Post Session: Quick Review

Indian equity benchmarks altered between negative and positive territory and ended flat as Reserve Bank of India (RBI) held policy rates defying hopes. The equity benchmark indices saw profit booking after RBI maintained status quo. The street had expected the RBI to reduce key policy rates by 25 basis points to 6% in order to spur an economy recovering from the impact of demonetization, as India’s falling inflation and a fiscally prudent budget had given it enough room to cut rates sooner to give a boost to the economy. RBI Governor Urjit Patel cut the economic growth forecast to 6.9 percent for the current fiscal from 7.1 percent estimated earlier, even as he said the economy will bounce back to 7.4 percent rate next fiscal. The Monetary Policy Committee (MPC) of the RBI kept the short-term lending rate, called repo rate, unchanged at 6.25 percent. Consequently, the reverse repo rate under the LAF remains unchanged at 5.75 percent and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 percent. The committee decided to change the stance from accommodative to neutral, while keeping the policy rate on hold to assess how the transitory effects of demonetization on inflation and the output gap play out.

The equity benchmarks made a cautious start and traded near neutral lines in early deals. Traders took some support from a private report stating that the global economic order is expected to shift from advanced to emerging economies over the next few decades and by 2040 India could edge past the US to become the world's second largest economy in purchasing power parity (PPP) terms. Separately, appreciating the central bank’s role in the wake of demonetization and global phenomena such as Brexit and the US elections, NITI Aayog Vice Chairman Arvind Panagariya said that Reserve Bank of India (RBI) played an admirable role in bringing incredible stability to the rupee. He added that those who have been critical of demonetization don’t understand what a gigantic task it was to remonetise the economy.

On the global front, Asian markets closed mixed, while oil prices remained under pressure after data overnight showed a build-up in US crude inventory. Japan’s Nikkei share average closed higher swinging away from earlier losses. A summary of opinions from January 30-31 meeting showed that Bank of Japan board members saw improvements in exports, consumer spending and capital expenditure but warned that it may take time for inflation expectations to pick up. European stocks were mixed, as investors eyed the release of fresh earnings reports, while concerns over potential political turmoil in Europe persisted. Investors remained cautious amid concerns over the possibility of a Brexit or Trump-style shock result in France’s upcoming presidential election.

Back home, airline stocks displayed mixed reactions on reports that the Indian aviation market is likely to overtake Japan this year to become the world’s third largest domestic market after US and China.

The BSE Sensex ended at 28306.16, down by 29.00 points or 0.10% after trading in a range of 28149.08 and 28391.64. There were 15 stocks advancing against 15 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.47%, while Small cap index was up by 0.27%. (Provisional)

The top gaining sectoral indices on the BSE were Consumer Durables up by 2.63%, Realty up by 1.22%, Oil & Gas up by 0.81%, PSU up by 0.76% and Metal up by 0.69%, while FMCG down by 0.54%, Bankex down by 0.07% and IT down by 0.04% were the few losers on BSE. (Provisional)

The top gainers on the Sensex were GAIL India up by 1.84%, Coal India up by 1.63%, TCS up by 1.52%, Tata Motors up by 1.23% and Lupin up by 1.16%. (Provisional)

On the flip side, Dr. Reddy’s Lab down by 1.40%, ITC down by 1.12%, Tata Steel down by 1.00%, Sun Pharma down by 0.98% and Infosys down by 0.93% were the top losers. (Provisional)

Meanwhile, in a move to create digital and less-cash economy, the Lok Sabha has passed the Payment of Wages (Amendment) Bill, 2017, under which specified industrial units will have to pay salaries and wages to workers solely via cheque or by electronic transfer to their bank. According to this bill, there is no need to get the consent of the workers to pay through cheques or through transfer in bank account.

The new Payment of Wages bill will also ensure that the other benefits like ESI, PF are also properly been passed onto the workers. Once the bill becomes law, it will also repeal the Payment of Wages (Amendment) Ordinance 2016, which was promulgated on December 28, 2016 and it replaces the Payment of Wages (Amendment) Bill 2016, which was introduced in Lok Sabha on December 15, 2016.

The amendment enables the Centre as well as state governments to notify industries where employers shall have pay wages either through cheque or crediting that into workers’ bank accounts. At present, the Act covers all those employees in certain categories of establishments whose wage do not exceed Rs 18,000 per month.
Labour Minister Bandaru Dattatreya hailed the initiative aimed at promoting the welfare of workers and said that the new legislation will help check exploitation of workers engaged in un-organised sectors and they will get exact salaries in their bank accounts.

The CNX Nifty ended at 8775.80, up by 7.50 points or 0.09% after trading in a range of 8715.00 and 8791.25. There were 32 stocks advancing against 19 stocks declining on the index. (Provisional)

The top gainers on Nifty were BHEL up by 3.09%, Bharti Infratel up by 3.00%, Grasim Industries up by 2.80%, ACC up by 2.80% and GAIL India up by 2.27%. (Provisional)

On the flip side, Dr. Reddy’s Lab down by 1.67%, Sun Pharma down by 1.16%, Hero MotoCorp down by 1.10%, Tata Steel down by 1.03% and ITC down by 1.01% were the top losers. (Provisional)

The European markets were trading mixed; Germany’s DAX increased 14.38 points or 0.12% to 11,563.82, France’s CAC increased 22.91 points or 0.48% to 4,777.38, while UK’s FTSE 100 decreased 7.9 points or 0.11% to 7,178.32.

Asian equity markets ended mixed on Wednesday, as solid earnings results, a pause in the yen rally and signs that the Chinese government was extending steps to defuse potential credit bubbles helped offset investor concerns over political risks in Europe and the United States. Chinese shares closed higher, led by financial shares, even as weak forex reserves data highlighted the challenges faced by Beijing in curbing capital outflows. While China's foreign exchange reserves unexpectedly fell below the closely watched $3 trillion in January for the first time in almost six years, the fall in reserves was much smaller than in the same period of last year and December. Japanese shares ended higher, a day after it hit a two-week low. While the dollar remained choppy against the yen, though expectations surrounding Prime Minister Shinzo Abe's visit to the United States from Thursday offered some support.