Post Session: Quick Review

Indian equity benchmarks traded in a narrow range for most part of the day and closed in green. The traders were in a cautious mode ahead of the US Federal Reserve’s Monetary Policy meeting. The industry is hoping that there will be a rate hike by the US Fed in the coming week. The market traded flat after making a higher opening in early deals with CBEC Chairman Najib Shah’s statement that the GST Council may in future decide to reduce the tax slabs under the Goods and Services Tax (GST) regime after analyzing the revenue garnered and the compensation payouts to states. He said that any change in tax slab is possible after assessing the revenues and the effect of exemptions and deductions given in the new tax regime and analyzing it with the expenditure. Some buying crept in with Prime Minister Narendra Modi’s statement that demonetization triggered an unprecedented cash crunch in the country, but defended his decision saying it will lead to long-term gains. Modi added that the government’s measure will bring a degree of inconvenience but this short-term pain will pave way for long-term gains. The decision has several gains for farmers, traders and labourers who are the economic backbone of our nation. A month after Rs 500 and Rs 1000 notes were demonetized, Union Finance Minister Arun Jaitley had announced a slew of measures to promote the use of digital payments. Separately, a private poll conducted enlightened that Indian inflation is expected to have cooled to a 14-month low in November after Prime Minister Narendra Modi’s surprise removal of high denomination bank notes caused an intense cash shortage and severely hurt consumption.

The upside was however capped with reports that the fast-growing automobile sector in the country has posted a decline of about 5% in November - the first time this year, hit by the demonetization hurdle. Commercial vehicles, two- and three-wheelers all posted a decline. This was the steepest in the past 44 months. The sector had declined 7.75 percent in March 2013. The last time the sector posted a decline was December 2015, when volumes fell by only 0.17 percent.  Additionally, Fitch in its report has warned that banks in China and India will continue to remain under pressure next year due to mounting bad loans, even though earnings and capital buffers are strong enough to withstand any serious threat. In the 2017 outlook on Asia-Pacific banks, Fitch said, most of Asia-Pacific’s banks are facing a cyclical deterioration in asset quality in 2017, as a challenging economic environment continues to put pressure on borrowers.

On the global front, Asian markets ended mixed, while Japanese stocks rose to their highest level in a year supported by Wall Street gains and solid buying of exporters on the back of a weaker yen. Malaysian Industrial Production rose to a seasonally adjusted annual rate of 4.2% in November, from 3.2% in the preceding month. European stocks were mixed as markets digested the European Central Bank’s latest policy decision and investors began to turn their attention to the Federal Reserve’s meeting next week. The ECB left its benchmark interest rate unchanged at a record-low of zero, in line with forecasts.

The BSE Sensex ended at 26721.13, up by 26.85 points or 0.10% after trading in a range of 26707.81 and 26803.76. There were 12 stocks advancing against 18 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.21%, while Small cap index was up by 0.53%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 1.61%, Bankex up by 1.02%, PSU up by 0.52%, Power up by 0.42% and IT up by 0.37%, while Auto down by 0.33%, Metal down by 0.29% and Capital Goods down by 0.13% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were SBI up by 2.37%, ICICI Bank up by 2.19%, ONGC up by 1.80%, Axis Bank up by 1.33% and Tata Motors up by 0.90%. (Provisional)

On the flip side, Bajaj Auto down by 2.05%, Coal India down by 1.59%, HDFC down by 1.32%, Mahindra & Mahindra down by 1.27% and Hero MotoCorp down by 1.08% were the top losers. (Provisional)

Meanwhile, domestic rating agency, ICRA in its latest report on aviation has said that the airlines are set to increase an additional capacity of 20-25 per cent over the next three to four years even though earnings are falling, due to competitive pressures and the resultant hit on profitability. The report added that the growth will be driven by sizeable order backlog of the market leader Indigo, GoAir, Jet Airways and SpiceJet coupled with the expected fleet expansion of new airlines Vistara and AirAsia. The capacity expansion will also be boosted by the launch of two new airlines, Air Carnival and Zoom Air.

According to the report, the companies need to ensure strengthening their liquidity position to protect from unforeseen shocks such as sudden spikes in jet fuel prices, which can put negative pressure on operating cash flows. The challenge to recovery and profitability other than an increase in fuel prices is a failure to maintain pricing discipline by offering deeply discounted fares.

It further said that in the near term, the balance sheet of aviation industry is expected to remain under pressure except the carriers reduce debt burden by improving operating performance or by introducing an equity investment and to maintain growth the government need to address on the aviation infrastructure requirements and regulatory matters, which have constrained performance of airlines.

The domestic aviation industry witnessed an annual growth of 22.5% in the first half of current financial year, making the domestic market the fastest-growing aviation market in the world. The comparative numbers for the second growth market of Russia is way below half of it at around 10 per cent, while China is at around 6 per cent and the US, the largest market at 3-4 per cent.

The CNX Nifty ended at 8255.35, up by 8.50 points or 0.10% after trading in a range of 8241.95 and 8274.95. There were 25 stocks advancing against 26 stocks declining on the index. (Provisional)

The top gainers on Nifty were SBI up by 2.62%, Bank of Baroda up by 2.30%, Tata Power up by 2.05%, ACC up by 1.86% and ICICI Bank up by 1.86%. (Provisional)
On the flip side, Bharti Infratel down by 2.93%, Bajaj Auto down by 2.11%, Grasim Industries down by 1.73%, Eicher Motors down by 1.72% and Mahindra & Mahindra down by 1.66% were the top losers. (Provisional)

The European markets were trading mostly in green; UK’s FTSE 100 increased 11.09 points or 0.16% to 6,942.64 and France’s CAC increased 8.83 points or 0.19% to 4,744.31, while Germany’s DAX decreased 14.88 points or 0.13% to 11,164.54.

Asian equity markets showed a mixed closing on Friday despite Wall Street stocks hitting fresh record highs overnight on data showing US labor market strength and the ECB's announcement of changes to the parameters of the asset purchase program. Investors looked ahead to next week's Federal Reserve meeting amid bets that the US central bank will raise interest rates for the first time in a year. Japanese stocks rose to their highest level in a year, supported by Wall Street gains and solid buying of exporters on the back of a weaker yen. Meanwhile, China stocks ended higher after a government report showed consumer inflation in the country picked up for a third straight month in November on signs of improving demand. Consumer prices rose an annual 2.3 percent, exceeding expectations for 2.2 percent and up from 2.1 percent in October. The producer price index surged 3.3 percent from a year earlier, the fastest pace in more than five years. Though, Seoul shares snapped a three-day winning streak as lawmakers prepared to vote on the possible impeachment of President Park Geun-hye, who has been engulfed in a massive corruption and influence-peddling scandal.