Post Session: Quick Review

Wednesday turned out to be a disappointing session of trade for Indian equity benchmarks where frontline gauges ended the session with a cut of around quarter percent, as investors opted to book profit after yesterday's huge rally. The benchmarks made a cautious start and traded slightly in red in early deals with minutes of the Reserve Bank of India's maiden monetary policy committee (MPC) meeting, released on Tuesday, whereby the rate panel eyed growth concerns. The minutes showed that broad concerns over economic growth and relief from the pullback in inflation, spurred the bank's recent rate cut decision. The downside remained capped as after the meeting concluded on Tuesday; the GST Council managed to arrive at a consensus on how to compensate the states for the losses they incur on account of the tax reform that subsumes various state and central levies. The GST Council finalized the compensation formula for states for potential revenue loss, converging at an assumption of 14 percent revenue growth rate over the base year of 2015-16. However, the Congress party has been arguing for capping the GST standard rate at 18%, which it says is the appropriate rate. With the new structure proposal capping the rate at 26% and also adding a cess on top of it, this is unlikely to pass the muster. The cess is already attracting opposition. Markets gained some strength in late afternoon session and pared all of their losses but the recovery proved short lived and selling in frontline counters dragged the benchmarks below neutral lines. Investors gained some confidence with Steel Minister Chaudhary Birender Singh's statement that India is seen as the sole bright spot in a troubled global economy. Confident that 'Make in India' will transform the nation into a manufacturing powerhouse, Minister has also said that nearly $26 billion has flowed into the country this year so far since we opened the floodgates for FDI across sectors.  Investors will now be eying the outcome of GST and the street is awaiting the implementation of the GST which hopefully will start to happen early next year.

On the global front, Asian markets ended mostly higher as a barrage of Chinese data confirmed the economy had stabilized on the back of government spending and a hot housing market, even if worries about debt continue to mount. China’s economy grew 6.7% in the third quarter from a year earlier, steady from the previous quarter and in line with expectations. European stocks were trading lower as investors became more cautious ahead of the European Central Bank’s upcoming policy meeting on Thursday.

Back home, selected auto stocks were under pressure as the road transport ministry has said that Form 22 under the Central Motor Vehicles Act, 1989, has been amended. From April next year manufacturers would have to provide initial certificate of compliance with pollution standards, safety standards of components quality and road-worthiness certificate for all vehicles. Logistics companies edged higher after the GST council worked out a compensation formula for states and is now bracing for a testy debate on rates.

The BSE Sensex ended at 27984.37, down by 66.51 points or 0.24% after trading in a range of 27926.17 and 28131.07. There were 17 stocks advancing against 13 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.06%, while Small cap index was up by 0.55%. (Provisional)

The top gaining sectoral indices on the BSE were Power up by 1.16%, PSU up by 0.76%, Oil & Gas up by 0.75%, TECK up by 0.26% and IT up by 0.23%, while FMCG down by 1.09%, Realty down by 0.91%, Auto down by 0.54%, Bankex down by 0.52% and Capital Goods down by 0.05% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Wipro up by 2.57%, Lupin up by 1.98%, GAIL India up by 1.71%, Adani Ports & Special Economic Zone up by 1.61% and Power Grid up by 1.08%. (Provisional)

On the flip side, ITC down by 2.56%, ICICI Bank down by 2.00%, Hero MotoCorp down by 1.33%, Hindustan Unilever down by 1.29% and SBI down by 0.84% were the top losers. (Provisional)

Meanwhile, the Cellular Operators Association of India (COAI) has urged the telecom regulator TRAI to postpone review of interconnects usage charges (IUC) till March 2017. The industry body has said that the regulator has initiated various other consultations which depending upon their final outcomes 'may have a significant direct impact on cost structures, changes in technology and other market dynamics’.

TRAI had fixed October 17 as deadline for receiving industry comments on the contentious consultation paper on interconnection usage charges or IUC, which is paid by one telecom operator to another for connecting phone calls. COAI reportedly said that actual network-related costs incurred by telecom operators should be used to compute the interconnect charges, thereby batting for an increase in mobile termination charge.

Telecom operators including Bharti Airtel, Vodafone and Idea Cellular have sought to defer the review till March 2017. COAI in its latest submission to TRAI said that 'It is therefore critical that the IUC review should not be held at this stage and be deferred by some months, that is, after end March 2017. By such time there will be more clarity on several issues’’. Trai had extended the date for receiving comments on the paper twice.

COAI, in its response pointed out that 'all its member operators support and recommend that mobile termination charge should be determined on the cost based principle, only Reliance Jio has a divergent view that 'Bill and Keep' approach should be adopted for determining the MTC. The mobile termination charge is currently pegged at 14 paise per minute and a cost-based model would imply an increase in termination charges. The cost-based model includes network operating costs, overhead costs, spectrum costs and capital costs.

The CNX Nifty ended at 8655.55, down by 22.35 points or 0.26% after trading in a range of 8636.70 and 8698.75. There were 24 stocks advancing against 26 stocks declining on the index, while one stock remained unchanged. (Provisional)

The top gainers on Nifty were Idea Cellular up by 7.14%, BHEL up by 3.45%, Tata Power up by 3.05%, Wipro up by 2.33% and Lupin up by 2.08%. (Provisional)
On the flip side, ITC down by 2.42%, ICICI Bank down by 1.87%, Hero MotoCorp down by 1.30%, Hindustan Unilever down by 1.18% and HDFC down by 1.15% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 18.88 points or 0.27% to 6,981.18, Germany’s DAX decreased 33.48 points or 0.31% to 10,598.07 and France’s CAC decreased 9.65 points or 0.21% to 4,499.26.

Asian stocks ended mostly in green on Wednesday, as oil extended overnight gains, while the dollar held steady against the yen and the highly anticipated Chinese economic data came along expected lines. Japanese shares ended higher, taking cues from a bounce in Wall Street shares and as investors looked ahead to a slew of corporate earnings results next week. Meanwhile, Chinese shares closed on a flat note even as a barrage of data showed fresh signs of stability in the world's second-largest economy. China's GDP expanded at an annual 6.7 percent in the third quarter of 2016 - in line with expectations and unchanged from the Q2 reading. Industrial output gained an annual 6.1 percent in September - shy of forecasts for 6.4 percent and down from 6.3 percent in August, while retail sales and fixed asset investment growth matched forecasts.