Post Session: Quick Review

Wednesday turned out to be a disappointing day of trade for Indian equity benchmarks and ended the session in red. Though the indices tried to recover on the latter part of the day but it was short lived with benchmarks drifting lower. The market traded slightly in red in early deals tracking mixed global cues as investors awaited for the Fed policy outcome. Fed is widely expected to raise rates for the first time in 2016 at its two-day meeting that started on Tuesday, with markets pricing in a chance of 0.25% to 0.50% hike. Any aggressive rate hike could hit the market more which is already under pressure over the demonetisation move. The sentiments remained under pressure after the domestic rating agency ICRA said that with consumption being affected by the demonetisation of higher currency old notes, tax revenues of the state governments for the current financial year is likely to be weaker than budgeted. Meanwhile, the Asian Development Bank (ADB) has lowered India’s gross domestic product (GDP) growth forecast to 7% in FY17 from its earlier estimate of 7.4%, citing adverse impact of demonetisation in the short run. The multilateral agency has however retained its earlier projection of 7.8% GDP growth for the country in FY18. Moreover, cautiousness prevailed as per latest RBI data, the demand destruction unleashed by the demonetisation drive saw the bank credit shrinking by a whopping Rs 61,000 crore, or 0.8%, during the fortnight to November 25. This plunge in bank credit came after another Rs 59,000 crore dip in the previous fortnight to November 11.

Traders failed to draw support from positive economic data that retail inflation fell to a two-year low in November due to the ongoing cash crunch following the demonetization drive, the country’s current account deficit (CAD) narrowed by more than a percentage point to 0.6 percent of GDP at $ 3.4 billion in the July-September, on account of lower trade deficit. S&P Global Ratings in its report said that demonetisation and a likely GST rollout from September 2017 are likely to cast a higher disruptive impact on informal, rural, and cash-based segments of the economy. It further said corporates and banks are likely to face short-term downside risk as the demonetization induced cash crunch will curtail GDP growth. It said the government's decision to cancel the legal tender status of high-value rupee notes has caused a significant physical cash crunch. Citigroup in its report raised concerned that current account deficit is likely to worsen further in the second half of the current financial year and is expected to be around $10 billion for FY17. According to the global financial services major, besides the widening of trade deficit in goods, the recent trend of decline in software services exports and private remittances has continued.

On the global front, Asian markets ended mostly in red, while Japan’s Nikkei closed flat in green, led by financial and energy stocks. The Bank of Japan quarterly tankan survey showed that sentiment among big manufacturers rose to plus 10 over the three months to December from plus 6 in the previous quarter. China stocks closed at one-month lows after regulators pledged to restrict risky investments by insurers, sapping already weak risk appetites ahead of a widely expected interest rate hike by the Federal Reserve. European stocks were trading lower as investors remained cautious ahead of the Federal Reserve’s monetary policy decision due later in the day, which is widely expected to raise interest rates.

The BSE Sensex ended at 26595.98, down by 101.84 points or 0.38% after trading in a range of 26547.05 and 26736.34. There were 8 stocks advancing against 22 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.83%, while Small cap index was down by 0.89%. (Provisional)

The few gaining sectoral indices on the BSE were IT up by 0.66%, TECK up by 0.40% and Realty up by 0.39%, while Metal down by 1.65%, PSU down by 1.55%, Capital Goods down by 1.03%, FMCG down by 1.00% and Oil & Gas down by 0.60% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Axis Bank up by 3.32%, Reliance Industries up by 1.88%, Infosys up by 0.84%, TCS up by 0.46% and Mahindra & Mahindra up by 0.45%. (Provisional)

On the flip side, Coal India down by 4.27%, Bharti Airtel down by 2.00%, ONGC down by 1.88%, Cipla down by 1.76% and Power Grid down by 1.46% were the top losers. (Provisional)

Meanwhile, Wholesale Price Index (WPI) inflation continued its easing trend for the third straight month in November, falling to 3.15 per cent on subdued demand due to demonetisation that led to softening of prices of vegetables and other kitchen staples.The WPI inflation for September was revised upwards at 3.8 per cent against the provisional estimate of 3.57 per cent.

