will grow more slowly than expected in 2016, expanding by just 1.7%, well below the April forecast of 2.8%. The forecast for 2017 has also been revised, with trade now expected to grow between 1.8% and 3.1%, down from 3.6% previously. With expected global GDP growth of 2.2% in 2016, this year would mark the slowest pace of trade and output growth since the financial crisis of 2009. Investors’ attention has now turned to American politics with Republican candidate Donald Trump and Democrat Hillary Clinton taking part in the US presidential debate. The two US presidential candidates have clashed over jobs, terrorism and race in a bitter television debate. It was the first of three planned presidential debates.

On the global front, Asian markets ended mostly in green, as global investors reacted to the first US presidential candidate debate. Japanese Prime Minister Shinzo Abe said that the Bank of Japan’s new policy framework was intended to strengthen monetary policy and achieve its 2 percent inflation target at the earliest possible time. European shares were trading lower as Deutsche’s woes worsen and post-debate relief rally fizzled out. Energy-related stocks were mixed as market participants were also eyeing an informal meeting of OPEC members this week to discuss a potential production freeze.

Back home, telecom stocks Bharti Airtel, Idea Cellular and MTNL were in red after telecom regulator TRAI said it will slap show cause notices on operators for call drops that are far exceeding the norm. The regulator stepped in as row between incumbents like Airtel and new entrant Reliance Jio has escalated after Mukesh Ambani-led Jio charged dominant incumbent operators of providing far fewer points of interconnect than needed for its users to complete calls on rival networks.

The BSE Sensex ended at 28259.85, down by 34.43 points or 0.12% after trading in a range of 28179.34 and 28432.74. There were 14 stocks advancing against 16 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.18%, while Small cap index was up by 0.16%. (Provisional)

The top gaining sectoral indices on the BSE were IT up by 0.74%, TECK up by 0.40%, Realty up by 0.34%, FMCG up by 0.03% and Consumer Durables up by 0.01%, while Capital Goods down by 1.06%, Oil & Gas down by 0.70%, Metal down by 0.56%, PSU down by 0.52% and Auto down by 0.42% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were TCS up by 1.38%, Lupin up by 1.31%, Wipro up by 1.10%, Asian Paints up by 1.08% and Hindustan Unilever up by 0.54%. (Provisional)

On the flip side, Bharti Airtel down by 2.04%, Adani Ports & Special Economic Zone down by 2.02%, Larsen & Toubro down by 1.77%, GAIL India down by 1.34% and ONGC down by 1.16% were the top losers. (Provisional)

Meanwhile, global rating agency, Moody's Investors Service in its latest report stated that India's petroleum consumption will likely grow by 6 percent in 2017-18, double the rate at which fuel demand in China is projected to grow. Moody’s said that China's slowing economic growth will temper underlying product demand over the next 12-18 months. As per the estimations, China's demand for refined-oil products will grow around 3 percent annually in the next two years as compared with 4-5 percent on average over the past five years.

The rating agency said that slow but steady demand growth from China and India supports its stable outlook for the Asian refining and marketing (R&M) industry, despite a likely modest earnings contraction through 2017 and also anticipates EBITDA for the industry will decline by 1-3 percent through 2017. Further, the US Energy Information Administration (EIA) projects total liquid fuels consumption in the Asia Pacific to rise by 0.9 million barrels per day (bpd) in 2017 to 33.3 million bpd. China and India remain the fastest-growing product markets in Asia, collectively accounting for 80 percent of total demand growth in the region.

Moody’s said that Asian refiners have started to dial back their capacity additions and this trend is expected to continue in 2017-18, although the immediate impact on an oversupplied market will be somewhat limited. It further said that refiners have canceled, delayed or scaled back large- scale, greenfield refineries as well as capacity expansion projects that were originally planned to come on-stream over the next 18 months. It also believes that such project delays and cancellations are partly in response to the ongoing supply glut in Asia, following over 400,000 barrels per day (bpd) of new capacity from India over the past few months.

The report however stated that economic slowdown in China, industry cyclicality and capacity overhang continue to pressure Asian refiners, despite stable outlook. Moody’s may change their outlook to negative if net refining capacity additions and increasing refinery output in Asia materially outpace growth in demand, such that their projected EBITDA for the industry declines by more than 10 percent; or if demand from China and India contracts. On the other hand, it would consider a positive outlook if regional demand overwhelms capacity additions such that refining margins exceed $ 8 per barrel on a sustained basis and if it raises its EBITDA growth forecast to above 10 percent.

The CNX Nifty ended at 8720.75, down by 2.30 points or 0.03% after trading in a range of 8690.50 and 8768.50. There were 19 stocks advancing against 32 stocks declining on the index.  (Provisional)

The top gainers on Nifty were Aurobindo Pharma up by 2.66%, TCS up by 1.50%, Lupin up by 1.27%, Yes Bank up by 1.19% and Ambuja Cement up by 1.16%. (Provisional)

On the flip side, Adani Ports & Special Economic Zone down by 2.18%, Hindalco down by 1.69%, Bharti Airtel down by 1.67%, BPCL down by 1.61% and Larsen & Toubro down by 1.53% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 14.19 points or 0.21% to 6,803.85, Germany’s DAX decreased 89.81 points or 0.86% to 10,303.90 and France’s CAC decreased 23.4 points or 0.53% to 4,384.45.

Asian equity markets ended mostly in green on Tuesday as investors conclude that US Democratic candidate Hillary Clinton won the first presidential debate over Republican Donald Trump. China stocks ended modestly higher but trade was thin, with many investors reluctant to stake out fresh positions ahead of a week-long holiday despite a surge in August industrial profits. Meanwhile, Japanese shares snapped a two-day losing streak, even as banking stocks remained under selling pressure in the wake of falling US bond yields and worries about the financial health of German lender Deutsche Bank. Taiwan stock exchange was closed for the day due to Typhoon MEGI.