Post Session: Quick Review

Today’s session turned out to be disappointing day of trade for Indian equity benchmarks which wiped off all the gains of the calendar year 2016. Key benchmark indices extended losses with Nifty touching almost five-month low, while Sensex hit almost six-month low. The markets made a positive start and pared all the gains in early deals on account of lingering worries over the cash squeeze in the domestic economy and outflow of foreign institutional investment amid fears of a rate hike by the US Federal Reserve. The demonetisation effect also continues to weigh on the bourses with several brokerage firms cutting GDP growth estimates for FY17, FY18. A private report has stated that India’s economic growth is expected to fall by up to 1 percent point over the next 12 months in the wake of demonetisation, while longer-term gains will depend on follow-up reforms. Moody’s Investors Service said Indian businesses will see strongest profit growth over the next 12 to 18 months on the back of sustained economic expansion and project completions. However, downside risks to this projection stem from GDP growth falling below 6% and/or weakening of commodity prices resulting in lower EBITDA growth. A combined opposition today disrupted the proceedings of Lok Sabha for the fourth consecutive day demanding discussion on demonetisation under a rule that entails voting, leading to adjournment of the House twice. The Opposition had stalled proceedings in both Houses last week, demanding the Prime Minister’s response in the matter.

Separately, the sentiments further weighed down as Centre-state stalemate over GST jurisdiction continues. The Centre and States on Sunday failed to reach a consensus on who will control which set of assessees under GST. The said meeting which came ahead of the formal meeting of the all powerful GST Council on November 25, was held after the Centre and States were deadlocked over the issue at two previous meetings. Adding anxiety among market participants, the private report indicated that foreign investors have pulled out close to $3 billion from the Indian capital market this month so far on lingering concerns over the government’s demonetisation decision and fears of a rate hike by the US Federal Reserve. According to data, net withdrawal by FPIs from equities stood at Rs 9,841 crore during November 1-18, while the same from the debt market was Rs 9,720 crore during the period under review, translating into a total outflow of Rs 19,561 crore ($2.89 billion).

On the global front, Asian markets ended mostly in green, as dollar strength took a breather and oil prices jumped. Japan stocks end higher as a weak yen and decent economic data boosted Tokyo-traded shares. European stocks were trading lower, with investors eyeing upcoming comments by European Central Bank President Mario Drgahi due later in the day, after he reaffirmed last week that the bank was ready to implement fresh stimulus measures if necessary.

The BSE Sensex ended at 25818.12, down by 332.12 points or 1.27% after trading in a range of 25717.93 and 26270.28. There were 7 stocks advancing against 23 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 2.65%, while Small cap index was down by 3.05%. (Provisional)

The losing sectoral indices on the BSE were Realty down by 4.33%, Metal down by 3.38%, PSU down by 3.05%, Auto down by 3.02% and Bankex down by 2.74%, while there were no gainers on the indices.  (Provisional)

The top gainers on the Sensex were Wipro up by 1.12%, TCS up by 0.65%, ONGC up by 0.40%, Reliance Industries up by 0.35% and Hero MotoCorp up by 0.29%. (Provisional)

On the flip side, SBI down by 6.06%, Tata Steel down by 3.27%, Power Grid down by 3.23%, Maruti Suzuki down by 3.03% and Tata Motors down by 3.00% were the top losers. (Provisional)

Meanwhile, in order to discuss issues relating to exports and effects of demonetization, Commerce and Industry Minister Nirmala Sitharaman has called a meeting of export promotion councils and other sector representatives including sectors from pharmaceuticals and textiles on November 21.

After recording negative growth for about two-years, exports have started recording positive growth. The outbound shipments continued to grow for the second month in a row, expanding by 9.59 per cent to $ 23.51 billion in October on healthy growth in shipments of jewellery and engineering products. Traders are worried that the move has implications on the supply side and demonetisation would impact exporters particularly small and medium units as most of them still deal in cash.

Expressing anxieties on the development, Council of Leather Exports (CLE) Chairman Rafeeq Ahmed has said that the move to put limitations on cash withdrawal which is impacting the working capital of exporters as they have to pay cash for certain perks like overtime and extra incentives to labourers. Temporary workers too demand cash. Further, trade experts have said that the move has implications on the supply side.

On November 8, 2016, the government had declared demonetisation of Rs 500 and Rs 1,000 note and replace them with new Rs 500 and Rs 2,000 notes to curb corruption and make efforts to recover ‘black’ or unaccounted money.

The CNX Nifty ended at 7942.85, down by 131.25 points or 1.63% after trading in a range of 7916.40 and 8102.45. There were 7 stocks advancing against 44 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bharti Infratel up by 2.05%, Wipro up by 0.81%, ONGC up by 0.80%, Reliance Industries up by 0.56% and TCS up by 0.35%. (Provisional)

On the flip side, Bank of Baroda down by 8.79%, SBI down by 6.53%, Eicher Motors down by 6.07%, Yes Bank down by 5.49% and Hindalco down by 5.38% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 11.86 points or 0.18% to 6,763.91, Germany’s DAX decreased 52.36 points or 0.49% to 10,612.20 and France’s CAC decreased 16.56 points or 0.37% to 4,487.79.

Asian equity markets ended mostly in green on Monday, although the yuan's weakness as well as the dollar's continued strength against the yen supported shares in China and Japan. Chinese stocks rose to a fresh 10-month high led by blue-chips, but gains were limited as some investors remained sceptical that the uptrend could extend further. Meanwhile, Japan's Nikkei rose gaining for a fourth day after a further weakening in the yen boosted overall sentiment, while mining stocks staged a rally thanks to rising oil prices. Though, Seoul shares retreated on institutional selling on expectations of faster-than-expected Federal Reserve interest rate increases.