Indian benchmarks snap 4-days winning streak; Nifty fails to protect 8800 mark

Tremors of earthquake of 5.8 magnitude, which hit Uttarakhand on Tuesday, was felt on Indian stocks market too, as the frontline benchmark indices slipped over quarter percent with investors remaining on the sidelines and refraining from any buying activity ahead of the Reserve Bank of India’s (RBI) bi-monthly monetary policy committee meeting on Wednesday. RBI, in its sixth bi-monthly policy statement for the year, may have to delay the repo rate cut until a better picture emerges out of the remonetisation exercise. Sentiments remained downbeat on report that foreign portfolio investors (FPIs) sold shares worth a net Rs 403.52 crore on February 6, 2017. Besides, weakness in other Asian markets coupled with depreciation in rupee value against the dollar also spoiled sentiments. After rising for nine straight days, the rupee turned weak by 15 paise to 67.37 against the dollar on Tuesday on fresh demand for the American currency from importers. However, losses remained capped with commerce and Industry Minister Nirmala Sitharaman’s statement that disbanding FIPB (Foreign Investment Promotion Board) will further improve ease of doing business and the respective regulators of the ministries concerned are ‘sufficient’ to take care of investment proposals. The decision, the minister said, is in line with the government's policy for 'maximum governance and minimum government'. Some support also came with the report that the Centre is looking at developing economic corridors and planning to come up with logistic parks on national highways.

Meanwhile, some steel stocks came under pressure on report that the government would not extend protectionist minimum import price (MIP) on 19 colour-coated steel products. The development comes a day after Steel Minister Chaudhary Birendra Singh stated that industry must gear up to face global competition as protectionist measures like MIP and anti-dumping cannot continue indefinitely. Most Indian automakers were down, contributing to the benchmarks’ decline, with Tata Motors and Bajaj-Auto falling as much as 3.5% and 0.8% respectively. On the other hand, some buying was observed in fertiliser stocks on the report that the Finance Ministry granted Rs 10000 crore to Fertiliser Ministry under special banking arrangement to provide loan to cash-starved fertiliser companies at reasonable rates. In scrip specific development, Punjab National Bank rallied after the bank reported an over four-fold jump in net profit to Rs 207.18 crore for the quarter ended December 31, 2016-17, on account of lower provisioning. Also, Future Retails surged as much as 18% after the company reported a strong 87% year on year growth in its standalone net profit at Rs 101 crore for the quarter ended December 2016.

On the global front, Asian markets ended mostly lower on Tuesday as political and economic uncertainty sent investors sheltering in the Japanese yen and gold, while expectations China's foreign exchange reserves had fallen for a seventh month added to nervousness. Japanese market ended lower as caution crept in ahead of a meeting between Japanese Prime Minister Shinzo Abe and US President Donald Trump due this weekend. Meanwhile, European stocks traded slightly higher in early trade as investors continued to weigh concern over political risks and digest corporate earnings.

Back home, the local benchmarks got off to a pessimistic start, as investors largely remained influenced by the daunting sentiments prevailing in Asian markets. Thereafter, the key indices failed to show any kind of fervor due to lack of encouraging leads. The key gauges suffered a setback in afternoon trades as sudden bouts of profit booking emerged in the local markets. However, the bourses recovered from the lows of the day but could not succeed in minimizing the huge losses by the end of trading session. Finally, the NSE’s 50-share broadly followed index - Nifty plunged by over quarter percent to settle below the crucial 8,800 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex took a triple digit cut and closed below the psychological 28,350 mark. The market breadth on the BSE was pessimistic, as there were 1324 shares on the gaining side against 1561 shares on the losing side, while 121 shares remained unchanged.

Finally, the BSE Sensex declined 104.12 points or 0.37% to 28335.16, while the CNX Nifty was down by 32.75 points or 0.37% to 8,768.30. 

The BSE Sensex touched a high and a low of 28483.41 and 28239.12, respectively and there were 10 stocks on gainers side as against 20 stocks on the losers side on the index.

The broader indices made a negative closing; the BSE Mid cap index declined 0.18%, while Small cap index was down by 0.09%.

The top gaining sectoral indices on the BSE were Capital Goods up by 1.12%, Power up by 0.41%, Consumer Durables up by 0.26%, IT up by 0.23% and TECK up by 0.06%, while Metal down by 1.25%, Auto down by 0.93%, Oil & Gas down by 0.84%, Realty down by 0.38% and PSU down by 0.32% were the top losing indices on BSE.

The top gainers on the Sensex were Infosys up by 1.10%, Larsen & Toubro up by 1.02%, Maruti Suzuki up by 0.89%, Asian Paints up by 0.50% and HDFC up by 0.44%. On the flip side, Tata Motors down by 3.52%, Coal India down by 2.88%, ONGC down by 2.86%, Adani Ports & SEZ down by 1.86% and Lupin down by 1.73% were the top losers.

Meanwhile, in order to discuss the issue raised by Indian IT firms on the proposed changes in the regime for issuing H-1B visas for skilled workers by the US government, Commerce and Industry Ministry will soon hold a meeting with industry including Nasscom which have significant presence in the US. The Commerce Minister Nirmala Sitharaman has said that the proposed changes in the H-1B visa regime will have an impact on Indian firms and added that they are constantly in touch with the Consulate Office in the US.

Sitharaman further said that the meeting will be held once Parliament announces a recess from its proceedings. She said that in the meeting they will discuss about how they are working out in this environment and what their strategy is to deal with this matter.  She added that they are also going to have a clear exchange and discussions with industry and after that she will be able to have a clearer picture of where the industry is.

The Minister added that the changes that could have financial implications, such as doubling the minimum wage requirement, can be brought about only through Congressional approval and not executive order, indicating the government had time to take a calibrated decision. The Minister pointed out that there are several nuances to the law proposed by the US. She said 'It is a call which is possibly going to happen through an executive order which will mean a few things...Probably, we will have to wait for Congress approval. Further commenting about the increasing global protectionism, the commerce minister has said that it is increasing during the time when global demand is also not picking up.

The CNX Nifty traded in a range of 8,809.30 and 8,741.05. There were 15 stocks in green as against 36 stocks in red on the index.

The top gainers on Nifty were BHEL up by 5.07%, BPCL up by 1.72%, Larsen & Toubro up by 1.20%, Infosys up by 1.15% and Bank of Baroda up by 1%. On the flip side, Tata Motors down by 3.57%, Tata Motors - DVR down by 3.41%, Coal India down by 2.32%, Hindalco down by 1.95% and Lupin down by 1.81% were the top losers.

The European markets were trading in green; UK’s FTSE 100 increased 38.6 points or 0.54% to 7,210.75, Germany’s DAX increased 39.61 points or 0.34% to 11,549.45 and France’s CAC increased 2.01 points or 0.04% to 4,780.09.

Asian equity markets ended mostly lower on Tuesday as economic and political uncertainty gripped global markets. Given the worries about the political landscape in Europe and lingering uncertainty surrounding Donald Trump's fiscal and trade policies, investors were apprehensive about holding riskier assets. Safe-haven assets such as the Japanese yen and gold gained ground as risk appetite waned. Japanese shares ended lower as caution crept in ahead of a meeting between Japanese Prime Minister Shinzo Abe and US President Donald Trump due this weekend. Chinese shares ended down as the People's Bank of China refrained from adding cash into the system for a third straight session, underlining its tightening bias to deflate potential credit bubbles in the world's second-largest economy. Trading sentiment weakened further ahead of data expected to show that foreign exchange reserves fell for the seventh straight month by about $10.5 billion to $3 trillion in January.