Indian benchmarks end lower ahead of Trump’s inauguration

Friday’s session turned out to be an awful day of trade for Indian equity markets where frontline indices tumbled below their crucial 27,100 (Sensex) and 8,350 (Nifty) levels. After getting a negative start, market never looked confident throughout the session and ended near the intraday low levels, as sentiments remained dismal ahead of inauguration speech of Donald Trump as US President. For most of his campaign and after the election, Trump vowed to make sweeping changes to US trade and immigration policy, threatened to impose steep tariffs on Chinese imports and proposed hefty tax cuts. On the domestic front, sentiments were undermined by the report that India's economy lost momentum in the final three months of 2016 after Prime Minister Narendra Modi's ban on high-value notes hurt consumption and businesses. Having posted growth of above 7% for six consecutive quarters, India's gross domestic product is expected to have expanded just 6.5% in the October-December quarter - the weakest in nearly three years. Besides, discouraging earnings by some blue-chip companies too weighed on sentiments. Adani Power reported a net loss of Rs 478.39 crore for the quarter ended December 31, 2016 (Q3FY17) as compared to net loss of Rs 30.24 crore for the same quarter in the previous year. MindTree reported 26% Y-o-Y drop in its consolidated net profit at Rs 103 crore due to poor performance of its US and Europe subsidiaries. Moreover, Axis Bank reported a whopping 73% Y-o-Y decline in net profit at Rs 580 crore in the December quarter on account of rise in bad loans. Meanwhile, IT stocks came under selling pressure on the report that two powerful US Senators have announced they will introduce a legislation, which if passed by the Congress, would give preference to foreigners studying in American universities, a move that will tighten the noose around the H-1B visa programme and could hurt Indian IT firms. Furthermore, several Cement stocks edged lower after the Competition Commission of India (CCI) imposed penalties aggregating to almost Rs 207 crore on seven major cement companies for rigging of bids and cartelisation to get tenders in Haryana government orders. Shree Cement, UltraTech Cement, Jaiprakash Associates, JK Cement, Ambuja Cements, ACC and JK Lakshmi Cement have been slapped with fines of Rs 18.44 crore, Rs 68.3 crore, Rs 38.02 crore, Rs 9.26 crore, Rs 29.84 crore, Rs 35.32 crore and Rs 6.55 crore, respectively.

On the global front, Asian equity markets ended mixed on Friday as caution prevailed in financial markets ahead of US President-elect Donald Trump's inauguration later today. Broader sentiment was subdued even after China's fourth-quarter economic growth beat expectations and Federal Reserve Chair Janet Yellen took a less hawkish policy stance. China's economy grew by a faster-than-expected 6.8% in the fourth quarter, boosted by higher government spending and record bank lending. Japanese stocks edged higher as investors covered their short positions, but gains were tempered and volume was low as markets remained cautious over Donald Trump’s inauguration. Chinese markets ended a volatile week on an upbeat note as main indexes rose after data showing faster-than-expected economic growth fuelled blue-chips, while a surge in small-caps erased most of the losses earlier in the week. Meanwhile, European markets declined in early trading and were set for their biggest weekly loss since before Donald Trump won the U.S presidential election in November as investors steered clear of adding risk to portfolios ahead of Trump inauguration speech.

Back home, after getting a negative start, the local benchmarks traded in tight range throughout the morning session, but the selling pressure accentuated in the noon trades as investors took to across the board risk aversion. Thereafter, the key indices failed to show any kind of fervor due to lack of encouraging leads. Finally, the NSE’s 50-share broadly followed index Nifty, got buttressed by over a percent to settle below the crucial 8,350 support level, while Bombay Stock Exchange’s Sensitive Index-Sensex accumulated over two hundred and fifty points and closed below the psychological 27,100 mark. Moreover, the broader markets too got decimated to a large extent as the BSE’s midcap index shaved off 1.54% and smallcap index sulked 1.27% in the session.

The market breadth remained pessimistic, as there were 854 shares on the gaining side against 1850 shares on the losing side, while 193 shares remained unchanged.

Finally, the BSE Sensex declined by 274.10 points or 1% to 27034.50, while the CNX Nifty dropped 85.75 points or 1.02% to 8,349.35.

The BSE Sensex touched a high and a low of 27264.41 and 27009.81, respectively and there were 7 stocks on gainers side against 23 stocks on the losers side on the index.

The broader indices made a negative closing; the BSE Mid cap index ended lower 1.54%, while Small cap index was down by 1.27%.

The sole gaining sectoral index on the BSE was FMCG up by 0.10%, while Metal down by 2.37%, PSU down by 1.97%, Power down by 1.97%, Realty down by 1.94% and Consumer Durables down by 1.84% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 1.31%, Asian Paints up by 0.60%, ITC up by 0.59%, Dr. Reddys Lab up by 0.24% and Bajaj Auto up by 0.22%. On the flip side, Axis Bank down by 6.86%, Adani Ports & SEZ down by 3.59%, SBI down by 2.83%, Tata Steel down by 2.68% and ICICI Bank down by 2.34% were the top losers.

Meanwhile, global credit rating agency, Fitch in its latest credit change zone report for the country's listed corporates has said that they are less optimistic in their projections for the 27 Indian listed corporates they publicly rate. Fitch has rated 27 out of the top 100 largest listed Indian corporates in its report.

Fitch Ratings and India Ratings and Research which is part of the Fitch Group, projects that 17 out of the 27 'Fitch-rated' corporates in the top-100 portfolio to be in credit-positive change zones, where leverage is forecast to fall, and 10 companies in the credit-negative change zones, where leverage is forecast to rise.

Four of the 27 Fitch-rated companies are positioned in opposite credit change zones. It has predicted Wockhardt, NHPC, and Reliance Industries to be in credit-negative change zones, conversely, Fitch forecasts Bharti Airtel in the credit-positive change zone. The report explained that market expectations of improving corporate credit profiles is driven more by projected higher EBITDA (earnings before interest, tax, depreciation and amortisation) generation than lower debt and capex (capital expenditure).

The CNX Nifty traded in a range of 8,423.65 and 8,340.95. There were 9 stocks in green against 42 stocks in red on the index.

The top gainers on Nifty were Idea Cellular up by 2.96%, Bharti Airtel up by 1.14%, Yes Bank up by 1%, UltraTech Cement up by 0.62% and ITC up by 0.41%. On the flip side, Axis Bank down by 7.26%, Adani Ports & SEZ down by 3.76%, Bank of Baroda down by 3.75%, Tata Motors - DVR down by 2.96% and SBI down by 2.79% were the top losers.

The European markets were trading mostly in green; Germany’s DAX increased 2.14 points or 0.02% to 11,599.03, France’s CAC increased 1.75 points or 0.04% to 4,842.89, while UK’s FTSE 100 decreased 4.69 points or 0.07% to 7,203.75.

Asian equity markets ended mixed on Friday ahead of the inauguration of US President-elect Donald Trump later in the day. Investors digested a raft of Chinese economic data, dovish comments from European Central Bank President Mario Draghi and Federal Reserve Chair Janet Yellen's speech in California about the state of the US economy. Japanese stocks though edged up as investors covered their short positions, but gains were tempered and volume was low as markets remained cautious ahead of Donald Trump’s inauguration. Chinese stocks ended a volatile week on an upbeat note as main indexes rose after data showing faster-than-expected economic growth fuelled blue-chips, while a surge in small-caps erased most of the losses earlier in the week.