Post Session: Quick Review

Indian equity benchmarks traded in a narrow range throughout the day and ended on flat note with positive bias. Investors remained wary ahead of key economic data - industrial production (IIP) for December - to be released later today. The equity benchmarks made a positive start and traded slightly in green in early deals taking some support with a US think tank report which stated that India will be the world’s fastest growing economy during the next five years as China’s economy cools and growth elsewhere sputters, but internal tensions over inequality and religion will complicate its expansion. According to NIC, India probably has the greatest potential to boost global growth because of its size and the success of its technology sector, but it would have to improve its energy, transportation and manufacturing infrastructure to sustain high rates of growth. Some support also came with a private report highlighting that even with cash shortage hurting businesses in some sectors, the impact of demonetization on the credit profile of large corporates is neutral, with no major rating changes expected due to the note-ban move. The report noted that the immediate impact of note-ban on revenues of large firms in third quarter of 2016-17 ranges from nil for the export-oriented sectors like IT/ITeS, to a significant impact on auto, real estate and gems & jewellery, with a gradual recovery expected as cash availability improves in the fourth quarter (January-March). Sentiments remained upbeat with the report that government’s revenue collection from indirect tax grew by an impressive 23.9 percent during the April-January period, while that from direct tax rose by 10.79 percent. Total direct and indirect tax collections at the end of January stood at Rs 12.85 lakh crore, 76 percent of the Rs 16.99 lakh crore target, as per revised estimate for 2016-17.

On the global front, Asian markets closed mostly higher, after US President Donald Trump promised that he would soon cut taxes for businesses. Trump told his Chinese counterpart Xi Jinping that the US would stick with the ‘One China’ policy, easing tension between the world’s two largest economies and China trade data eased growth concerns. China reported better-than-expected trade data for January as demand picked up both at home and abroad, an encouraging start to 2017 for the world’s largest trading nation. January exports rose 7.9 percent from a year earlier as global demand perked up, while imports expanded 16.7 percent on improved domestic appetite for coal, crude oil and iron ore. Japan’s Nikkei surged as the yen weakened against the dollar, lifted shares of exporters. Indonesia market closed lower as losses in the Financials, Trade and Miscellaneous Industry sectors led shares lower. European stocks were trading in green as investors eyed a fresh batch of corporate earnings reports, although concerns over political uncertainty in Europe continued to weigh.

The BSE Sensex ended at 28325.20, down by 4.50 points or 0.02% after trading in a range of 28286.80 and 28456.18. There were 14 stocks advancing against 16 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index was down by 0.31%, while Small cap index was tad up by 0.08%. (Provisional)

The top gaining sectoral indices on the BSE were IT up by 1.81%, TECK up by 1.37%, Capital Goods up by 0.42%, Bankex up by 0.28% and Realty up by 0.23%, while Oil & Gas down by 0.77%, Auto down by 0.58%, FMCG down by 0.56%, PSU down by 0.49% and Metal down by 0.42% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were TCS up by 2.87%, Adani Ports & Special Economic Zone up by 2.32%, Infosys up by 2.07%, Tata Steel up by 1.46% and NTPC up by 1.13%. (Provisional)

On the flip side, Lupin down by 1.90%, Dr. Reddy’s Lab down by 1.54%, GAIL India down by 1.42%, ITC down by 1.41% and Cipla down by 1.25% were the top losers. (Provisional)

Meanwhile, credit rating agency, India Ratings in its latest report has said that despite the cash shortage hurting some sectors significantly in the third quarter, the impact of demonetisation on the credit profile of large corporates (revenue over Rs 250 crore) remained neutral, with no significant changes in their ratings expected due to the notes ban move. It pointed that large corporates have sufficient liquidity buffers to meet debt servicing obligations.

The report noted that the impact has been varied, depending on the extent and nature of cash usage within an industry. Further, it said that the immediate impact of note-ban on revenues of large firms in third quarter of 2016-17 ranges from nil for the export-oriented sectors like Information Technology (IT)/Information Technology enabled services (ITeS), to a significant impact on auto, real estate, gems and jewellery, with a gradual recovery expected as cash availability improves in the fourth quarter (January-March).

The report stated that during demonetisation a significant fall was witnessed in sales of a couple of sectors where the nature of cash usage is often considered dubious like real estate, gems and jewellery. However, it said that organised players and large corporates in such sectors will benefit in the long-run. It added that the sectors which are ancillary to the impacted sectors like auto components, cement, steel or other metals will also see the ripple effects of demonetisation.

The CNX Nifty ended at 8794.05, up by 15.65 points or 0.18% after trading in a range of 8771.20 and 8822.10. There were 26 stocks advancing against 25 stocks declining on the index. (Provisional)

The top gainers on Nifty were Grasim Industries up by 3.83%, Tech Mahindra up by 3.08%, TCS up by 2.83%, Infosys up by 2.29% and Adani Ports & Special Economic Zone up by 2.20%. (Provisional)

On the flip side, Aurobindo Pharma down by 4.06%, BPCL down by 1.77%, Lupin down by 1.67%, Dr. Reddy’s Lab down by 1.59% and GAIL India down by 1.50% were the top losers. (Provisional)
The European markets were trading in green; UK’s FTSE 100 increased 23.87 points or 0.33% to 7,253.37, Germany’s DAX increased 36.63 points or 0.31% to 11,679.49 and France’s CAC increased 2.95 points or 0.06% to 4,829.19.

Asian equity markets ended mostly higher on Friday, supported by Wall Street's gains overnight after US President Donald Trump promised a ‘phenomenal’ tax plan to lower the burden on American businesses. Trump also issued belated well-wishes to China for the Lunar New Year and sought to work with President Xi Jinping to ‘develop a constructive relationship’ that benefits both countries, the White House said in a statement, potentially alleviating concerns about a major shift in Washington's relations with Beijing. While Trump's promise to announce ‘something phenomenal on taxes in the next 2 to 3 weeks’ lifted the dollar to a 1-1/2-week high versus the Japanese yen, gold extended overnight losses and Treasuries retreated for a second day. Japanese shares rallied as the yen weakened against the dollar ahead of Prime Minister Shinzo Abe's meeting with Trump. Reports suggest that Abe will put forward an economic co-operation package including a $150 billion five-part investment package in US infrastructure when they meet later today. Further, Chinese shares ended higher as investors cheered trade data and Russian President Vladimir Putin confirmed his readiness to take part in the 'One Belt, One Road' summit in Beijing in May this year. China's January exports rose an annual 7.9 percent in dollar terms on stronger global demand, rebounding from the previous month's contraction, while imports rose by 16.7 percent, preliminary data showed.