Post Session: Quick Review

Indian equity benchmarks traded on a weak note for most part of the day and ended the session in red. Investors maintained a cautious approach ahead of state elections results, including that of Uttar Pradesh. Uttar Pradesh election is the world’s largest this year and will have a key influence on Prime Minister Narendra Modi’s chances of clinching a second term in 2019. Concerns have also grown over a hike in interest rates by the US Federal Reserve next week. The market made a soft start in early deals as traders took cautious approach with the Organization for Economic Cooperation and Development (OECD) in its Interim Economic Outlook report highlighted that India, where the government implemented a drastic measure of currency demonetization in November, was the only one to see its growth forecast for the year reduced. India’s growth projection for the financial year ending on March 31 was lowered to 7.3 percent. The outlook for the fiscal year 2018 was retained at 7.7 percent. Yet, the Indian economy would continue to remain the fastest growing in the entire group in both years. Sentiments also remained subdued with a private report stated that Consumer price inflation is likely to rise in February for the first time since demonetization and this could prompt the Reserve Bank of India (RBI) to hike rates much sooner than most expect. The downside was capped taking support from Prime Minister Narendra Modi’s statement that his government has been able to tame inflation which had gone out of control before 2014 and no political party could raise the issue during the polls in five states. PM cited examples of how different organizations around the world including the World Bank, IMF and others have appreciated the demonetization move.

On the global front, Asian markets closed mixed, as strong China trade data bolstered bets of a recovering global economy, though gains were capped by caution ahead of a widely expected US interest rate hike next week. Japan’s economy grew more than earlier estimated in the fourth quarter as capital expenditure grew at its fastest in almost three years, welcome news for policymakers as they begin to discuss how to wind down years of massive stimulus. European stocks were trading in green as investors eyed the UK annual budget release due later in the day, as well as a batch of fresh earnings reports.

Back home, shares of aviation stocks SpiceJet, Jet airways and InterGlobe Aviation closed in green on reports that the Delhi government will cut tax of Air Turbine Fuel (ATF) to 1 percent from 25 percent in a bid to boost connectivity between the capital and northeast areas.

The BSE Sensex ended at 28904.41, down by 95.15 points or 0.33% after trading in a range of 28815.48 and 29022.32. 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 0.60%, while Small cap index was down by 0.34%. (Provisional)

The few gaining sectoral indices on the BSE were Bankex up by 0.28%, Healthcare up by 0.10% and Consumer Durables up by 0.02%, while Metal down by 2.03%, Realty down by 1.58%, Energy down by 1.44%, Oil & Gas down by 1.35% and Basic Materials down by 0.96% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Power Grid up by 0.75%, SBI up by 0.71%, TCS up by 0.57%, HDFC Bank up by 0.36% and Sun Pharma up by 0.33%. (Provisional)

On the flip side, Tata Steel down by 1.95%, ONGC down by 1.83%, Mahindra & Mahindra down by 1.37%, Reliance Industries down by 1.36% and Infosys down by 1.18% were the top losers. (Provisional)

Meanwhile, domestic credit rating agency, ICRA in its latest report has said that the compensation law approved by the government for revenue losses related to the transition to the goods and services tax (GST) system will bring certainty to state budgeting. However, the report noted that the temporary disruption may be witnessed on account of transition to the GST and forecasted that the pace of growth of central transfers to state governments will halve in the coming fiscal.

The rating agency said that after the transition to the GST, the states' own revenues will increase by 14 per cent for the first five years, reducing the extent of uncertainty for budget preparation at the state level. On the same time, it projected decline in the pace of growth of central tax devolution to 10.9 per cent in FY2018- Budget Estimates from 20.1 per cent in FY2017- revised estimates, due to slowdown in the year-on-year growth of the excise duty and service tax collections.

ICRA stated that the GST on services accruing to the states on an aggregate basis will be twice as high as the share of service tax devolved to the state governments, on every Rs 100 of taxable services in the current regime.  Moreover, compensation for losses by the centre would protect against any medium-term downside to the state governments’ revenues.

The CNX Nifty ended at 8926.30, down by 20.60 points or 0.23% after trading in a range of 8891.95 and 8957.05. There were 19 stocks advancing against 32 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bosch up by 2.81%, Yes Bank up by 1.99%, Zee Entertainment up by 1.65%, Eicher Motors up by 1.42% and Kotak Mahindra Bank up by 0.92%. (Provisional)

On the flip side, Tata Steel down by 2.07%, Idea Cellular down by 2.07%, ONGC down by 1.96%, Tech Mahindra down by 1.71% and BHEL down by 1.34% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 4.14 points or 0.06% to 7,343.13, Germany’s DAX increased 30.52 points or 0.26% to 11,996.66 and France’s CAC increased 0.42 points or 0.01% to 4,955.42.

Asian equity markets ended mixed on Wednesday after the release of strong China trade data. China's imports advanced 44.7 percent year-on-year in February, much bigger than the forecast of 23.1 percent while exports grew only 4.2 percent in yuan terms versus a 14.6 percent annual rise economists had forecast. As a result, the trade balance showed a deficit of CNY 60.4 billion in February compared to the expected surplus of CNY 172.5 billion. Separate data from the People's Bank of China revealed that China's foreign exchange reserves unexpectedly increased by $7 billion to $3.0 trillion in February, marking the first increase in eight months. Chinese shares ended lower as concerns over tighter liquidity offset data showing clear signs of increased domestic demand. Japanese shares ended lower as caution prevailed ahead of the ECB's policy meeting on Thursday, the US jobs report due on Friday and the March 14-15 Federal Open Market Committee meeting. Sentiment was also dampened after data showed the US trade deficit in January hit the highest level in nearly five years, underscoring the challenges facing Trump. However, the sentiment remained cautious amid losses on Wall Street overnight as risk appetite took a hit on rising geopolitical tensions in East Asia, with the arrival of the first components of a US-deployed controversial missile-defense system in South Korea. Meanwhile, the United Nations has called for calm between Malaysia and North Korea after the two banned each other's nationals from exiting their countries following the killing of North Korean leader Kim Jong-un's half-brother.