Post Session: Quick Review

Indian equity benchmarks traded on a weak note for most part of the day and closed in red as investors took cautious approach ahead of US President Donald Trump’s first speech in US Congress scheduled on Tuesday. The Nifty drifted below 8900-mark and snapped 6-days winning streak despite market heavyweight Reliance Industries surged to more than seven-and-a-half-year high on continued hopes about its telecom unit. The equity benchmarks made a cautious start in early deals in absence of any positive domestic triggers. The sentiments turned pessimistic with the economic think-tank National Council of Applied Economic Research (NCAER) report which lowered the country’s growth forecast to 6.9 percent for the current fiscal on account of demonetization. A few days before demonetization was announced, NCAER had projected a growth rate of 7.6 percent for 2016-17. According to NCAER, the growth rate would rebound to 7.3 percent for 2017-18. The Gross Value Added (GVA) at Basic Prices at constant (2011-12) prices is predicted to grow at 6.3 percent in 2016-17 and 7 percent in 2017-18. Some selling also crept in as weakness was witnessed in select banking stocks after a media report said that the oil ministry received several complaints over the past few weeks, claiming banks were still imposing fees on debit card transactions for fuel despite a clear instruction from the government not to do so. Separately, the second official estimate of GDP growth due on Tuesday is likely to show the economy expanded below 7% in FY17, tripped by the November 8 demonetization that dented the consumption demand. The Central Statistics Office’s first estimate released on January 6 pegged growth at 7.1% in FY17, but it did not include the impact of demonetization.

On the global front, Asian markets closed lower, ahead of US President Donald Trump’s speech to a joint session of Congress on Tuesday, where he is expected to unveil some elements of his plans to cut taxes. China’s blue chips posted their biggest single-day loss in two months after the securities regulator vowed to step up its campaign against speculation and hinted about loosening its grip on new share offerings. China’s trade deficit in services narrowed to $20.9 billion in January from $26.1 billion in December. January’s deficit was largely due to a $19.7 billion gulf in spending between foreign tourists and the Chinese, who splurge more abroad than foreign tourists in China. European stocks were trading on mixed note as investors digested company headlines and showed concern over a possible new call for a referendum in Scotland.

Back home, telecom stocks Idea Cellular, Bharti Airtel, Reliance Communications and MTNL closed in red on escalating telecom war among service providers. Bharti Airtel has reportedly decided to do away with national roaming charges for voice and data services, a move that is sure to benefit its 268 million users, in order to take on Mukesh Ambani’s Reliance Jio Infocomm.

The BSE Sensex ended trading at 28825.03, down by 67.94 points or 0.24% after trading in a range of 28791.19 and 28961.83. There were 9 stocks advancing against 21 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.04%, while Small cap index was up by 0.12%. (Provisional)

The top gaining sectoral indices on the BSE were Energy up by 1.81%, Oil & Gas up by 0.72%, IT up by 0.38% and Healthcare up by 0.20%, while Telecom down by 2.73%, Bankex down by 1.34%, Auto down by 0.96%, Power down by 0.88% and Utilities down by 0.74% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Reliance Industries up by 4.56%, Wipro up by 0.75%, Hindustan Unilever up by 0.66%, Coal India up by 0.53% and Lupin up by 0.46%. (Provisional)

On the flip side, Axis Bank down by 3.54%, Power Grid down by 3.31%, Bharti Airtel down by 2.80%, ICICI Bank down by 1.76% and Maruti Suzuki down by 1.55% were the top losers. (Provisional)

Meanwhile, following government’s decision to phase out the Foreign Investment Promotion Board (FIPB), the Reserve Bank of India (RBI) is likely to frame standard operating procedure (SOP) for approval of foreign direct investment (FDI) proposals by ministries.  The government has taken decision to abolish FIPB and form a new mechanism with an aim to improve ease of doing business and to remove an additional layer in the form of FIPB which is no longer required. RBI is the nodal agency for administration of foreign investments and foreign exchange.

Once the FIPB is abolished, the onus of approving FDI proposals would be on the ministries and regulatory authorities concerned, hence in a recent inter-ministerial meeting, the committee discussed on the proposal for setting up norms for FDI approvals in sensitive sectors, which are currently under government approval of the FDI policy. It has also discussed the possibility of approving the FDI proposals along with grant of licences. The committee has pointed that in the sensitive sectors like defence and telecom, companies having licences can only seek foreign investments.

Further, the committee noted that the government may request RBI to prepare the standard operating procedure for every ministry and the Home Ministry could be asked to vet the FDI proposals from Pakistan and Bangladesh. All these issues are under discussions of the committee formed by the government, which includes representatives from the RBI, Finance Ministry, the Department of Industrial Policy and Promotion, and the Home Affairs Ministry. The committee is expected to submit its report within two months which will give guidelines on FDI approval procedures in the sensitive sectors.

The CNX Nifty is currently trading at 8896.45, down by 43.05 points or 0.48% after trading in a range of 8888.65 and 8951.80. There were 9 stocks advancing against 42 stocks declining on the index. (Provisional)

The top gainers on Nifty were Reliance Industries up by 4.63%, Aurobindo Pharma up by 2.11%, Lupin up by 0.97%, Hindustan Unilever up by 0.78% and Coal India up by 0.67%. (Provisional)

On the flip side, Idea Cellular down by 4.39%, Axis Bank down by 3.65%, Power Grid down by 3.34%, Bharti Infratel down by 3.12% and Zee Entertainment down by 2.84% were the top losers. (Provisional)

The European markets were trading mostly in green; UK’s FTSE 100 increased 13.46 points or 0.19% to 7,257.16, Germany’s DAX increased 4.37 points or 0.04% to 11,808.40, while France’s CAC decreased 3.66 points or 0.08% to 4,841.58.

Asian equity markets ended lower on Monday as lower commodity prices weighed on resource stocks and caution crept in ahead of US President Donald Trump's speech to Congress on Tuesday night, with investors looking for details on his promises of tax reform, deregulation and infrastructure spending. Chinese shares ended lower after the securities regulator vowed stricter regulations to clamp down on speculation and pledged to speed up approvals of initial public offerings. Further, Japanese shares hit 2-1/2 week lows as the yen's strength hurt exporters and lower US yields sent financials broadly lower. Meanwhile, Taiwan markets were closed for a public holiday.