Post Session: Quick Review

Indian equity benchmarks traded on a weak note for most part of the day and ended the session with cut of around two-tenth of a percent. The further direction of markets hinges on the results of the elections in the northern state of Uttar Pradesh, due out on Saturday. Investors are also awaiting the US Federal Reserve meeting next week, where it is widely expected to raise interest rates. The market made a mildly positive start in early deals extending the gains of the last session on supportive regional cues but profit booking dragged the market into red. There was some cautiousness in the markets with Deputy Governor of the Reserve Bank of India’s (RBI) statement that the impact of demonetization on the informal sector is not fully captured in the GDP data and the effects of demonetization is expected to spill over to certain segments of the economy in this quarter. However, he also said that the impact of the notes ban would only be temporary and would help in bringing informal sector into the mainstream economy. Some selling also crept in after a foreign brokerage firm reported that companies are reluctant to increase hiring, and future activity expectations have fallen. The report highlighted that even as both service and manufacturing PMIs have posted better numbers than previous months, firms are reluctant to increase hiring points to a modest ‘U’ shaped recovery with the Reserve Bank likely to hold on to rates in the near future. Cautiousness also prevailed on report that India improved its ease of doing business ranking last year -- moving up from 131 to 130 in a list of 190 countries but still ranks among the worst performers on other key parameters. In most indicators, India ranked low, coming closest to sub-Saharan African countries. The downside was however capped with the global rating agency Fitch’s report that Indian economy will grow by 7.1% in the current financial year before stepping up to 7.7% in the next two financial years. It said the December quarter GDP number suggests that economic activity was ‘hardly hit’ by the cash crunch after the government’s move to remove 86 percent of currency in circulation overnight.

On the global front, Asian markets closed mostly higher, with sentiments slightly downbeat on growing expectations of a Fed rate hike this month. Bank of Japan board member Takako Masai said large swings in exchange rates can be a concern for Japan’s economy as it could hurt business sentiments. China finance minister said that the country will strictly control local government debt quotas and step up checks on illegal debt guarantees, as the country’s top officials stepped up assurances that they will keep financial risks under control. European markets were trading mostly higher with caution tone after a batch of weak corporate earnings reports and the biggest fall in German industrial orders since the depths of the global financial crisis disappointed investors, setting the tone for a lackluster session in Europe.

The BSE Sensex ended at 28992.85, down by 55.34 points or 0.19% after trading in a range of 28957.68 and 29098.17. 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 0.11%, while Small cap index was up by 0.01%. (Provisional)

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.36%, Consumer Durables up by 0.16%, Power up by 0.16%, Energy up by 0.12% and Capital Goods up by 0.12%, while Metal down by 1.74%, Basic Materials down by 0.76%, Telecom down by 0.62%, Auto down by 0.50% and Healthcare down by 0.47% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Adani Ports & Special Economic Zone up by 1.74%, TCS up by 1.35%, ONGC up by 1.14%, GAIL India up by 0.66% and HDFC Bank up by 0.49%. (Provisional)

On the flip side, Tata Steel down by 2.21%, Infosys down by 1.53%, Lupin down by 1.33%, Axis Bank down by 1.21% and Tata Motors down by 0.98% were the top losers. (Provisional)

Meanwhile, domestic credit rating agency, ICRA in its latest report has said that growth of the domestic pharmaceutical industry is expected to remain moderate due to slowing growth in the US, increased regulatory scrutiny and consolidation of supply chain in the US market. However, the agency also said that the adequate scale and drug development capabilities gained by industry would help to keep them in good stead to capture new opportunities in the US market.

The report noted the slowdown in revenue growth from the US, which dropped to 12 per cent in the first nine months of the current fiscal from 15 per cent in the last fiscal, 2015-16 and 33 per cent CAGR during 2011-15 despite consolidation and currency benefits. Further, it added that the continued regulatory interventions in domestic market are expected to put some pressure in near term though long-term growth prospects for domestic pharmaceutical market remain healthy given increasing penetration, accessibility and continued new launches.

The rating agency said that the domestic formulations business of companies within their sample registered growth of 9.3% in Q3 FY2017 as against 14.1% in Q2 FY2017, with demonetization resulting in channel de-stocking though the growth should come back in the next few months. The report however said the domestic pharma industry has gained adequate scale and drug development capabilities over the last decade of growth which would “keep them in good stead to capture new opportunities in the US market”.

The CNX Nifty ended at 8945.20, down by 18.25 points or 0.20% after trading in a range of 8932.80 and 8977.85. There were 17 stocks advancing against 34 stocks declining on the index. (Provisional)

The top gainers on Nifty were Adani Ports & Special Economic Zone up by 1.93%, TCS up by 1.31%, BPCL up by 1.19%, IndusInd Bank up by 1.16% and ONGC up by 1.14%. (Provisional)

On the flip side, Hindalco down by 3.26%, Tata Steel down by 2.09%, Infosys down by 1.45%, Lupin down by 1.37% and Axis Bank down by 1.28% were the top losers. (Provisional)

The European markets were trading mostly in green; UK’s FTSE 100 increased 10.07 points or 0.14% to 7,360.19, Germany’s DAX increased 22.46 points or 0.19% to 11,980.86, while France’s CAC decreased 8.63 points or 0.17% to 4,963.56.

Asian equity markets ended mostly higher on Tuesday amid growing expectations among traders that the Federal Reserve could raise interest rates at its March policy meeting next week. Also, US factory orders rose 1.2 percent month-on-month and durable goods orders climbed 2 percent, both beating the market consensus. Chinese shares ended higher, aided by renewed interest in technology shares in late trading after a listless morning session. Investors piled up tech shares for the second day following Premier Li Keqiang's Work Report on Sunday that identified innovation as a key part of China's economic restructuring. Though, Japanese shares ended lower with rising geopolitical tensions, French election uncertainty and overnight losses in the European banking sector.