Benchmarks make soft start to 2017

Indian equity benchmarks have made a soft start to the first trading session of 2017, as traders opted to book profit after previous session’s rally. Narendra Modi's announcement of new sops to boost low-cost housing ahead of the Union Budget too affected the sentiments. Sentiments also remained dampened after report that foreign investors turned net sellers with net sale value of Rs 585.6 crore on December 30, 2016. Meanwhile, the Reserve Bank of India (RBI) governor Urjit Patel in his Financial Stability Report published by the RBI has expressed that Goods and Services Tax and the withdrawal of specified bank notes will impart far reaching changes going forward.

On the global front, the US markets ended in red on the last session of the year but were well off the day’s low. Asian markets are mostly closed for the day. The only counter opened was South Korean KOSPI, trading slightly in green at this point of time. Back home, stocks related to banking counters remained under pressure, as after the PM’s call to lenders to do more to increase lending for the poor, State Bank of India has slashed interest rates by 0.9 percentage point, or 90 basis points (bps), bringing down the rates to the lowest in about a decade, forcing rivals to follow suit. However, public sector oil marketing companies edged higher, as petrol price has been hiked by Rs 1.29 per litre and diesel by 97 paise per litre excluding state levies.

The BSE Sensex is currently trading at 26525.81, down by 100.65 points or 0.38% after trading in a range of 26484.53 and 26720.98. There were 14 stocks advancing against 16 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index was up by 0.09%, while Small cap index up by 0.54%.

The top gaining sectoral indices on the BSE were Realty up by 2.36%, Oil & Gas up by 0.69%, Power up by 0.51%, Capital Goods up by 0.34% and Consumer Durables was up by 0.31%, while Bankex down by 0.80%, FMCG down by 0.51% and Auto was down by 0.20% were the few losing indices on BSE.

The top gainers on the Sensex were NTPC up by 1.21%, Reliance Industries up by 0.52%, Cipla up by 0.50%, Dr. Reddys Lab up by 0.50% and Lupin was up by 0.49%. On the flip side, Bajaj Auto down by 2.01%, HDFC down by 1.90%, Hero MotoCorp down by 1.47%, SBI down by 1.42% and Mahindra & Mahindra was down by 1.01% were the top losers.

Meanwhile, Industry body, Associated Chambers of Commerce and Industry of India (Assocham) in its latest report has said that banning of high value notes would lower growth rate due to economic slowdown in the third and fourth quarters of fiscal 2016-17. Apex industry body admitted that it was not easy to predict precisely the impact of note withdrawal with far-reaching implications and also said that the growth momentum would be restored by the normal monsoon raising agricultural growth and rural demand.

The report said that consumption, which accounts for 60 percent of the GDP, is expected to recover in the first quarter (April-June) of 2017-18 on spending from the disbursement of pay, pension and arrears following the implementation of the seventh Central Pay Commission’s award. The report also noted that demonetisation would adversely impact many sectors of the economy in the short run and hence government revenue through indirect taxes. It added that the extent to which the shortfall would be offset would depend on direct tax collection, especially tax on undeclared income. Though, in the medium term, demonetisation is expected to boost tax revenues and translate into higher capital expenditure and faster fiscal consolidation.

On the real estate sector Assocham said that the sector could bring much needed correction in the housing market as, property prices would decline in the absence of huge cash for transactions, fuelled by unaccounted income. It further said that similarly, prices of consumer goods may fall due to moderation in demand as use of cards and cheques will compensate for some purseses. On the flip side, greater formalisation of economic and financial activity will help broaden the tax base and expand usage of the financial system. It added that corporates will see economic activity decline with lower sales volumes and cash flows. Companies doing retail sales will be most affected.

The CNX Nifty is currently trading at 8157.90, down by 27.90 points or 0.34% after trading in a range of 8141.00 and 8212.00. There were 26 stocks advancing against 25 stocks declining on the index.

The top gainers on Nifty were Eicher Motors up by 2.74%, Ultratech Cement up by 2.37%, Ambuja Cement up by 2.04%, ACC up by 1.42% and BPCL was up by 1.21%. On the flip side, HDFC down by 1.95%, Bajaj Auto down by 1.82%, SBI down by 1.74%, Hero MotoCorp down by 1.50% and Bank of Baroda was down by 1.47% were the top losers.

Equity markets in China, Japan, Hong Kong, and Australia are all shut on account of the New Year holiday. The only counter opened today was KOSPI Index, increased 1.91 points or 0.09% to 2,028.37