Post Session: Quick Review

Indian equity benchmarks traded on a weak note and ended the session with cut of around four tenth of a percent. The markets took a breather from a record-hitting spree a day before the central bank’s policy outcome. Nifty closed below 9650 mark after touching fresh record high of 9709.30 in early hour of trade. The equity benchmarks erased all their initial gains and entered into red terrain in early deals as traders remained on sidelines ahead of the two-day policy review by RBI’s monetary policy committee (MPC) starting today. The street is expecting the MPC to turn dovish and to be open for a 25 bps cut in interest rates on August 2 if rains are normal. Meanwhile, Prime Minister Narendra Modi reviewed preparations for the rollout of the goods and services tax (GST) regime from July 1, and said it would be a turning point for the economy. He has asserted that the implementation of GST is the culmination of the concerted efforts of all stakeholders, including political parties, trade and industry bodies. With less than a month left for GST rollout, seven states, including West Bengal, Tamil Nadu and Jammu & Kashmir, are yet to pass their legislations required for implementing the new indirect tax regime. So far, 24 states and Union Territories, including Delhi, Odisha and Puducherry, have passed the State Goods and Services Tax (SGST) Act in their respective legislative assemblies. Investors shrugged off the report that the Indian economy is expected to see a consumption driven rather than investment driven growth, the new trend of farm loan waivers is likely to stimulate rural demand. Farm loan waivers will amount to 2% of GDP by 2019 polls as other states may follow BJP’s Maharashtra and UP governments. NITI Aayog CEO Amitabh Kant said that the GST to be rolled out next month as the biggest tax reform since independence will help India achieve 9 per cent growth rate. He said GST will simplify India’s taxation system and help deal with tax evasion.

On the global front, Asian markets closed mostly in red, amid a slew of risk factors, including escalating tensions in the Middle East, the coming testimony of the former FBI director, British elections and a European Central Bank meeting. Japan’s real wages were flat in April from the same period a year earlier, with rising prices offsetting gains in nominal pay and possibly hurting households’ purchasing power. European shares extended their fall as weaker oil prices, pulled lower by a major diplomatic rift between Gulf Arab states, gave rise to risk adversity.

Back home, stocks of tyre manufacturing companies like Apollo Tyres, MRF, JK Tyre, Ceat, Balkrishna Industries, TVS Srichakra and GOODYEAR India closed in green as the rubber prices a key raw material for manufacturing tyres are hovering near seven-month low.

The BSE Sensex ended at 31190.03, down by 119.46 points or 0.38% after trading in a range of 31172.55 and 31430.32. There were 9 stocks advancing against 21 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 0.67%. (Provisional)

The only gaining sectoral indices on the BSE were IT up by 2.34% and TECK up by 1.65%, while Consumer Durables down by 1.93%, Power down by 1.76%, Industrials down by 1.41%, FMCG down by 1.32% and Utilities down by 1.27% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were TCS up by 3.65%, Infosys up by 1.86%, Wipro up by 0.88%, Dr. Reddy’s Lab up by 0.63% and Cipla up by 0.58%. (Provisional)
On the flip side, Tata Motors down by 3.45%, NTPC down by 2.71%, ONGC down by 2.17%, ITC down by 2.08% and Sun Pharma down by 1.69% were the top losers. (Provisional)

Meanwhile, in order to attract more overseas inflows, the government is now considering further relaxing foreign direct investment (FDI) norms in the defence sector. In a meeting attended by industry chambers including CII and FICCI, the ministry asked the stakeholders suggestions for changes in FDI policy to attract foreign investors.

In India presently FDI up to 49 per cent is permitted in the sector through automatic route and beyond that up to 100 per cent via government nod is permitted. Government is the only procurer of defence equipment in the country, besides, the export of defence products from India is also very regulated. At the meeting industry experts stated that foreign investors seek assured orders before setting up manufacturing unit in any country.

The government had recently cleared the Strategic Partnership (SP) policy to create a vibrant defence manufacturing ecosystem in the country through involvement of both the major Indian corporates as well as the MSME sector. The policy is also likely to reduce current dependence on imports and gradually ensure greater self-reliance & dependability of supplies essential to meet national security objectives.

The CNX Nifty ended at 9637.30, down by 37.80 points or 0.39% after trading in a range of 9630.20 and 9709.30. There were 14 stocks advancing against 37 stocks declining on the index. (Provisional)

The top gainers on Nifty were HCL Technologies up by 3.52%, TCS up by 3.49%, Infosys up by 2.20%, Tech Mahindra up by 1.38% and Wipro up by 0.98%. (Provisional)

On the flip side, Tata Motors down by 3.50%, NTPC down by 2.92%, Indiabulls Housing down by 2.88%, Tata Motors - DVR down by 2.53% and ONGC down by 2.48% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 4.84 points or 0.06% to 7,520.92, Germany’s DAX decreased 57.58 points or 0.45% to 12,765.36 and France’s CAC decreased 13.61 points or 0.26% to 5,294.28.

Asian equity markets ended mostly in red on Tuesday, with geopolitical tensions in the Middle East and caution ahead of key risk events keeping investors nervous. The dollar hit a six-week low versus the yen and gold prices rose on safe-haven demand as investors looked ahead to the UK general election, the ECB meeting and former FBI Director James Comey's testimony before the Senate Intelligence Committee - all scheduled for Thursday. Oil extended overnight losses as investors shifted their focus back on a supply glut and speculation mounted that a diplomatic rift among some of the most powerful states in the Arab world could hamper a global deal to reduce oil production. Japanese shares ended lower, with a stronger yen and weak overnight cues from Wall Street weighing on markets. South Korean markets were closed for Memorial Day. Though, Chinese shares bucked the regional trend to end a tad higher, with consumer and financial shares lending support as investors pondered the impact of new regulations on initial public offerings and ahead of a flurry of economic data.