As per official data, the annual rate of inflation, based on monthly WPI, stood at 3.15 percent (provisional) for the month of November, 2016 (over November, 2015) as compared to 3.39 percent (provisional) for the previous month and -2.04 percent during the corresponding month of the previous year.  Build up inflation rate in the financial year so far was 4.45% compared to a build up rate of 0.80% in the corresponding period of the previous year.

Primary Articles index having weight of 20.12 percent in the whole inflation index, declined by 0.9 percent to 259.4 (provisional) from 261.8 (provisional) for the previous month. In the primary articles, the index for 'Food Articles' group declined by 1.0 percent to 276.1 (provisional) from 278.8 (provisional) for the previous month, the index for 'Non-Food Articles'  group declined by 0.8 percent to  221.4 (provisional) from 223.2 (provisional) for the previous month and the index for 'Minerals' group declined by 1.7 percent to  207.4 (provisional) from 210.9 (provisional) for the previous month.

Fuel & Power having weight of 14.91 percent in the WPI inflation index rose by 1.8 percent to 190.7 (provisional) from 187.3 (provisional) for the previous month.
Manufactured Products having the maximum weight of 64.97 percent in the index rose by 0.3 percent to 157.9 (provisional) from 157.4 (provisional) for the previous month. In the manufactured products, the index for 'Food Products' group rose by 0.5 percent to 194.0 (provisional) from 193.0 (provisional) for the previous month, the index for 'Textiles' group rose by 0.1 percent to 141.8 (provisional) from 141.7 (provisional) for the previous month, the index for 'Paper & Paper Products' group rose by 0.3 percent to 156.4 (provisional) from 155.9 (provisional) for the previous month, the index for 'Rubber & Plastic Products' group declined by 0.1 percent to 148.4 (provisional) from 148.5 (provisional) for the previous month, index for 'Chemicals & Chemical Products' group rose by 0.1 percent to 150.8 (provisional) from 150.7 (provisional) for the previous month, the index for 'Basic Metals, Alloys & Metal Products' group rose by 0.7 percent to 156.3 (provisional) from 155.2 (provisional) for the previous month and the index for 'Machinery & Machine Tools' group rose by 0.1 percent to 135.4 (provisional) from 135.2 (provisional) for the previous month.

On the other hand, the index for 'Beverages, Tobacco & Tobacco Products' group declined by 0.1 percent to 221.6 (provisional) from 221.7 (provisional) for the previous month, index for 'Wood & Wood Products' group declined by 1.6 percent to 197.6 (provisional) from 200.8 (provisional) for the previous month, index for 'Rubber & Plastic Products' group declined by 0.1 percent to 148.4 (provisional) from 148.5 (provisional) for the previous month and index for 'Non-Metallic Mineral Products' group declined by 0.2 percent to 179.9 (provisional) from 180.2 (provisional) for the previous month in the Manufactured Products.

The CNX Nifty ended at 8182.80, down by 39.00 points or 0.47% after trading in a range of 8165.10 and 8229.40. There were 14 stocks advancing against 37 stocks declining on the index. (Provisional)

The top gainers on Nifty were Axis Bank up by 3.09%, HCL Tech up by 2.62%, Reliance Industries up by 1.53%, Tata Power up by 1.35% and Infosys up by 1.03%. (Provisional)

On the flip side, Coal India down by 4.40%, Bosch down by 2.71%, Eicher Motors down by 2.66%, Aurobindo Pharma down by 2.45% and ONGC down by 2.20% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 17.43 points or 0.25% to 6,951.14, Germany’s DAX decreased 15.69 points or 0.14% to 11,268.96 and France’s CAC decreased 20.52 points or 0.43% to 4,783.35.

Asian equity markets ended mostly in red on Wednesday as investors remained cautious ahead of the Federal Reserve’s monetary policy decision due later in the day. The Fed is widely expected to hike rates for the first time in a year at the conclusion of its meeting later Wednesday. Chinese shares ended lower after regulators pledged to restrict risky investments by insurers. Meanwhile, Japanese shares closed flat as traders processed the Bank of Japan’s quarterly tankan survey, released Wednesday. The survey showed that sentiment among large manufacturers rose to plus 10 over the three months to December from plus 6 in the previous quarter. A plus figure means the percentage of respondents saying business conditions are favorable exceeds those saying they aren’t.