Post Session: Quick Review

Indian equity benchmarks traded on lackluster note and ended the session in red with cut of around one and quarter percent. The final leg of selling coupled with political uncertainty in Italy and France intensified the fall which dragged Nifty close below 8100 mark. The markets made a gap-down start in early deals because of major spike in crude oil prices, cash crunch caused by demonetization and mixed signals from the US market have taken the toll on the street. The rupee wiped off its opening gains and was trading down on account of sustained foreign fund outflows coupled with buying of American currency by banks and importers. Foreign Institutional Investors stood net sellers in domestic equity markets on Thursday as they sold shares worth of Rs 360.39 crore with gross purchases and gross sales of Rs 14,573.16 crore and Rs 14,933.55 crore, respectively, according to the data available with NSDL. The demonetization drive continues to hurt the domestic economy. The ratings agency, CRISIL lowered the country’s GDP growth forecast by 100 basis points to 6.9 percent from 7.9 percent earlier for the current fiscal. At the same time, the agency expects the consumer price index (CPI)-based inflation to print lower at 4.7 percent as compared to its earlier estimate of 5 percent. Investors failed to draw any support on reports that Government of India on the recommendation of the Reserve Bank of India, decided to revise the ceiling for issue of securities under the Market Stabilisation Scheme (MSS) to Rs 6 lakh crore. The earlier limit was Rs 30,000 crore. This hike is valid only for 28 days. Under MSS, the central bank will issue cash management bills (CMB). A UN study report ‘Economic and Social Survey for Asia and the Pacific 2016 of the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP)’ highlighted that India’s economy is projected to grow at 7.6 percent in 2017 as investment regains momentum and manufacturing base strengthens on the back of structural reforms in the country, crediting India and China for steady growth of the Asia-Pacific region.

On the global front, Asian markets ended mostly in red; Hong Kong stocks fell the most in two weeks as investor were anxiety over US payroll data later in the day which offset optimism over the Shenzhen-Hong Kong investment link set to go live on Monday. The Chinese government has rolled out new tightening measures on capital outflow from the country, amid the yuan’s 7% decline this year. European shares were trading in red as investors remained cautious before a constitutional referendum in Italy and a presidential election in Austria on Sunday.

The BSE Sensex ended at 26234.75, down by 325.17 points or 1.22% after trading in a range of 26182.93 and 26463.06. There were 4 stocks advancing against 26 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 1.21%, while Small cap index was down by 1.35%. (Provisional)

The losing sectoral indices on the BSE were Consumer Durables down by 2.94%, Capital Goods down by 1.71%, FMCG down by 1.59%, Auto down by 1.52% and Realty down by 1.30%. (Provisional)

The top gainers on the Sensex were Bajaj Auto up by 0.93%, Cipla up by 0.60%, ICICI Bank up by 0.19% and Reliance Industries up by 0.07%. (Provisional)
On the flip side, Adani Ports & Special Economic Zone down by 3.63%, Maruti Suzuki down by 3.62%, Asian Paints down by 3.47%, Tata Motors down by 3.43% and HDFC down by 2.40% were the top losers. (Provisional)

Meanwhile, global ratings agency, CRISIL has lowered India’s Gross Domestic Product (GDP) growth forecast by 1 percent to 6.9 percent for 2016-17 from 7.9 percent forecasted earlier, saying economic recovery from demonetisation will take at least a couple of months, translating into a GDP growth of 6.6 percent for the second half, compared with 7.2 percent in the first half. At the same time, Crisil also said that the jolt to demand will also pull inflation down thus, it expects the consumer price index (CPI)-based inflation to print lower at 4.7 percent as compared to its earlier estimation of 5 percent.

The ratings agency said that the pain of demonetisation will be frontloaded and the benefits will be felt over a period of time. It also said that uncertainty coupled with a fall in consumption demand and inventory build-up, will push back recovery in private corporate investments. Additionally, it said that the problem gets compounded because of a preponderance of cash transactions in the humongous informal sector, which cannot be accurately measured or monitored.

Further talking on government's demonetisation move, CRISIL said that the problem is, the infusion of replacement notes has been very sluggish and the ensuing cash choke has pulled back the business cycle, which was beginning to accelerate on the back of a good monsoon, the seventh pay commission pay hike, and the one rank one pension scheme for veterans. It added that the cash crunch will impact private consumption demand (55 per cent of GDP) directly, and cull GDP growth in the third and fourth quarters of the current fiscal.

The CNX Nifty ended at 8088.00, down by 104.90 points or 1.28% after trading in a range of 8070.05 and 8159.30. There were 8 stocks advancing against 43 stocks declining on the index. (Provisional)

The top gainers on Nifty were Eicher Motors up by 2.78%, Tata Power up by 0.82%, Idea Cellular up by 0.82%, Bajaj Auto up by 0.72% and Ultratech Cement up by 0.54%. (Provisional)

On the flip side, Maruti Suzuki down by 3.83%, Asian Paints down by 3.42%, Adani Ports & Special Economic Zone down by 3.42%, Zee Entertainment down by 3.37% and Tata Motors down by 3.36% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 53.36 points or 0.79% to 6,699.57, Germany’s DAX decreased 94.4 points or 0.9% to 10,439.65 and France’s CAC decreased 58.64 points or 1.29% to 4,501.97.

Most of the Asian markets made a negative closing on Friday as the oil rally fizzled out and rising US Treasury yields, reflecting expectations that inflation will accelerate in 2017, triggered fresh concerns about capital outflows from emerging markets. US nonfarm payrolls data, a key economic indicator that the Federal Reserve eyes, due later in the day and the weekend's referendum on constitutional reform in Italy also kept investors on the sidelines. US employment is expected to increase by 170,000 jobs in November after climbing by 161,000 jobs in October, while the unemployment rate is expected to hold at 4.9 percent. Chinese shares ended lower as coking coal futures and construction product steel rebar tumbled after recent sharp gains. Further, Japanese shares fell modestly as the dollar pulled back against the yen.