Post Session: Quick Review

Indian equity benchmarks traded on lackluster note and ended the session with cut of around two tenth of a percent. Investors awaited cues on market direction amid a number of geopolitical events scheduled later in the day. The equity benchmarks traded slightly in red in early deals as sentiments remained dampened after Chief Economic Adviser Arvind Subramanian expressed his unhappiness over the Reserve Bank’s inflexibility on interest rates. He warned that real policy rates are becoming tighter and rising at a time of low inflation and slowing growth. Subramanian expressed concern over growing protectionism in global markets and felt that India needs open markets to grow at 8-10%. Reserve Bank of India (RBI) in its policy review gave the impression that it had embraced an accommodative stance once again, keeping the possibility of a future rate cut open. The RBI in its monetary policy review also cut growth projection for current fiscal to 7.3 per cent from 7.4 per cent. The growth of real gross value added (GVA) for 2016-17 has been pegged at 6.6 percent, 0.1 percentage point lower than the second advance estimates released in February 2017. As the RBI left lending rates unchanged, India Inc expressed their disappointment saying the central bank has chosen to remain over-cautious about the inflation outlook. Separately, a global investment bank has downgraded its rating on India to ‘neutral’ from ‘overweight’ initiated earlier in the month of February, citing a sharp surge in valuations which offers limited risk to reward ratio from current levels.

On the sectoral front, some selling crept in the banking sector stocks after Moody’s Investors Service estimated that the 11 Indian state-run banks could need up to 950 billion rupees ($14.76 billion) in equity capital by March 2019, far above the 200 billion rupees the government plans to inject into state banks by then. The ratings agency said that weak capitalization levels will remain a key credit weakness for the 11 banks adding that they had limited ability to raise external capital. Steel stocks showed mixed reactions after foreign brokerage firm highlighted that a confluence of positive factors should drive a rerating of Indian steel stocks. Confirmation of anti-dumping duties for the next four years has put a floor to Indian steel prices. Indian steel demand-supply is on the cusp of a multi-year tightening phase given lack of new capacity additions. Steel demand outlook is also improving with the government’s affordable housing program and likely start of an investment cycle by FY19. Meanwhile, liquor stocks closed mixed after Karnataka state government decided to send a proposal to the union government seeking to de-notify the National Highways (NH) pass through urban local bodies in Karnataka as local roads.

On the global front, Asian markets closed mixed, as investors focused on risk events later in the day. China reported stronger-than-anticipated exports and imports for May despite falling commodity prices, suggesting the economy is holding up better than expected despite rising lending rates and a cooling property market. European markets were trading in green as markets readied for a triple-dose of excitement - an ECB meeting, a British election and testimony by the ex-FBI chief fired by Donald Trump last month.

The BSE Sensex ended at 31205.46, down by 65.82 points or 0.21% after trading in a range of 31193.77 and 31354.51. There were 14 stocks advancing against 16 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.14%, while Small cap index was up by 0.26%. (Provisional)

The top gaining sectoral indices on the BSE were Healthcare up by 1.63%, Metal up by 0.64%, Basic Materials up by 0.31% and Power up by 0.21%, while Oil & Gas down by 1.46%, IT down by 1.26%, TECK down by 1.17%, Telecom down by 0.97% and Energy down by 0.87% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Dr. Reddy’s Lab up by 3.70%, Sun Pharma up by 3.50%, HDFC up by 2.28%, Cipla up by 1.95% and Tata Steel up by 1.54%. (Provisional)

On the flip side, GAIL India down by 4.01%, TCS down by 3.65%, Hero MotoCorp down by 1.69%, Asian Paints down by 1.66% and ICICI Bank down by 1.49% were the top losers. (Provisional)

Meanwhile, the United Nations Conference on Trade and Development (UNCTAD), in its latest report ‘World Investment Report 2017’ has said that India would be the top prospective foreign direct investment (FDI) destination globally after the U.S. and China. The report however noted that although new liberalization efforts continue to improve the investment climate in India, tax-related concerns remain a deterrent for some foreign investors.

UNCTAD report said that an improved economic outlook in major Asian economies such as India, China is likely to lift investor confidence and help boost FDI inflows by about 15 per cent in 2017. Besides, it has said that the country’s renewed policy efforts to attract FDI may also contribute to higher inflows in 2017, adding that foreign multinational enterprises (MNEs) are increasingly relying on cross-border M&As (mergers and acquisitions) to penetrate the rapidly growing Indian market.

It said that in major recipients such as China, India and Indonesia, renewed policy efforts to attract FDI could contribute to an increase of inflows in 2017. However, the report found that FDI in India remained almost flat in year 2016 at about $44 billion, up only 1 per cent from 2015. At the same time India's outward FDI declined by about third from $7.572 billion in 2015 to $5.12 billion in 2016. UNCTAD has also reported that FDI inflows to developing Asia shrank by 15 per cent to $443 billion in 2016, the first decline since 2012.

The CNX Nifty ended at 9647.10, down by 16.80 points or 0.17% after trading in a range of 9642.40 and 9688.70. There were 22 stocks advancing against 29 stocks declining on the index. (Provisional)

The top gainers on Nifty were Dr. Reddy’s Lab up by 3.91%, Sun Pharma up by 3.48%, HDFC up by 2.19%, Cipla up by 1.86% and Tata Steel up by 1.66%. (Provisional)

On the flip side, TCS down by 3.58%, GAIL India down by 3.50%, Indian Oil down by 2.07%, Hero MotoCorp down by 1.57% and Bharti Airtel down by 1.56% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 0.34 points to 7,478.96, Germany’s DAX increased 38.49 points or 0.3% to 12,710.98 and France’s CAC increased 9.82 points or 0.19% to 5,275.35.

Asian equity markets made a mixed closing on Thursday as investors awaited directional cues from three big upcoming events today and next week's Federal Reserve meeting. The European Central Bank (ECB) will announce its latest interest rate decision later today, with traders on the lookout for any hints of policy changes on rate and stimulus outlook. Polls have opened in the UK with the latest polls predicting a narrow victory for Theresa May's party over the main opposition Labour Party. Former FBI Director James Comey's testimony before the Senate Intelligence Committee also remained in the spotlight after he confirmed media reports that President Donald Trump demanded his loyalty and asked him to drop at least part of the bureau's investigation of former National Security Adviser Mike Flyn. Japanese shares ended lower as the yen edged higher in late Asian deals on a report that the Bank of Japan was re-calibrating its communications to acknowledge it is thinking about how to handle a withdrawal from its monetary stimulus. Meanwhile, Chinese shares ended higher after Chinese exports and imports data topped expectations. Exports advanced 8.7 percent year-on-year in dollar terms in May, faster than the 7.2 percent increase economists had forecast. Imports climbed 14.8 percent, much above expectations for 8.3 percent growth.