Post Session: Quick Review

Indian equity benchmarks snapped two days winning streak to close in red with benchmarks Nifty and Sensex close below 8200 and 26600 level respectively. The market traded in red in early deals as investors indulged in cutting down bets on disappointing macroeconomic data . Oil soared following a landmark deal by Russia and other non-OPEC producers to join the cartel in capping output, in a bid to end a stubborn global glut that has hammered prices. Traders also remained on sidelines ahead of domestic trade deficit data, November CPI inflation and WPI inflation to be announced later in the week, while globally Fed rate decision is awaited. The sentiments were under pressure with Industrial production shrinking an annual 1.9% in October, worsening from a 0.7% rise in the previous month and 9.8 percent growth in the year-ago month. Industrial production has contracted in four out of seven months so far this fiscal. In the April-October period, production declined 0.3 percent compared with 4.8 percent growth last year. Some pressure also crept in with the Centre and States failing to approve the GST laws on Sunday and agreed to meet on December 22 and 23 to hammer out a consensus, dashing hopes that the crucial bills would be introduced in the ongoing winter session of Parliament and making it tough to meet the April 1 rollout date across the country. The Centre and States have been locked in a logjam over the issue of administrative control after post-implementation of GST.

The selling got intensified at last hour of trade, as investors dumped Banking and NBFC stocks. The banking stocks were under pressure on reports that the government has conducted sting operations in around 500 branches of banks across the country. The CDs of the sting operations have been sent to the Union Ministry of Finance and proper action against erring bank officials would be taken at an appropriate time. NBFC universe came under pressure after Bajaj Finance stated that inquiries have dropped drastically post demonetization move by the government. Investors took cautious approach of private survey which enlightened that post demonetization, earnings and spending took a hit across India. According to a survey, which covered 15,000 citizens from over 220 districts of the country, 20 percent have explicitly stated that their earnings have been impacted, while 48 percent said there is decline in spending after demonetization. Bihar, Jharkhand and Orissa are witnessing decline in earnings the most, followed by states like Gujarat, Maharashtra, Madhya Pradesh, Uttar Pradesh, Delhi, West Bengal and Kerala.

On the global front, Asian markets ended mostly in red, ahead of a Federal Reserve meeting that is widely expected to raise US interest rates and as oil prices soared after producers agreed to reduce output. Japan’s Nikkei rose amid weakness in the Japanese Yen. Japan’s Core Machinery Orders rose to 4.1% in November, from -3.3% in the preceding month. China stocks suffered their biggest fall in six months as blue-chips were knocked by fresh regulatory curbs to rein in insurers’ aggressive stock investments. European stocks were trading lower as investors await another rate decision from the US Federal Reserve this week.

Back home, select IT stocks were battered down on fears that the US may have stricter norms for H-1B visa. The H-1B is a non-immigrant visa in the United States which allows US employers to temporarily employ foreign workers in specialty occupations. According to reports, Trump may reduce the cap on H-1B visas or raise the fees or auction them.

The BSE Sensex ended at 26528.06, down by 219.12 points or 0.82% after trading in a range of 26468.59 and 26725.31. There were 6 stocks advancing against 24 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 1.05%, while Small cap index was down by 0.74%. (Provisional)

The losing sectoral indices on the BSE were Bankex down by 1.68%, Auto down by 1.61%, Oil & Gas down by 1.08%, FMCG down by 0.95% and Consumer Durables down by 0.65%, while there were no gainers on sectoral front. (Provisional)

The top gainers on the Sensex were ONGC up by 1.66%, TCS up by 0.81%, NTPC up by 0.73%, Sun Pharma up by 0.59% and Larsen & Toubro up by 0.26%. (Provisional)

On the flip side, Asian Paints down by 3.17%, Axis Bank down by 2.67%, Bajaj Auto down by 2.50%, Hero MotoCorp down by 2.13% and Mahindra & Mahindra down by 1.86% were the top losers. (Provisional)

Meanwhile, domestic rating agency, ICRA in its latest report has said that NHAI’s plan to provide relief to road developers by covering 90 per cent of interest cost and O&M expenses for the period during which government had suspended user fee collection on National Highways with effect from November 9 and which went on till December 2 (midnight), is insufficient as it does not cover debt repayment obligation. It also mentioned that this compensation may possibly lead to clashes with developers given the huge revenue loss for them.

According to the report, in most of the toll projects, the revenue loss is greater than Rs 1 crore and even in terms of the net realisable fee, it’s around 6.6 per cent (24/365*100), some of the developers are seeking for Clause 41 to be implemented in this case. Under this, NHAI has obligation to place the concessionaire in the same financial position as it would have enjoyed had there been no such change in law. In which case, the clause also provides for cash compensation for revenue loss in order to protect the net present value of the cash flows to the developers.

Earlier NHAI came up with a plan to provide compensation to the extent of 90 per cent of interest cost for the 24-day period, only to the extent of the interest accrued on principal amount of debt provided by senior lenders for financing the total project cost. National Highway Authority of India (NHA) has suffered an income loss of around Rs 1,238 crore (at an average toll collection per day of Rs 51.59 crore) due to suspension of toll collection on highways till December 2 post demonetisation.

The CNX Nifty ended at 8171.60, down by 90.15 points or 1.09% after trading in a range of 8154.45 and 8230.65. There were 6 stocks advancing against 45 stocks declining on the index. (Provisional)

The top gainers on Nifty were ONGC up by 1.76%, NTPC up by 0.88%, TCS up by 0.67%, Sun Pharma up by 0.53% and Bosch up by 0.17%. (Provisional)

On the flip side, BPCL down by 3.54%, Ambuja Cement down by 3.54%, Eicher Motors down by 3.30%, Asian Paints down by 3.27% and Ultratech Cement down by 3.06% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 11.9 points or 0.17% to 6,942.31, Germany’s DAX decreased 51.2 points or 0.46% to 11,152.43 and France’s CAC decreased 5.94 points or 0.12% to 4,758.13.

Asian equity markets ended mostly in red on Monday, with a crackdown on stock purchases by insurance firms sending Chinese and Hong Kong shares tumbling. China's insurance regulator suspended Evergrande Life from further investing in stocks, saying its asset allocation plan is not clear and capital operation is not standardized. Meanwhile, Japanese shares closed at a fresh high for the year as the yen continued to weaken against the dollar ahead of an expected rate hike by the Federal Reserve this week. Higher oil prices and upbeat core machinery orders data also boosted investor sentiment. Japan's October core machinery orders rose for the first time in three months to beat expectations. Markets in Malaysia and Indonesia were closed in observance of the birth of the Prophet Muhammad.