Indian benchmarks end a session with modest cut

After trading on a feeble note for most part of the session, Indian benchmark indices ended in the negative terrain, as investors remained on the sidelines and refrained from any buying activity ahead of corporate results and the government budget. The government will unveil its Budget on February 1 and investors hope for incentives to support an economy hit by cash shortages after a ban on higher-value banknotes. Sentiments remained dismal with report that International Monetary Fund (IMF) cut India's growth forecast for the current fiscal by one percentage point, due to the temporary negative consumption shock induced by cash shortages and payment disruptions associated with the recent currency note withdrawal and exchange initiative. In an update of its flagship publication the World Economic Outlook, the IMF said India is likely to grow by 6.6% only in FY17, down from 7.6% estimated earlier and marginally behind China that is pegged to grow at 6.7% in 2016.  However, losses remained capped with report that the Goods and Services Tax (GST) Council on Monday broke a deadlock over issues of administrative control over assessees and broadly agreed to roll out the GST from July 1, instead of the earlier deadline of April 1. Under the proposed tax regime, 90% of all assessees with a turnover of Rs 1.5 crore or less will be assessed for scrutiny and audit by state authorities, the remaining 10% by the Centre. The Council also resolved a logjam over the right to tax economic activities within 12 nautical miles from India’s coasts. Some support also came with the private report indicating that Indian consumers remain the most optimistic in the Asia-Pacific region and their outlook on economy and stock market showed highest levels of confidence even after their government's recent demonetisation measure. The report is based on a survey conducted across 17 markets in Asia Pacific, between November 2016 and December 2016.

On the global front, Asian markets ended mostly lower on Tuesday, with investors awaiting UK Prime Minister Theresa May's speech on her government's Brexit plans later today amid growing uncertainty over US policy ahead of President-elect Donald Trump's inauguration later this week. Japan's Nikkei share average skidded to its lowest levels since early December, undermined by a resurgent yen as well as profit-taking. Meanwhile, European stock markets closed on a negative note on Monday, with FTSE closed lower by 10 points and CAC lower by 40 points. However, Chinese markets ended higher, snapping a five-day losing streak, as small-caps staged a sharp afternoon rebound that let an index tracking them halt an eight-day slide. European stocks edged lower, weighed by the heightened prospect that the U.K. will leave the European Union’s single market when Britain exits the bloc.

Back home, after getting a cautious start, the local benchmarks slipped into negative territory in late morning session as investors turned jittery over rising concern about Donald Trump's policies and the UKs position in the European Union. Thereafter, the key indices oscillated in an extremely tight range through the session, lacking any significant trigger at domestic front. Eventually, the NSE’s 50-share broadly followed index Nifty, suffered a moderate cut of around 18 bps to settle below the crucial 8,400 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex- slipped over fifty points and closed above the psychological 27,200 mark. On the BSE sectoral space, Metal and Oil & Gas pockets remained among top laggards in the space as they got lacerated by 1.52% and 1.39% respectively. While sectors like PSU and Autotoo got pounded in the session. On the flipside, the defensives like FMCG and Power along with IT managed to go home with moderate gains of around half a percent. In scrip specific development, losses were led by Reliance Industries whose shares fell over three percent after its third quarter earnings failed to cheer investors. The company reported 3.60% rise in its consolidated net profit at Rs 7506 crore for the quarter ended December 31, 2016 as compared to Rs 7245 crore for the same quarter in the previous year. While the company posts slightly better-than-expected earnings, investors remained concerns about spending on telecoms unit Jio. The market breadth remained pessimistic as there were 1366 shares on the gaining side against 1378 shares on the losing side, while 177 shares remained unchanged.

Finally, the BSE Sensex declined 52.51 points or 0.19% to 27235.66, while the CNX Nifty was down by 14.80 points or 0.18% to 8,398.00. 

The BSE Sensex touched a high and a low of 27381.43 and 27179.19, respectively and there were 12 stocks on gainers side against 18 stocks on the losers side on the index.

The broader indices made a mixed closing; the BSE Mid cap index ended flat with a negative bias, while Small cap index was up by 0.33%.

The top gaining sectoral indices on the BSE were FMCG up by 1.03%, Power up by 0.51%, IT up by 0.32%, Realty up by 0.20% and TECK up by 0.16%, while Metal down by 1.52%, Oil & Gas down by 1.39%, PSU down by 0.33%, Auto down by 0.20% and Bankex down by 0.06% were the top losing indices on BSE.

The top gainers on the Sensex were NTPC up by 3.08%, Asian Paints up by 2.72%, Axis Bank up by 1.98%, Hindustan Unilever up by 1.52% and Hero MotoCorp up by 1.30%. On the flip side, Reliance Industries down by 3.31%, Coal India down by 2.14%, ONGC down by 1.74%, Adani Ports & SEZ down by 1.68% and HDFC down by 1.02% were the top losers.

Meanwhile, days after World Bank slashed India's growth estimates, the International Monetary Fund (IMF), which so far had maintained that India is a bright spot against the gloomy global economic outlook, too has cut India’s economic growth estimate for 2016-17 to 6.6% from its earlier projection of 7.6%, due to the impact of the government's move of demonetization of high value currency notes in early November.

The IMF in its ‘World Economic Outlook update’ stated that India’s growth forecast for the current (2016-17) and next fiscal year were trimmed by one percentage point and 0.4 percentage point, respectively, primarily due to temporary negative consumption shock induced by cash shortages and payment disruptions associated with the recent currency note withdrawal and exchange initiative. IMF expects the economy to recover and grow by 7.2% in 2017-18, still slower than the previous estimate of 7.6%. In 2018-19, it expects the Indian economy to grow by 7.7%.

The IMF revised upwards China's estimate based on expectations of a stimulus. Near-term growth prospects were revised up for China, due to expected policy stimulus, but were revised down for a number of other large economies. China is projected to grow by 6.5% in 2017 and 6% in 2018, slower than India's growth in both years.

Earlier, the World Bank had lowered the India's GDP growth estimate for this fiscal to 7 percent, from its earlier estimate of 7.6 percent made in June last year, saying that immediate withdrawal of a large volume of currency in circulation and subsequent replacement with new notes announced by the government in November contributed to slowing growth in 2016.

The CNX Nifty traded in a range of 8,440.90 and 8,378.30. There were 17 stocks in green against 34 stocks in red on the index.

The top gainers on Nifty were NTPC up by 3.08%, Asian Paints up by 2.48%, Hero MotoCorp up by 1.95%, Axis Bank up by 1.75% and Hindustan Unilever up by 1.42%. On the flip side, Reliance Industries down by 3.37%, Coal India down by 2.06%, Adani Ports & SEZ down by 1.91%, ONGC down by 1.59% and Bharti Infratel down by 1.28% were the top losers.

The European markets were trading in red; UK’s FTSE 100 decreased 22.98 points or 0.31% to 7,304.15, Germany’s DAX decreased 75.1 points or 0.65% to 11,479.61 and France’s CAC decreased 22.67 points or 0.46% to 4,859.51.

Asian equity markets ended mostly in green on Tuesday, with investors awaiting British Prime Minister Theresa May’s speech on Brexit later in the day and Friday’s inauguration of Donald Trump as US president. In her speech, May is expected to outline plans for the United Kingdom's to exit the European Union. Japanese shares fell to its lowest level in more than a month as a strong yen soured sentiment. Meanwhile, Chinese shares ended higher, snapping a five-day losing streak, as small-caps staged a sharp afternoon rebound that let an index tracking them halt an eight-day slide.