Post Session: Quick Review

Indian equity benchmarks traded on a tepid note and ended the session with cut of around quarter percent points. Selling crept in at later half of the day on Pakistan media reports which dragged the market below neutral line. The equity benchmarks made a positive start and traded in fine fettle in early deals as traders took support from Prime Minister Narendra Modi’s statement that India has improved upon all the macro-economic indicators over the last three years mainly due to universal banking & universal biometric identification and noted that the fiscal deficit, balance of payments deficit and inflation in the country has reduced, while GDP growth rate, foreign exchange reserves and public capital investments have increased. The global rating agency Fitch Ratings enlightened that the Goods and Services Tax (GST) reform, being touted as India’s biggest reform that will come into effect from July 1, may not boost revenues significantly in the next few years, but can work in the medium term. The agency added that it may indirectly boost revenues in the medium term through higher GDP growth and more transparency. Investors took note that the rain disrupting El Nino still has a 50% chance of developing later this year albeit weakly, while prospects of Indian Ocean Dipole (IOD) - a phenomenon that strengthens monsoon in the country - forming over the Indian Ocean are looking good.

Selling crept in on reports that Pakistan Air Force (PAF) fighter jets Mirage flew close to the Siachen glacier. According to Pak media reports, all of its forward operating bases have been made fully operational. The report of Pakistani jets flying near Siachen came a day after the Indian Army announced that it had launched punitive fire assaults on Pakistani positions across the Line of Control earlier this month, inflicting some damage. Meanwhile, a US consultancy firm said that weak investment activity, as reflected in the slow output growth in capital goods and infrastructure, is likely to depress Indian gross value added (GVA) growth to around 6.6 per cent in the fourth quarter ended March. The report highlighted that the transition to GST (Goods and Services Tax) is also likely to create some disruption and impact the short-term sales volume across businesses. The market may remain volatile this week as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. May 2017 series to next month i.e. June 2017 series. The near month May 2017 derivatives contracts will expire on Thursday i.e. May 25, 2017.

On the global front, Asian markets closed mostly in green, as investors’ awaited minutes from the US Federal Reserve and an upcoming OPEC meeting. Moody’s Investors Services downgraded China’s long-term local and foreign currency issuer ratings, citing expectations that the financial strength of the world’s second-biggest economy would erode in the coming years. European stocks were trading mostly in green on thin volumes as markets were still recovering from the Manchester bombing.

The BSE Sensex ended at 30296.39, down by 68.86 points or 0.23% after trading in a range of 30247.60 and 30534.15. There were 8 stocks advancing against 22 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 1.46%, while Small cap index was down by 1.34%. (Provisional)

The few gainers on the BSE were Oil & Gas up by 0.43%, IT up by 0.14% and Auto up by 0.04%, while Telecom down by 2.63%, Capital Goods down by 2.39%, Metal down by 2.27%, Realty down by 1.82% and Healthcare down by 1.81% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Motors up by 4.31%, GAIL India up by 3.04%, Adani Ports & Special Economic Zone up by 2.70%, Hindustan Unilever up by 1.85% and TCS up by 1.65%. (Provisional)

On the flip side, Larsen & Toubro down by 3.21%, Dr. Reddy’s Lab down by 2.61%, Coal India down by 2.26%, Cipla down by 2.19% and SBI down by 2.13% were the top losers. (Provisional)

Meanwhile, the Goods & Services Tax (GST) which is finally scheduled to rollout from July 1, may not boost revenues 'significantly' in the next few years. Global rating agency Fitch Ratings in its latest report has said that though most of the industries are likely to benefit with GST, there are also concerns that it will likely keep government revenues a bit muted in the near term. Fitch has said that GST reform may not boost revenues significantly in the next few years, but it can indirectly boost revenues in the medium term through higher GDP growth and more transparency.

The rating agency noting GST as an important reform being implemented, has said that it will facilitate trade within India and reduce transaction costs. Earlier, Revenue Secretary Hasmukh Adhia too had said that the tax buoyancy under GST is likely to take a hit immediately, while Finance Minister Arun Jaitley had said that the revenues under GST may see an indirect increase with the widening of the tax net and less tax evasion.

Fitch though has found demonetization as a bold step taken by the country to curb black money and many other reforms like Insolvency and Bankruptcy Code, Aadhaar, Make in India, FDI-related measures and labour market laws as strong reforms, it has said that the country’s governance standards were still weak as far as voice and accountability, government effectiveness, rule of law and control of corruption were concerned. It further stated that some significant improvements have taken place in India in recent years, such as on the monetary front, but there are some other factors constraining India's rating, including the high general government debt burden.

The CNX Nifty ended at 9363.30, down by 22.85 points or 0.24% after trading in a range of 9341.65 and 9431.90. There were 14 stocks advancing against 37 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tata Motors up by 4.30%, Tata Motors - DVR up by 4.09%, GAIL India up by 2.98%, Adani Ports & Special Economic Zone up by 2.74% and BPCL up by 2.05%. (Provisional)

On the flip side, Bank of Baroda down by 3.52%, Larsen & Toubro down by 3.39%, Bharti Infratel down by 2.76%, ACC down by 2.72% and Aurobindo Pharma down by 2.57% were the top losers. (Provisional)

The European markets were trading mostly in red; Germany’s DAX decreased 19.23 points or 0.15% to 12,639.92, France’s CAC decreased 3.35 points or 0.06% to 5,344.81, while UK’s FTSE 100 increased 16.42 points or 0.22% to 7,501.71.

Asian equity markets ended mostly in green on Wednesday after the Trump administration unveiled its first budget proposal as a ‘taxpayer first’ plan that makes deep cuts to a number of programs while rising spending on border security and defense. A surge in US Treasury yields helped the dollar rebound from 6-1/2-month lows against its major peers, while oil prices rose for a fifth straight session ahead of OPEC's key meeting Thursday. The world's major oil countries are likely to extend production cuts for another nine months after Iraq backed an extension. Meanwhile, the FOMC minutes for the May 2-3 FOMC meeting are due later in the day, with investors looking for signs whether the Fed will lift rates in June. Chinese shares rose in the final minutes of trading, erasing losses spurred by Moody’s Investors Service cutting China’s debt rating and negative comments from MSCI Inc. on the nation’s stock market. Further, Japanese shares rose notably to hit a one-week high as the yen's fall against the dollar lifted export-oriented shares and banking stocks also benefited from a rise in US Treasury yields.