Post Session: Quick Review

Wednesday turned out to be a disastrous day of trade for Indian equity markets and continued its southward journey for third consecutive day. The equity benchmarks made a gap-down start in early deals due to global weakness on account of North Korea missile test and concerns over Donald Trump’s tax promises. Traders remained cautious on reports that the government wants to tighten even further the proposed Budget measure aimed at discouraging black money through restrictions on cash transactions to Rs 2 lakh from Rs 3 lakh. The government also plans to make inclusion of the Aadhaar ID mandatory in applications for permanent account number (PAN) cards. Investors took cautious approach with the Minister of State for Finance Arjun Ram Meghwal’s statement that it is not possible to assess the impact of note ban on India’s gross domestic product (GDP) as the economic development of a country depends on a number of factors including structural, external, fiscal and monetary factors. Some selling also crept in after a foreign brokerage firm reported that India’s GDP growth is expected to slow to 6.7 percent in the January-March quarter of this fiscal year as overall activity is yet to bounce back to levels seen prior to demonetization. The report highlighted that though the adverse growth effects of demonetization are waning; the pace of improvement is gradual and not yet broad based. Meanwhile, the government said that it is not possible to pinpoint the impact of demonetization on GDP as economic growth is contingent on a number of factors. Banking stocks were under pressure for fourth consecutive session after the Reserve Bank of India’s credit growth data suggested the banking system struggling to lend despite the higher liquidity. The recent loan-waiver announcement by various political parties also kept the stocks prices under check.

On the global front, Asian markets closed in red, as growing doubts about Donald Trump’s economic growth agenda prompted investors to dump risky assets and rush to safe havens such as gold and government debt. Japan stocks were lower as losses in the Warehousing, Finance & Investment and Financial Services sectors led shares lower. Japan’s exports grew the most in more than two years in February, rebounding from a Lunar New Year slowdown in January, as a widening trade surplus with the United States potentially raises tensions in the face of rising US protectionism. European markets were trading lower as investors continued to focus on political developments in France ahead of the highly-anticipated presidential election scheduled next month.

The BSE Sensex ended at 29146.46, down by 338.99 points or 1.15% after trading in a range of 29137.48 and 29341.41. There were 6 stocks advancing against 24 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.90%, while Small cap index was down by 0.92%. (Provisional)

The top losing sectoral indices on the BSE were Telecom down by 2.16%, Consumer Durables down by 1.95%, Auto down by 1.62%, FMCG down by 1.60% and Industrials down by 1.37%, while there were no gainers. (Provisional)

The top gainers on the Sensex were Lupin up by 1.07%, Wipro up by 0.76%, Cipla up by 0.58%, Dr. Reddy’s Lab up by 0.47% and Sun Pharma up by 0.34%. (Provisional)

On the flip side, Bharti Airtel down by 3.32%, ITC down by 3.01%, Tata Motors down by 2.71%, ICICI Bank down by 2.42% and Bajaj Auto down by 2.08% were the top losers. (Provisional)

Meanwhile, the government has proposed to cap cash transactions at Rs 2 lakh instead of Rs 3 lakh as provided in the Budget-2017. The proposal is a part of the 40 amendments to the Finance Bill moved by finance minister Arun Jaitley in Lok Sabha, which also includes, making biometric identifier Aadhaar mandatory for filing tax returns and allow cheque only contributions to electoral trusts as part of the tirade against blackmoney.

This cap is now at par with the current requirement of quoting permanent account number (PAN) for cash spending and to ensure a deterrent, the penalty for violation of this provision is a fine equivalent to the amount of transaction and the fine will be payable by person or establishment receiving cash.

The amendment provides that a person holding PAN as on 1 July, 2017, has to intimate his Aadhaar number to authority in a manner which will be notified by the government. The other amendments to the laws like Companies Act, Employees Provident Fund, Smuggling and Foreign Exchange Act, TRAI Act and Information Technology Act, have been moved with an aim of making the functioning of tribunals more efficient by merging the smaller ones and reducing their numbers from 40 to 12.

The CNX Nifty ended at 9027.65, down by 93.85 points or 1.03% after trading in a range of 9019.30 and 9072.90. There were 11 stocks advancing against 40 stocks declining on the index. (Provisional)

The top gainers on Nifty were Lupin up by 1.27%, HCL Technologies up by 1.22%, Cipla up by 0.62%, BPCL up by 0.60% and Dr. Reddy’s Lab up by 0.50%. (Provisional)

On the flip side, Bharti Airtel down by 3.40%, ITC down by 2.95%, Tata Motors down by 2.80%, ICICI Bank down by 2.59% and Hindalco down by 2.55% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 64.83 points or 0.88% to 7,313.51, Germany’s DAX decreased 84.35 points or 0.71% to 11,877.78 and France’s CAC decreased 39.66 points or 0.79% to 4,962.77.

Asian equity markets ended in red on Wednesday after Wall Street suffered its worst day this year on worries about whether President Donald Trump will be able to deliver his promises on reforming regulations, increasing infrastructure spending and lowering corporate taxes. Trump told House Republicans on Tuesday that they could lose re-election in the 2018 midterms if they vote against the GOP health care bill planned for Thursday. It is feared that a failure to approve the Obamacare replacement plan could endanger more of Trump's legislative and policy agenda. Chinese stocks closed modestly lower, dragged down by banks and property developers, amid worries over tightening liquidity in the banking system. Further, Japanese shares ended lower as reports of North Korean missile launch and worries that Trump will struggle to deliver promised tax cuts sent the yen soaring to strongest levels since November. Investors largely shrugged off better-than-expected Japanese trade data for February and the BoJ’s minutes from the January policy meeting.