Post Session: Quick Review

Indian equity benchmarks traded with volatility and ended modestly in green, as some support came with the American industry bodies lauding the Budget, saying Finance Minister Arun Jaitley has done an 'admirable job' in creating a vision that will propel the domestic economy while remaining cognizant about foreign investors eying the Indian market. Markets seem to be taking a breather, as of now, as the equity benchmarks BSE Sensex and NSE Nifty traded in a narrow range after posting a stellar rally over previous two weeks. The markets made a flat start and traded near neutral lines as investors’ awaited RBI monetary policy due next week. Some support also came with Economic Affairs Secretary Shaktikanta Das stating that the government is committed to fiscal prudence. So giveaways bordering on populism are something which the government does not believe in. A private report highlighted that the Reserve Bank of India (RBI) is likely to go for a 25 basis point cut in interest rate in its monetary policy review meet next week amid muted inflation, a prudent Budget and concerns about the impact of demonetisation on growth. According to the global financial services major, there is room for an accommodative policy stance by RBI next week, although the scope for further rate cuts is unlikely given global price developments. The markets also reacted to Nikkei IHS Markit report that the downturn in service sector activity across India softened during the opening month of 2017, with the slowdown reflecting a weaker contraction in new business inflows. The firm says rising from 46.8 at the end of 2016 to 48.7 in January, the seasonally adjusted headline Nikkei India Services Business Activity Index pointed to the slowest fall in output in the current three-month sequence of reduction.

On the global front, Asian markets ended mostly higher, as investors await the outcome of a key US monthly jobs report that will set the tone for the Federal Reserve’s policy outlook and as China’s markets reopened after a week-long break. A series of diplomatic snafus by the Trump administration were worrying some in the market. Hong Kong stocks suffered fourth consecutive session of decline, as a robust post-Christmas rebound appears to be losing steam amid uncertainty over global growth and fresh signs of policy tightening in China. Sentiments were also depressed by a slump in commodity prices on the mainland, which knocked shares of resources firms traded in Hong Kong. Some well-received company updates helped European shares inch higher but the key pan-regional benchmark index remained on track to end the week with a fall.

The BSE Sensex ended at 28251.52, up by 24.91 points or 0.09% after trading in a range of 28127.18 and 28280.58. There were 17 stocks advancing against 13 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.59%, while Small cap index was up by 1.07%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 1.01%, PSU up by 0.96%, Capital Goods up by 0.85%, TECK up by 0.83% and IT up by 0.67%, while Consumer Durables down by 0.83%, Auto down by 0.76%, Metal down by 0.58%, FMCG down by 0.14% and Oil & Gas down by 0.12% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Cipla up by 4.24%, Coal India up by 1.83%, SBI up by 1.58%, Axis Bank up by 1.50% and Dr. Reddy’s Lab up by 1.42%. (Provisional)

On the flip side, Tata Motors down by 1.53%, ICICI Bank down by 1.44%, Reliance Industries down by 0.97%, Tata Steel down by 0.86% and Power Grid down by 0.86% were the top losers. (Provisional)

Meanwhile, contracting for third straight month, India's services industry growth softened in the first month of 2017, with the slowdown in new business inflows, as firms struggled to recover from Prime Minister Narendra Modi's shock currency crackdown. The seasonally adjusted headline Nikkei India Services Business Activity Index remained below the 50 mark that separates growth from contraction, stood at 48.7 in January from 46.8 in December. As per the report, headcounts rose marginally, while work-in-hand increased for the eighth successive month. Input cost inflation slowed since December to a pace that was only marginal, whereas average selling prices decreased again.

The seasonally adjusted Nikkei India Composite PMI Output Index rose to 49.4 in January from December’s 38-month low of 47.6, pointing to a weaker contraction in private sector activity that was only marginal. The slowdown was supported by a rebound in factory production. According to the report, new orders at services firms dipped at a softer rate in January. Almost 11% of survey panelists reported falling levels of incoming new business, which they commonly associated with a relatively lower amount of cash in circulation. Concurrently, factory orders rose in the latest month.

Also, January data highlighted an increasing degree of pressure on the capacity of private sector firms’ operations as outstanding business rose to a greater extent than in December. However, sentiment among services companies improved considerably during January on the back of expectations that market conditions will soon normalize. Among the survey respondents, exactly 17% of panelists anticipate higher activity levels at their units in the coming 12 months, while the remaining firms foresee no change.

The CNX Nifty ended at 8738.55, up by 4.30 points or 0.05% after trading in a range of 8707.75 and 8748.25. There were 26 stocks advancing against 25 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bank of Baroda up by 4.73%, Tech Mahindra up by 4.46%, Cipla up by 4.05%, BHEL up by 2.52% and Bharti Infratel up by 2.19%. (Provisional)

On the flip side, Bosch down by 2.45%, Zee Entertainment down by 2.44%, Eicher Motors down by 1.93%, Tata Motors - DVR down by 1.91% and Tata Motors down by 1.67% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 increased 33.47 points or 0.47% to 7,174.22, Germany’s DAX increased 26.11 points or 0.22% to 11,654.06 and France’s CAC increased 39.67 points or 0.83% to 4,833.96.

Asian equity markets ended mostly higher on Friday, with Japanese shares closing higher after the yen weakened and the Nikkei survey showed that Japan's services sector continued to expand in January, although at a slower pace, with a PMI score of 51.9. That's down from 52.3 in December, although it remains well above the boom-or-bust line of 50 that separates expansion from contraction. The composite PMI came in at 52.3, down from 52.8 in December. However, Chinese shares ended lower after returning from a week-long holiday, as a private Chinese manufacturing survey missed forecasts and China's central bank surprised markets by raising its short-term lending rates. The Caixin China manufacturing purchasing managers' index dropped to 51 from 51.9 in December, suggesting a loss of momentum in output and new orders. The manufacturing PMI provides an overall view of activity in China's manufacturing sector, and is a closely watched indicator of economic health. Meanwhile, investors turned cautious ahead of the release of the US monthly jobs data due later in the day. The Labor Department's closely-watched report is expected to show an increase of 175,000 jobs in January after an increase of 156,000 jobs in the previous month. The unemployment rate is expected to hold at 4.7 percent.