Indian benchmarks end a disappointing day with half a percent cut

Indian benchmark indices extended their downfall for second consecutive day on Wednesday and finished the choppy day of trade with a cut of over half a percent on account of sustained selling by investors amid the dismal earnings by some blue-chip companies. Auto major Tata Motors slipped as much as ten percent after the company reported 96.22% fall in its consolidated net profit at Rs 111.57 crore for the quarter ended December 31, 2016, as compared to Rs 2952.67 crore for the same quarter in the previous year. India's largest drug maker Sun Pharmaceutical Industries declined over four percent after the company reported 4.73% drop in its consolidated net profit at Rs 1471.82 crore for Q3 FY17, as compared to Rs 1544.85 crore for the same quarter in the previous year. Further, investors turned jittery after the US Federal Reserve Chair Janet Yellen hinted at a likely rate hike in the forthcoming policy review. In her semi-annual monetary policy testimony before the Senate Banking Committee, Yellen said that the Fed will probably need to raise interest rates at an upcoming meeting in March and that delaying rate increases could leave the Fed's policymaking committee behind the curve. On the domestic front, sentiments remained dismal as India Ratings (Ind-Ra) cautioned the government that its strategy to revive economic growth by focusing on infrastructure may not yield results unless real estate and manufacturing sectors recover. Revising down economic growth by one percentage point to 6.8% from earlier 7.8% for the current financial year, due to demonetisation, the rating agency pegged economic expansion in the next financial year to 7.4%. Some market participants remained on the sidelines and refrained from any buying activity, 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 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. Meanwhile, banking stocks came under pressure on the private report that India may cut the amount of capital it plans to inject into state-controlled lenders this fiscal year by as much as Rs 7,800 crore ($1.2 billion) because of slow loan growth. The government, which had promised to inject Rs 25,000 crore into the lenders in the year ending March 31, has decided to defer Rs 2,100 crore of pledged amount into next financial year.

On the global front, 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. While Japanese market edged higher as the yen's weakness lifted exporters, Chinese stocks ended lower, as technology and resource stocks took a breather after their recent strong rally. Meanwhile, European stocks pushed higher for a seventh straight session, with banks leading the gains after Janet Yellen sparked a rally in financial stocks by hinting U.S. interest rates soon will go higher.

Back home, the local benchmarks got off to a soft start as the indices showed signs of consolidation in early trade. Thereafter, the key indices failed to show any kind of fervor due to lack of encouraging leads. The selling pressure accentuated in the noon trades as investors took to across the board risk aversion. 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. Eventually, the NSE’s 50-share broadly followed index Nifty, took a cut of over half a percent to settle below the crucial 8,750 support level, while Bombay Stock Exchange’s Sensitive Index, Sensex slipped by one hundred and fifty points and closed below the psychological 28,200 mark. Moreover, the broader markets too failed to show any kind of fervor and closed with losses of over a percent. The market breadth remained pessimistic, as there were 688 shares on the gaining side against 2147 shares on the losing side, while 150 shares remained unchanged.

Finally, the BSE Sensex declined by 164.71 points or 0.58% to 28174.60, while the CNX Nifty was down by 67.60 points or 0.77% to 8,724.70.
The BSE Sensex touched a high and a low of 28393.42 and 28263.45, 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 1.16%, while Small cap index was down by 1.52%.

The sole gaining sectoral index on the BSE was FMCG up by 0.08%, while Realty down by 3.53%, Auto down by 3.03%, Consumer Durables down by 1.61%, PSU down by 1.43% and Metal down by 1.35% were the top losing indices on BSE.

The top gainers on the Sensex were ITC up by 0.96%, HDFC Bank up by 0.90%, TCS up by 0.53%, Bajaj Auto up by 0.38% and Power Grid up by 0.32%. On the flip side, Tata Motors down by 10.32%, Sun Pharma down by 4.25%, Tata Steel down by 2.57%, Adani Ports & SEZ down by 2.09% and Hero MotoCorp down by 1.99% were the top losers.

Meanwhile, Union Labour Minister Bandaru Dattatreya has said that 8.65 per cent interest rate on employees’ provident fund (EPF) deposits for this financial year will soon be approved by the Finance Ministry. He also said that there was no difference opinion on this issue between the Labour Ministry and Finance Ministry and added that it is in the process and he will pursue it personally.

EPFO’s apex body, Central Board of Trustees (CBT) chaired by the Dattatreya, had approved 8.65 per cent rate of interest on EPF deposits for current fiscal on December 19 which is lowest in four years. For the FY 2015-16, the Employees’ Provident Fund Organisation had provided 8.8 per cent rate of interest to its 4 crore contributing subscribers. It also maintained 8.75 per cent for 2013-14 and 2014-15 while it was 8.5 per cent in 2012-13. EPFO will be left with a surplus of Rs 269 crore after providing 8.65 per cent interest rate for the current fiscal.

The minister’s assurance has come as relief for subscribers as the Finance Ministry has been reportedly asking the Labour Ministry to bring the EPF interest rate in alignment with other small saving schemes like PPF of the government. Earlier, the Finance Ministry had lowered interest rate on EPF for 2015-16 to 8.7 per cent from 8.8 per cent approved by the CBT but the step was retracted after protests by trade unions.

The CNX Nifty traded in a range of 8,807.90 and 8,712.85. There were 12 stocks in green as against 39 stocks in red on the index.

The top gainers on Nifty were Zee Entertainment Enterprises up by 1.61%, Bharti Infratel up by 1.33%, ITC up by 1.22%, TCS up by 0.71% and HDFC Bank up by 0.69%. On the flip side, Tata Motors - DVR down by 9.86%, Tata Motors down by 9.41%, Sun Pharma down by 4.20%, Aurobindo Pharma down by 3.55% and Bank of Baroda down by 3.37% were the top losers.

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.