Post Session: Quick Review

Indian equity benchmarks traded on a volatile note to end the day in red and benchmark Nifty closed below 8250 mark. The last hour of trade dragged the market lower to end with cut of around three tenth of a percent. The markets made a positive start with the report of Financial Stability and Development Council (FSDC), headed by Finance Minister Arun Jaitley that India appears to be much better placed with improved macro-economic fundamentals, as measures to eliminate shadow economy and tax evasion are expected to have positive impact on GDP. India expects to grow at around 7 percent in the first half of the next financial year. Selling crept in with President Pranab Mukherjee note of caution that the Narendra Modi government’s demonetization decision could likely lead to a temporary slowdown in the economy and hurt the poor. The President called for policymaking that would reduce the suffering of the poor, and seemed to question the focus shift in the government’s poverty alleviation programmes and policies from an entitlement-based approach to an entrepreneurial one. A private report highlighted that India’s GDP is likely to have grown at a much slower-than-expected pace of 5 percent in the October-December period and may see a 6 percent growth in the following quarter due to a slowdown in manufacturing and services sectors post demonetization. According to the global financial services major, activity data across manufacturing and services as well as consumption and investment have clearly taken a hit after November 8, 2016, when the government announced scrapping old 500/1,000 rupee notes.

On the global front, Asian markets closed mostly higher. In contrast, Japan’s Nikkei, one of the best performers since Republican Trump won the November 8 election, dropped as the yen gained versus the dollar. China raised the exchange rate for the yuan against the US dollar by 0.92 percent from the previous day, the biggest one-day increase in more than 11 years. Hong Kong shares extended gains to end firmer scoring its best week in three months, as capital outflow worries eased after the US dollar took a breather from its post-election rally. European stocks edged lower following a drop in commodity-related stocks, although the benchmark index remained on track for its best weekly performance since the middle of December.

Back home, select IT stocks closed in red after two US Congressmen have reintroduced a bill to curb the use of H-1B visas, on which the Indian IT sector is particularly dependent, the first salvo in the battle against outsourcing that is expected under the watch of President-elect Donald Trump. The new bill would require workers on the H-1B visa pay a minimum of $100,000, up from $60,000 currently.

The BSE Sensex ended at 26791.87, down by 86.37 points or 0.32% after trading in a range of 26733.33 and 27009.61. There were 13 stocks advancing against 17 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.19%, while Small cap index was down by 0.40%. (Provisional)

The few gaining sectoral indices on the BSE were Bankex up by 0.89%, Metal up by 0.21% and Auto up by 0.04%, while IT down by 2.26%, TECK down by 1.90%, Realty down by 1.01%, FMCG down by 0.75% and Consumer Durables down by 0.40% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Asian Paints up by 1.23%, ONGC up by 1.23%, Dr. Reddy’s Lab up by 1.01%, HDFC Bank up by 0.82% and HDFC up by 0.69%. (Provisional)

On the flip side, Wipro down by 2.26%, TCS down by 2.08%, Infosys down by 2.05%, ITC down by 1.54% and Coal India down by 0.99% were the top losers. (Provisional)

Meanwhile, for the first time since demonetisation of high-value currency notes, President Pranab Mukherjee has cautioned that the government's demonetisation decision could likely lead to a temporary slowdown in the economy and hurt the poor. Addressing to Governors and Lieutenant Governors, President has said that demonetisation, while immobilising black money and fighting corruption, may lead to temporary slowdown of the economy.

On the effects of demonetisation among the poor, the President said that extra care must be taken to alleviate sufferings of the poor triggered by economic slowdown which has become unavoidable post demonetisation. The President said that he appreciates the thrust on transition from entitlement approach to an entrepreneurial one for poverty alleviation, but he is not too sure that the poor can wait that long. He added that they need to get succor here and now, so that they can also participate actively in the national march toward a future devoid of hunger, unemployment and exploitation.  He also said that the recent package announced by the Prime Minister Narendra Modi including major tax rebates for farmers, small traders, senior citizens and women will provide some relief to them.

Mukherjee termed 2016 as a year of mixed fortunes and said that it began on a very promising note with the economy performing well, overcoming the weak global economic trends. GDP growth of 7.2% in the first half of 2016-17 same as that of last year is a pointer to the fact that our economic recovery has been on solid grounds. In 2014 and 2015 below normal rains had caused rural distress. A good monsoon in 2016 is expected to improve agricultural production and increase rural employment and incomes.

The CNX Nifty ended at 8247.95, down by 25.85 points or 0.31% after trading in a range of 8233.25 and 8306.85. There were 23 stocks advancing against 28 stocks declining on the index. (Provisional)

The top gainers on Nifty were Yes Bank up by 3.16%, Kotak Mahindra Bank up by 2.67%, Eicher Motors up by 2.19%, Bank of Baroda up by 1.72% and IndusInd Bank up by 1.71%. (Provisional)

On the flip side, Tech Mahindra down by 3.78%, HCL Tech down by 3.46%, Idea Cellular down by 2.41%, TCS down by 2.19% and Wipro down by 2.15% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 5.73 points or 0.08% to 7,189.58, Germany’s DAX decreased 33.03 points or 0.29% to 11,551.91 and France’s CAC decreased 24.49 points or 0.5% to 4,876.15.

Asian equity markets ended mostly in green on Friday, except for Chinese and Japanese shares that ended in red, tracking exchange rate fluctuations ahead of the closely-watched US jobs report due later on Friday that Fed officials will factor into future decisions on interest rate policy, with expectations for a gain of 178,000 in December. But a soft reading on Thursday of 153,000 from ADP, the private sector payroll processor, is sowing some doubt. While China's yuan gave up some gains after a two-day surge, the Japanese yen strengthened further against the dollar on expectations of slow pace of rate hikes in the US.