Post Session: Quick Review

Friday turned out to be a disappointing day of trade for Indian markets where frontline gauges ended the day in negative territory for second consecutive session. The last hour of trade dragged the market lower with Nifty closing below 9200 mark for the first time in four sessions. The equity benchmarks made a soft start and traded in red in early deals on account of geopolitical concerns as US President Donald Trump ordered a targeted military strike against an airfield in Syria from which a deadly chemical attack was launched this week. The United States launched cruise missiles potentially escalating the conflict and spooking investors globally. Meanwhile, Russian President Vladimir Putin believes US cruise missile strikes on a Syrian air base broke international law and have seriously hurt US-Russia relations. The Russian Foreign Ministry said in a statement that Moscow is suspending a memorandum with the US to prevent incidents and ensure flight safety. China urged all parties in Syria to try to find a political settlement in the six-year-old civil war after a US military strike on a Syrian airfield. On domestic front, sentiments remained dampened after the Reserve Bank yesterday projected retail inflation to increase to 5% in the second half of the current fiscal citing risks of El Nino impacting the monsoon and one-off effects of the Goods and Services Tax. RBI further said that a prominent risk could emanate from managing the implementation of the allowances recommended by the 7th Central Pay Commission (CPC). Some selling also crept in after Fitch Ratings in its Asia-Pacific Sovereign Overview for April-June quarter, said that loose macroeconomic policy settings that cause a return of persistently high inflation and a widening current-account deficit, which would increase the risk of external funding stress are also negative for the economy.

On the global front, Asian markets closed mixed, as investors maintained cautious approach after US fired missiles into Syria in response to a chemical weapons attack. The US dollar dropped half a yen, while gold and oil prices rallied hard, though dealers said the early panic calmed when a US official called the attack a one-off. Household confidence in Japan rose more-than-expected last month. In a report, Cabinet Office said that Japanese Household Confidence rose to a seasonally adjusted annual rate of 43.9, from 43.2 in the preceding month whose figure was revised up from 43.1. European shares were trading mostly in red as major benchmarks tracked a global pull-back in risky assets. Investors awaited manufacturing data from Britain and non-farm payrolls from the US later in the session.

Back home, shares of Oil Marketing Companies (OMCs) Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) closed in green amid reports that the state-run companies are planning to review fuel rates on a daily basis to align them with international prices. If this happens, prices at petrol pumps may change every day in line with a trend mostly seen in advanced markets. So far, OMCs review fuel prices on a fortnightly basis.

The BSE Sensex ended at 29706.61, down by 220.73 points or 0.74% after trading in a range of 29668.45 and 29886.12. There were 5 stocks advancing against 25 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.30%, while Small cap index was down by 0.47%. (Provisional)

The few gaining sectoral indices on the BSE were Telecom up by 0.75%, Oil & Gas up by 0.48% and Capital Goods up by 0.10%, while Healthcare down by 1.43%, Metal down by 1.24%, Realty down by 1.19%, Bankex down by 0.96% and Basic Materials down by 0.75% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were TCS up by 1.21%, Bajaj Auto up by 1.01%, Bharti Airtel up by 0.69%, Hero MotoCorp up by 0.58% and NTPC up by 0.36%. (Provisional)

On the flip side, Sun Pharma down by 2.69%, Lupin down by 2.57%, Reliance Industries down by 2.32%, Adani Ports & Special Economic Zone down by 2.26% and Dr. Reddy’s Lab down by 2.18% were the top losers. (Provisional)

Meanwhile, Asian Development Bank (ADB), anticipating India to grow at 7.4% in 2017-18 and 7.6% in 2018-19, in its latest report has said that the demonetisation of high-value bank notes is likely to have a positive impact over the medium term and coupled with the forthcoming implementation of the goods and services tax (GST), will widen the tax net and improve tax compliance. It also said that with more people channelising their savings into the banking system, banks will have more money to lend at lower rates and lower aggregate deposit costs should improve bank profitability, further increasing their lending capacity.

The report titled ‘Asian Development Outlook’ has found that the note ban was to foster digitisation, improving tax compliance and channelising additional savings through the formal banking system. However, it also noted that India is a cash-intensive society, with an estimated 78% of consumer payments made in cash, hence the initial currency crunch, caused by the slow pace or remonetisation, hit economic activity, causing a temporary drop in consumption and employment.

Noting that the temporary drop in demand led to a decline in inflation, the ADB said that the return of demonetised notes caused bank deposits to surge and lending rates to drop and the steady progress in remonetisation is expected to rapidly rectify the situation.

The CNX Nifty ended at 9197.20, down by 64.75 points or 0.70% after trading in a range of 9188.10 and 9250.50. There were 14 stocks advancing against 37 stocks declining on the index. (Provisional)

The top gainers on Nifty were BPCL up by 4.58%, Indian Oil Corporation up by 3.02%, Bharti Infratel up by 2.55%, TCS up by 1.33% and Bharti Airtel up by 0.89%. (Provisional)

On the flip side, Bank of Baroda down by 3.66%, Sun Pharma down by 3.00%, Lupin down by 2.72%, Adani Ports & Special Economic Zone down by 2.41% and Kotak Mahindra Bank down by 2.39% were the top losers. (Provisional)

The European markets were trading mostly in red; Germany’s DAX decreased 62.06 points or 0.51% to 12,168.83, France’s CAC decreased 14.14 points or 0.28% to 5,107.30, while UK’s FTSE 100 increased 3.02 points or 0.04% to 7,306.22.

Asian made a mixed closing on Friday due to escalating geopolitical worries after the US bombed a Syrian regime target for the first time since the country's civil war began in 2011, in retaliation for this week's gruesome chemical weapons attack against civilians. Also, investors awaited cues from the meeting between leaders of the world's two biggest economies and the US employment report slated for release later in the day. A statement from the White House said that President Donald Trump and Chinese President Xi Jinping will discuss global, regional and bilateral issues of mutual concern. Meanwhile, Chinese stocks ended higher, led by the Shanghai benchmark closing at a 15-month high, with risk appetite lifted by Beijing's decision to launch a new economic zone in Hebei province.