Post Session: Quick Review

Indian equity benchmarks traded in a narrow range oscillating between positive and negative terrain and ended the day in red. The equity benchmarks made a cautious start ahead of the Fed rate-setting decision later in the day, where it is widely expected to increase rates. The rupee opened higher against dollar and hit its highest level since November 2015 in early trade. The unwinding of the US currency followed by BJP’s landslide victory in Uttar Pradesh supported the local currency. Some concerns came with the CRISIL’s report that the implementation of the Goods and Services Tax in 2017 coupled with rising commodities prices will put pressure on the retail inflation in FY18. Investors maintained a cautious approach as the likelihood of a repo rate cut in April 2017 remains subdued. Those hoping that the Reserve Bank of India (RBI) would slash interest rates going ahead may just have to wait further as the inflation may have come back to haunt the economy. Higher food, fuel, non-fuel commodities and power prices and playing out of base effect in February had led to both Wholesale Price Index (WPI) and Consumer Price Index (CPI) or retail inflation soaring northwards to 6.55% and 3.65%, respectively. The WPI inflation was highest in 39 months, while the retail inflation was at a 4-month high.

Meanwhile, Chief Economic Adviser Arvind Subramanian said that recent election results came as a surprise to him and the outcome has given the Modi government a political mandate to carry out its economic agenda. Subramanian said that demonetization can be called successful only if the amount of currency in circulation comes down over time and there is an increase in tax compliance. Moody’s Investors Service said that BJP’s thumping victory in Uttar Pradesh and substantial gains made in other states will facilitate reforms as the ruling party inches closer to a majority in Upper House. It added that the 2017 state election results in India demonstrate broad-based popular support for the Indian government’s policy agenda and will facilitate the implementation of further reforms, a credit positive for the sovereign.

On the global front, Asian markets closed mostly lower, as investors took profits before a US central bank policy meeting. China’s Premier Li Keqiang said that forecasts of a hard landing for the world’s second largest economy should stop, though domestic and external risks remain and meeting the target of 6.5 percent growth for this year won’t be easy. Li said the economy faces risks this year, but added the country has many policy tools to cope with them. European shares were trading in green boosted by strength in basic resource and oil stocks.

Back home, Information Technology (IT) companies were trading weak as the Indian rupee strengthens further against US dollar. A firm rupee adversely impacts the operating profit margin of IT firms as the sector derives a lion’s share of revenue from exports. Select liquor stocks like United Spirits, Radico Khaitan and Globus Spirits closed in green taking support from news that Karnataka Chief Minister Siddaramaiah abolished value added tax on wine, beer, wine and hard liquor in the state’s budget.

The BSE Sensex ended at 29370.79, down by 71.84 points or 0.24% after trading in a range of 29358.91 and 29500.08. There were 12 stocks advancing against 18 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.97%, while Small cap index was up by 0.63%. (Provisional)

The top gaining sectoral indices on the BSE were Telecom up by 1.70%, Realty up by 0.77%, Auto up by 0.67%, Consumer Disc up by 0.60% and Basic Materials up by 0.56%, while IT down by 1.91%, TECK down by 1.30% and Oil & Gas down by 0.03% were the only losers on BSE. (Provisional)

The top gainers on the Sensex were Hero MotoCorp up by 1.44%, Tata Steel up by 1.12%, Reliance Industries up by 0.90%, Tata Motors up by 0.67% and SBI up by 0.66%. (Provisional)

On the flip side, TCS down by 2.48%, Infosys down by 2.03%, Wipro down by 1.72%, Hindustan Unilever down by 1.61% and Coal India down by 0.86% were the top losers. (Provisional)

Meanwhile, keeping an optimistic view from the much-awaited Goods and Services Tax (GST) regime, the Central Board of Excise and Customs (CBEC) is expecting an increment in tax figures. The CBEC Chairman Najib Shah has said that the ministry belief that the current level of tax will not be reduced for at least 5 years, it will remain same and noted that taxes are likely to increase a bit from the current level.

Shah pointing that the fitment of goods and services in the four tax slabs is under way, said that apart from the tax rates, there will also be a cess on top of it, which will form the corpus to compensate the states for any revenue loss for the first five years of implementation of GST and to which commodities will have the cess will be determined by the Council.

Shah expressed hope that the implementation of GST will lead to increase in GDP by 1-2 per cent and added that tax evasion should come down as all filings will be IT driven and evasion will get difficult. The CBEC Chairman also said that GST will ensure that the laws regarding the new indirect tax regime are finalised by April 1, so that the industry has three months to prepare for the transition.

The CNX Nifty ended at 9082.60, down by 4.40 points or 0.05% after trading in a range of 9075.50 and 9106.55. There were 25 stocks advancing against 26 stocks declining on the index. (Provisional)

The top gainers on Nifty were Idea Cellular up by 9.90%, BHEL up by 3.32%, Bank of Baroda up by 3.26%, Aurobindo Pharma up by 2.20% and Tata Power up by 1.85%. (Provisional)

On the flip side, TCS down by 2.67%, Infosys down by 2.28%, Wipro down by 1.46%, HCL Technologies down by 1.46% and Hindustan Unilever down by 1.20% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 21.68 points or 0.29% to 7,379.53, Germany’s DAX increased 16.44 points or 0.14% to 12,005.23 and France’s CAC increased 9.74 points or 0.2% to 4,984.00.

Asian equity markets ended mostly lower on Wednesday ahead of a rates decision from the US Federal Reserve and as Dutch voters head to the polls. Investors were focused on what the Federal Reserve will say about tightening monetary policy during the rest of the year with markets already pricing in an immediate rise in US interest rates. Japanese shares ended lower as the yen continued to strengthen against the dollar. Though, Chinese shares ended marginally higher after Premier Li Keqiang's news conference at the end of the annual meeting of China's parliament offered few surprises. A rebound in oil prices in Asian trading also helped to limit overall losses to some extent.