Post Session: Quick Review

Indian equity benchmarks traded on a lackluster note in a narrow range throughout the day and closed in red. The equity benchmarks BSE Sensex and NSE Nifty snapped its four day winning streak ahead of government’s Budget session, which will start tomorrow with the Economic Survey of India and Annual Budget presentation for financial year 2017-18 by the Finance Minister Arun Jaitley on Wednesday. The markets made a cautious start and traded slightly in red in early deals as investors got spooked from Donald Trump’s protectionist stance. Trump on Friday signed an executive order that suspends the arrival of refugees for at least 120 days and bars visas for travelers from seven Muslim majority countries including Iran, Iraq, Libya, Somalia, Sudan, Syria and Yemen for the next three months. India’s software lobby group, Nasscom, has asked IT majors in America such as Apple, Google, Microsoft and IBM to lobby with Trump, to explain that more jobs would be generated by US companies if they outsource to India. The potential visa curbs come a time when the traditional IT services sector is under pressure from automation and the shift in spending on newer areas such as digital and cloud. Sentiments remained subdued with Former Finance Minister P Chidambaram’s statement that cash crunch in the wake of demonetization is still continuing in many places in the country even though it has eased to an extent in the metros. Besides, global credit rating agency, CRISIL in its latest report said that the fiscal deficit target of 3 percent for 2017-18 will be hard to hold as the debt dynamics of the country show stickiness. Further the agency stated that to help economy, there is a need to move to a range which will provide some flexibility to the government. However, losses remained capped as some support came with the tax department assuaging investors concern ahead of implementation of GAAR from April 1. The Central Board of Direct Taxes in clarifications on GAAR, has said that the adequate procedural safeguards are in place to ensure that General Anti-Avoidance Rules (GAAR), which seeks to prevent companies from routing transactions through other countries to avoid taxes, are invoked in a uniform, fair and rational manner.

On the global front, Asian markets ended in red, while most of markets were closed for the day and as investors cast a wary eye over steps by President Donald Trump to bar travelers from seven Muslim-majority countries. Japan’s Nikkei 225 fell after data showed that December retail sales rose 0.6% from the previous year, well below the 1.3% increase expected. Markets in Europe started the week on a negative footing with investors focused on corporate earnings and digesting international concerns over US President Donald Trump’s introduction of a travel ban on refugees coming from seven Muslim-majority countries.

Back home, telecom companies Bharti Airtel, Idea Cellular, Reliance Communications and MTNL closed on firm note reacting to merger of Vodafone and Idea. London-based Vodafone Group Plc has confirmed that it is in discussions with Aditya Birla Group for an all-share merger of Vodafone India with Idea Cellular.

The BSE Sensex ended at 27844.56, down by 37.90 points or 0.14% after trading in a range of 27813.32 and 27947.37. There were 10 stocks advancing against 20 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index was up by 0.34%, while Small cap index was down by 0.38%. (Provisional)

The sole gaining sectoral index on the BSE was TECK up by 0.78%, while Auto down by 0.91%, Consumer Durables down by 0.76%, Bankex down by 0.65%, PSU down by 0.57% and Power down by 0.46% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Bharti Airtel up by 7.36%, Reliance Industries up by 2.01%, Asian Paints up by 0.71%, Sun Pharma up by 0.66% and Dr. Reddy’s Lab up by 0.64%. (Provisional)

On the flip side, Tata Motors down by 2.07%, Tata Steel down by 1.52%, ONGC down by 1.42%, SBI down by 1.37% and Hero MotoCorp down by 1.11% were the top losers. (Provisional)

Meanwhile, the global credit rating agency, CRISIL in its latest report has said that the fiscal deficit target of 3 per cent for 2017-18 will be hard to hold as the debt dynamics of the country show stickiness. Further the agency stated that to help economy, there is a need to move to a range which will provide some flexibility to the government.

It stated that to maintain fiscal prudence for the next two to three years, government needs to come up with substantial steps to push up the revenues. Though, it said that the borrowing target is not expected to be very large and in line with the fiscal deficit target, adding that they are not significant or at the level that would spook the stock market and reverse the gains.

Further, agency noted that in FY17, spectrum or excise duty on oil that has led to revenue windfall are all temporary measures and may reverse in the coming fiscal. It added that the income Declaration Scheme (IDS) scheme too may not provide much support and can't continue forever.

On the current scenario, the rating agency has said that country has not been able to bring down the debt-GDP ratio which is quite high and it makes matters complicated and the government should focus on execution capacity so that the budget does not lie unused. It said that the GDP estimate is around 6.9 per cent for 2016-17.

The CNX Nifty ended at 8633.70, down by 7.55 points or 0.09% after trading in a range of 8617.75 and 8662.60. There were 18 stocks advancing against 33 stocks declining on the index. (Provisional)

The top gainers on Nifty were Idea Cellular up by 25.77%, Bharti Airtel up by 7.00%, Grasim Industries up by 4.38%, Reliance Industries up by 1.94% and Tech Mahindra up by 1.07%. (Provisional)

On the flip side, Bharti Infratel down by 7.46%, Aurobindo Pharma down by 2.47%, Tata Motors down by 1.70%, Tata Steel down by 1.51% and Tata Motors - DVR down by 1.42% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 54.91 points or 0.76% to 7,129.58, Germany’s DAX decreased 76.84 points or 0.65% to 11,737.43 and France’s CAC decreased 44.15 points or 0.91% to 4,795.83.

Asian equity markets ended in red on Monday, as investors digested lackluster US GDP data and the US immigration ban on seven predominantly Muslim countries. The immigration curbs introduced by US President Donald Trump heightened concerns about the impact of the new administration's policies on trade and the economy. Data on Friday showed that the US economy grew less-than-expected during the final quarter of the year as the annualized quarter-on-quarter rate was 1.9% versus the 2.2% estimate and 3.5% the previous quarter. Caution ahead of monetary policy decisions in the US, UK and Japan as well as Chinese manufacturing data and US jobs data due this week also kept investors nervous. Japanese shares ended lower as a firmer yen clouded the outlook for exporters. Reports showed Japanese retail sales grew 0.6 percent in December from a year earlier, gaining for a second straight month but falling below forecasts for a 1.7 percent gain. Markets in China, Hong Kong, Malaysia, Singapore, South Korea and Taiwan were shut on Monday for the Lunar New Year holidays.