Post Session: Quick Review

Indian equity benchmarks traded on lackluster note throughout the day and closed in red in absence of any triggers. The market continued to reel under selling pressure, closing for fifth straight session of losses amid thin trading volumes at FIIs desk. Foreign Portfolio Investors (FPIs) have continued their selling spree with outflows witnessed in both emerging market equities and debt. Foreign investors have pulled out more than Rs 19,500 crore from the capital market so far in December following demonetization, a rate hike by the US Federal Reserve and a spike in crude oil prices. FIIs investment in India has been a popular theme but that choice has not made great returns. This year, Indian markets in dollar terms, has not given any returns. The market pared most of their initial losses but managed to keep their head above water in early deals on account of buying in front line blue chip counters. Some support came with NITI Aayog member Ramesh Chand’s statement that despite the impact of demonetisation, growth in agriculture for the current year will still be above 5 percent, though he pointed that the prevailing cash crunch has hit the growers of perishables more compared to those who grow bulk crops such as paddy and cotton. Investors took note of report that India has overtaken UK & become the fifth largest GDP after USA, China, Japan & Germany. Owing to Britain’s recent Brexit-related problems and thanks to India’s rapid economic growth, India has managed to overtake its erstwhile colonial master United Kingdom in terms of the size of the economy - the first time after nearly 150 years. A report published in Forbes magazine highlighted that this dramatic shift has been driven by India’s rapid economic growth over the past 25 years as well downslide in the value of the pound over the last 12 months.

Selling crept in after global financial services major Nomura revised upwards India’s current account deficit (CAD) forecast to 1.4% of GDP for the current fiscal from 0.4% earlier. According to Nomura, India’s trade deficit widened to a 16-month high of $13 billion in November from $10.4 billion in October, as a result of a sharp slowdown in exports after demonetization and a pickup in imports, led by gold and higher commodity prices. For the fourth quarter (October-December) of 2016 Nomura expects a current account deficit of 2.5% of GDP (versus 0.9% earlier) and for the January-March period, it is likely to be around 2% of GDP. Meanwhile, the street has started building hopes that the budget will be great; it will provide support, stimulus, etc.  The budget could come up with income tax benefits to consumers. That will help negate the negative impact of demonetization on consumer stocks and thereby on the market sentiment. The hopes of Fast-Moving Consumer Goods (FMCG) companies on the back of a good monsoon and the Seventh Pay Panel award came partially unstuck after the government’s sudden move to pull back currency notes upset the applecart towards the end of 2016.

On the global front, Asian markets ended mixed, China stocks fell as Beijing’s move to tighten supervision of shadow banking activities and persistent liquidity concerns restrained risk appetite. China’s central bank said it would tighten supervision of shadow banking businesses by including off-balance sheet wealth management products (WMPs), widely viewed as a source of financial risk, into its risk-assessment framework next year. Japan’s Nikkei closed in green as the Bank of Japan kept monetary policy steady and gave a more upbeat view of the economy, reinforcing market expectations that its future policy direction could be an increase - not a cut - in interest rates. European stocks were trading mostly lower as investors reacted with caution to three separate terror incidents around the region yesterday that have rekindled concerns over security and geopolitical risks.

Back home, Aviation stocks Jet Airways, SpiceJet, InterGlobe Aviation and Global Vectra Helicorp closed in red on report that India’s Airlines industry may have to bear an additional tax burden of up to Rs 15,000 crore annually once the Goods and Services Tax (GST) is implemented. The additional tax burden may push airlines, most of which have turned profitable, into losses again, coming as it does at a time when global fuel prices are flaring up. Select Tata group companies were in focus after Cyrus Mistry yesterday quit from the boards of six listed companies, including Tata Motors and Indian Hotels. He vowed to shift his fight to a larger platform as the ‘coercive action taken by Tatas against various stakeholders was making him uneasy’. He would, however, continue to remain a director on the board of Tata Sons.

The BSE Sensex ended at 26328.25, down by 46.45 points or 0.18% after trading in a range of 26241.43 and 26435.56. There were 10 stocks advancing against 20 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 1.31%, while Small cap index was down by 0.82%. (Provisional)

The top gaining sectoral indices on the BSE were IT up by 0.97%, TECK up by 0.77%, Consumer Durables up by 0.46% and FMCG up by 0.02%, while Bankex down by 1.04%, Auto down by 0.88%, Oil & Gas down by 0.82%, PSU down by 0.79% and Metal down by 0.72% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were TCS up by 2.30%, Coal India up by 1.01%, ITC up by 0.99%, Wipro up by 0.91% and GAIL India up by 0.85%. (Provisional)
On the flip side, SBI down by 2.26%, ICICI Bank down by 2.06%, Bajaj Auto down by 2.05%, Tata Steel down by 1.85% and Lupin down by 1.83% were the top losers. (Provisional)

Meanwhile, in a bid to encourage cashless economy, Telecom Regulatory Authority of India (TRAI) has called the banks to skip convenience charges.  TRAI Chairman R.S. Sharma batting for the issue said that banks should eliminate convenience charges to implement digital payment system across the country in the post-demonetisation era. He said that it is vital to eliminate convenience charge by the banks to create a well-operational and sustainable digital and cashless economy as India is an extremely cost sensitive market.

Sharma highlighted that cost, convenience and confidence were crucial factors for digital payments, and an effective digital infrastructure was essential for digital remonetisation. He further said that JAM (Jan Dhan-Aadhaar-Mobile) trinity creates a robust system for digital inclusion with 1.1-billion Aadhaar users across the country. As a trinity of the government's initiative for financial inclusion, JAM links accounts of all the unbanked individuals with their Aadhaar cards and mobile numbers, ostensibly to plug leakages of state subsidies.

Sharma also supported extensive use of Bharatnet with Digital Cable Television System for digital connectivity across the country. He said that interoperable or interlinked digital wallets can also support the digital payment systems.

The CNX Nifty ended at 8086.60, down by 17.75 points or 0.22% after trading in a range of 8062.75 and 8124.10. There were 20 stocks advancing against 31 stocks declining on the index. (Provisional)

The top gainers on Nifty were TCS up by 2.26%, Ambuja Cement up by 2.04%, Zee Entertainment up by 1.54%, ACC up by 1.51% and Ultratech Cement up by 1.49%. (Provisional)

On the flip side, Idea Cellular down by 4.06%, Aurobindo Pharma down by 3.61%, Bosch down by 3.13%, SBI down by 2.49% and Yes Bank down by 2.45% were the top losers. (Provisional)

The European markets were trading mostly in red; UK’s FTSE 100 decreased 14.51 points or 0.21% to 7,002.65 and Germany’s DAX decreased 8.63 points or 0.08% to 11,418.07, while France’s CAC increased 6.17 points or 0.13% to 4,828.94.

Asian stocks ended mixed on Tuesday, with Chinese and Hong Kong shares ending in the red on waning hopes for additional monetary stimulus and concerns surrounding a tighter regulatory environment. China's central bank said it would tighten supervision of shadow banking businesses by including off-balance sheet wealth management products into its risk-assessment framework next year. Meanwhile, Japanese shares ended higher after the market digested the Bank of Japan's decision to maintain current monetary policy, and the yen's fall versus the dollar lifted overall sentiment. The Bank of Japan kept its monetary policy settings unchanged, as widely expected, saying the economy continues to recover moderately as a trend.