Post Session: Quick Review

Indian equity benchmarks traded on volatile note oscillating between positive and negative terrain to end the trade in red. The market traded in green in early deals after opening in red, taking cues from interest rates hike of 25 basis points by US Federal Reserve and indication of a faster pace of interest rate hike going ahead. The sentiments took some support with Prime Minister Narendra Modi’s statement that presently, cleaning the system from black money and corruption is very high on his agenda and added that India is currently witnessing an economic transformation. Traders took some encouragement after global rating agency S&P in its latest report said that as per it’s base case scenario, the disruption from demonetisation should be short-lived with demand revival in the next one to two quarters, limiting the impact on Indian banks and corporate and in the long run, demonetisation and the GST could result in a wider tax base and greater participation in the formal economy. Meanwhile, the Chief Economic Adviser at the Ministry Of Finance Arvind Subramanian enlightened that the Indian economy is well cushioned to absorb the impact of US Federal Reserve's rate hike, amid fears of capital outflows from India. India is seen as better equipped than its other emerging market peers to weather the impact of higher US interest rates because of its stronger economic growth and record high foreign exchange reserves of more than $300 billion. The sentiments remained under pressure with industry body CII statement that India’s economic growth will see a ‘significant fall’ in the second half of the current fiscal on account of cash crunch following demonetisation. As far as corporate earnings are concerned, the consumer goods sector has seen sales drop by 20 percent in the last month. Global rating agency Standard & Poor’s stated that demonetisation has cast a shadow over the RBI’s competence and independence, it further said that slow replacement of the abolished bills has sparked a shortage of cash that has hit large parts of the economy.

On the global front, Asian markets ended mostly in red, after the US Federal Reserve overnight indicated it would raise interest rates faster than expected in 2017. The rate hike in US would lead outflow of money from emerging market equities into US bonds which are considered as safer investment options. This is only for the second time in a decade that the Federal Reserve has raised its rate. Japan’s stock exchange was the sole gainer as its manufacturing activity grew at the fastest pace in almost a year in December as new orders improved in a sign that domestic demand is gathering strength. The European markets were trading mostly in green. Investors eyed the Bank of England’s monetary policy decision due later in the trading session. The BoE is expected to keep its bank rate at an historic low of 0.25%.

Back home, selected stocks of liquor companies were trading under pressure after Supreme Court banned sales of liquor along the national and state highways. The existing liquor license for the highway will lapse on April 1.

The BSE Sensex ended at 26529.09, down by 73.75 points or 0.28% after trading in a range of 26407.58 and 26737.86. 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 0.01%, while Small cap index was up by 0.25%. (Provisional)

The top gaining sectoral indices on the BSE were IT up by 0.61%, Bankex up by 0.34%, TECK up by 0.28%, Capital Goods up by 0.24% and PSU up by 0.14%, while Consumer Durables down by 1.00%, FMCG down by 0.69%, Auto down by 0.27%, Oil & Gas down by 0.10% and Realty down by 0.01% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were TCS up by 2.45%, Axis Bank up by 2.37%, ONGC up by 1.30%, Power Grid up by 1.02% and Bajaj Auto up by 1.01%. (Provisional)

On the flip side, Sun Pharma down by 4.29%, NTPC down by 2.08%, Tata Motors down by 2.03%, ITC down by 1.37% and Cipla down by 1.15% were the top losers. (Provisional)

Meanwhile, after the wholesale price index-based inflation (WPI) for November 2016 softened to 3.15 percent, as compared to 3.39 percent during the previous month, mainly due to decline in vegetables, potato and fruits, apex industry body - the Associated Chambers of Commerce & Industry of India (ASSOCHAM) - has said that WPI is in line with the expectations as demonetisation led the Indian economy into a depressive state.

The ASSOCHAM expects the WPI numbers to fall further in the coming months since any increase in crude oil prices due to output cut decision by OPEC countries and increase in prices of other commodities due to stimulus given by US and other developed countries will take the off pressure on consumption demand, which is a main contributor in GDP.

The industry body urged policy makers to take some corrective actions to arrest the fall in WPI as this would impact the IIP (Index of Industrial Production) numbers, which dropped by 1.9 per cent in October, ahead of the demonetization and it is further expected to fall in the coming months owing to the prolong effect of ban on currency of high denomination which will create downward price pressure on industrial output. ASSOCHAM stated that prices of products which are of national interest has been rising and policy makers should check and address through supply side responses. The association has also suggested that Government of India should take steps to boost industry by lowering interest rates and by cutting tax rates.

The CNX Nifty ended at 8154.65, down by 27.80 points or 0.34% after trading in a range of 8121.95 and 8225.90. There were 19 stocks advancing against 32 stocks declining on the index. (Provisional)

The top gainers on Nifty were Axis Bank up by 2.43%, TCS up by 2.22%, ONGC up by 1.29%, Mahindra & Mahindra up by 1.20% and Bank of Baroda up by 1.17%. (Provisional)

On the flip side, Sun Pharma down by 4.18%, Tata Motors - DVR down by 2.50%, Grasim Industries down by 2.39%, NTPC down by 2.17% and Tata Motors down by 2.04% were the top losers. (Provisional)

The European markets were trading mostly in green; Germany’s DAX increased 59.64 points or 0.53% to 11,304.48, France’s CAC increased 31.07 points or 0.65% to 4,800.31, while UK’s FTSE 100 decreased 7.21 points or 0.1% to 6,941.98.

Asian equity markets ended mostly in red on Thursday after the Federal Reserve raised interest rates for the first time in a year. The quarter percentage point rate increase, the second in a decade, was widely expected although investors were surprised to see the Fed project three more increases for 2017. Japanese shares bucked the trend and ended marginally higher as the dollar surged against the yen after interest rate hike announcement.