Post Session: Quick Review

Indian equity benchmarks traded below neutral line for most part of the day and ended in red on sustained selling by investors amid disappointing corporate earnings. The trade was on a tepid note despite Asian shares ended higher and Wall Street logged record highs overnight after Federal Reserve Chair Janet Yellen spoke in support of an interest rate hike next month. Investors remained on the sidelines ahead of the 10th meeting of the all-powerful GST Council this weekend, where a critical anti-profiteering clause in the draft Goods and Services Tax law to ensure that the benefit of lower taxes gets shared with consumers is likely to be finalized. The Council, headed by Finance Minister Arun Jaitley and comprising representatives of all states, is also likely to finalize the definition of agriculture and agriculturist as well as the constitution of a ‘National Goods and Services Tax Appellate Tribunal’ to adjudicate on disputes. The equity benchmarks made a sluggish start and traded slightly in red with fear of US Fed’s imminent rate hike in March. Domestic rating agency Indian Ratings and Research retained its negative outlook on mid-sized and smaller state-run banks due to limited access to capital and large non-performing assets. The agency has however maintained stable outlook on large public sector banks and private sector banks supported by high levels of capital. The report highlighted that banks would need Rs 91,000 crore in Tier-I capital till March 2019 to grow at a bare minimum pace of 8-9 percent CAGR. It includes the Rs 20,000 crore of residual tranches from the government’s Indradhanush programme. Separately, some selling crept in banking stocks which fell on private report that the government is likely to cut the amount of capital it plans to inject into state-controlled lenders this fiscal year by as much as Rs 7,800 crore because of slow loan growth. Drug firms Dr. Reddy’s Laboratories and Aurobindo Pharma closed in red which put pressure on Pharma counters after both companies have separately recalled few quantities of two different drugs from the US market as they are found to be not up to the mark. The downside was capped as Finance Ministry officials citing sound macroeconomic parameters, pitched for a rating upgrade in their meeting with global rating agency Fitch. The ministry also explained the representative’s strict fiscal discipline that the government intends to follow, besides various steps taken by the government in the recent Budget to prop up growth.

On the global front, Asian markets closed mostly higher, on Federal Reserve Chair Janet Yellen’s comments on the US economy and rising interest rate hike expectations. Japan stocks end in green as gains in the Paper & Pulp, Rubber and Transport sectors led shares higher. Bank of Japan Governor Haruhiko Kuroda said that he has no plan now to raise the central bank’s bond yield targets as inflation was still distant from its 2 percent target. The governor added that inflation remains distant from 2 percent target, so it’s appropriate to continue with the powerful monetary easing to achieve the target at the earliest date possible. European shares rose as French lender Credit Agricole led banking stocks higher and earnings provided a boost.

The BSE Sensex ended at 28166.71, down by 172.60 points or 0.61% after trading in a range of 28102.23 and 28382.32. There were 10 stocks advancing against 20 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 1.12%, while Small cap index was down by 1.61%. (Provisional)

The only gainer on BSE was FMCG up by 0.31%, while Realty down by 3.73%, Auto down by 2.95%, Consumer Durables down by 1.77%, Power down by 1.42% and PSU down by 1.37% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were ITC up by 1.05%, HDFC Bank up by 0.73%, TCS up by 0.72%, Bajaj Auto up by 0.38% and Hindustan Unilever up by 0.37%. (Provisional)

On the flip side, Tata Motors down by 10.38%, Sun Pharma down by 4.28%, Tata Steel down by 2.34%, Adani Ports & Special Economic Zone down by 2.25% and Hero MotoCorp down by 2.10% were the top losers. (Provisional)

Meanwhile, in order to prevent any rise in price of commodities after Goods and Services Tax (GST) Law implementation, the GST council in its 10th Meeting on 18 February is likely to finalise an anti-profiteering clause in the draft GST law to ensure that trade and industry pass the benefits of reduction in tax rates to consumers.

The government is keen that benefit of lower taxes is passed on to consumers and so an anti- profiteering measure has been incorporated into the draft law. Anti-profiteering clause provides for constituting an authority to ensure its implementation which will examine whether input tax credits availed by any registered taxable person, or the reduction in the price on account of any reduction in the tax rate, have actually resulted in a commensurate reduction in the price of the said goods and/or services supplied by him.

The GST council in its meeting is also expected to finalise the definition of 'agriculture' and 'agriculturist' as well as the constitution of a 'National Goods and Services Tax Appellate Tribunal' to adjudicate on disputes. If the GST Council approves the revised draft in its meeting, the government will attempt to present it before Parliament in the second half of current Budget Session next month.

The CNX Nifty ended at 8728.20, down by 64.10 points or 0.73% after trading in a range of 8712.85 and 8807.90. There were 11 stocks advancing against 40 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bharti Infratel up by 1.63%, Zee Entertainment up by 1.54%, ITC up by 0.81%, HDFC Bank up by 0.75% and TCS up by 0.71%. (Provisional)

On the flip side, Tata Motors - DVR down by 9.86%, Tata Motors down by 9.55%, Sun Pharma down by 4.04%, Aurobindo Pharma down by 3.72% and Bank of Baroda down by 3.47% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 33.84 points or 0.47% to 7,302.40, Germany’s DAX increased 48.53 points or 0.41% to 11,820.34 and France’s CAC increased 19.86 points or 0.41% to 4,915.68.

Asian equity markets ended mostly higher on Wednesday as wall street touched record highs overnight after Federal Reserve Chair Janet Yellen painted a largely upbeat picture of the world's largest economy during the first day of her two-day testimony and indicated the central bank could raise short-term interest rates at its next policy meeting in March. Japanese shares rose sharply as the yen's weakness lifted exporters and the prospects of a US rate rise lifted US Treasury yields and helped spur a broad-based rally in banks and insurers. However, Chinese stocks ended lower, as technology and resource stocks took a breather after their recent strong rally. Indonesia stock exchange was closed on account of Voting Day.