Post Session: Quick Review

Erasing all of their losses, Indian equity benchmarks closed the trade with modest gains ahead of Federal Open Market Committee’s interest rate decision. The language of Federal Reserve could offer some scope of surprise. The equity benchmarks made a cautious start and traded slightly in red in early deals as sentiments were dampened after a foreign brokerage firm estimated that over 65% of the total Rs 9.50 lakh crore of agri debt may potentially get written-off. A debt waiver in the near term leads to relief in agri NPAs for banks in that state, but sets the wrong precedent for future servicing, and impacts on credit behaviour in other states. A private report highlighted that Indian employers expect steady hiring outlook for next three months, but their confidence have dipped to the least optimistic level since 2005 amid uncertainties in global markets. The survey indicated that the hiring activity is expected to slow for the sixth consecutive quarter. Buying crept in after India’s wholesale inflation slipped below 3% during May as compared to 3.85% in April, raising hopes of a rate cut by RBI in its next Monetary Policy Review Meeting. The Wholesale Price Index (WPI) or wholesale inflation for the month of May stood at 2.17%, down 1.68% from 3.85% in April. The sequential decline in the WPI inflation in May 2017 was broad based, with all the major sub-groups, except manufactured non-food products, recording a slide in prices from the year earlier. Separately, a foreign brokerage firm stated that speeding up NPA resolution process by RBI with identifying 12 NPL accounts under the new bankruptcy code is a positive step for banks. The Reserve Bank of India’s (RBI) appointed committee has identified large accounts for reference of NPAs under the Insolvency and Bankruptcy Code.

On the global front, Asian markets closed mostly in red. The Bank of Japan is set to keep monetary settings unchanged on Friday and reassure markets it will lag way behind the Federal Reserve in dialing back its massive stimulus program, with inflation stubbornly low despite a strengthening economy. Economic data out of China showed retail sales and industrial output topped forecasts in May, but a miss in urban investment reinforced views the world’s second-largest economy will soon start to lose some momentum as lending costs rise and the property market cools. European markets were trading mostly in green as investors cautiously awaited the latest monetary decision by the US Federal Reserve.

Back home, PSU Bank stocks closed mostly in green taking support from the Reserve Bank of India yesterday’s announcement of steps to speed up NPA resolution process by identifying 12 accounts that can be immediately taken up under the Insolvency and Bankruptcy Code (IBC). The gross bad debt of the Indian banking system as of March was at Rs 7.11 lakh crore, which means the 12 accounts would be responsible for about Rs 1.78 lakh crore.

The BSE Sensex ended at 31171.69, up by 68.20 points or 0.22% after trading in a range of 31054.94 and 31190.36. There were 16 stocks advancing against 12 stocks declining, while 2 stocks remained unchanged on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index was down by 0.01%, while Small cap index was up by 0.54%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 1.83%, Energy up by 1.51%, Capital Goods up by 0.95%, Oil & Gas up by 0.71% and Telecom up by 0.47%, while Metal down by 0.70%, FMCG down by 0.63%, Basic Materials down by 0.21%, Healthcare down by 0.16% and Utilities down by 0.09% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Reliance Industries up by 3.30%, Larsen & Toubro up by 1.60%, Dr. Reddy’s Lab up by 1.55%, ICICI Bank up by 1.33% and Hero MotoCorp up by 1.22%. (Provisional)

On the flip side, Cipla down by 1.84%, ITC down by 1.58%, HDFC down by 1.19%, Tata Steel down by 1.14% and Wipro down by 1.10% were the top losers. (Provisional)

Meanwhile, continuing its declining trend for yet another month, India’s Wholesale price index (WPI) inflation eased in May as prices of fuel and food articles declined. According to the data released by the ministry of commerce and industry, the WPI with the revised base year of 2011-12 fell to 2.17% in May from 3.85% in April and (-) 0.90% during the corresponding month of the previous year. Build up inflation rate in the financial year so far was (-) 0.35% compared to a build up rate of 2.51% in the corresponding period of the previous year. Meanwhile, for the month of March, 2017, the final WPI was revised upward to 5.99% from 5.70% (provisional).

Component wise, primary articles index, having weight of 22.62%, witnessed a decline of 1.5% to 126.5 (provisional) from 128.4 (provisional) for the previous month. Among the primary articles, the index for ‘Food Articles’ group fell down by 1.2% to 137.7 (provisional) from 139.4 (provisional) for the previous month and the index for ‘Non-Food Articles’ group also decreased by 1.2% to 119.8 (provisional) from 121.2 (provisional) for the previous month. The index for ‘Minerals’ group rose by 1.9% to 114.8 (provisional) from 112.7 (provisional) for the previous month due to higher price of garnet and the index for ‘Crude Petroleum & Natural Gas’ group declined by 7.1% to 71.1 (provisional) from 76.5 (provisional) for the previous month due to lower price of  crude petroleum.

Fuel & Power index having weight of  13.15% decreased by 2.1% to 90.8 (provisional) from 92.8 (provisional) for the previous month on account of lower prices of LPG, petrol & high speed diesel.

Manufactured Products constituting the major portion of the index with weight of 64.23% increased by 0.4% to 112.6 (provisional) from 112.1 (provisional) for the previous month. The index for ‘Manufacture of Food Products’ group fell down by 0.1%  to 127.2 (provisional) from 127.3 (provisional) for the previous month, the index for ‘Manufacture of Wearing Apparel’ group dropped 0.4% to 133.5 (provisional) from 134.1 (provisional) for the previous month, the index for ‘Manufacture of Leather and Related Products’ group slumped 0.6% to 119.5 (provisional) from 120.2 (provisional) for the previous month, the index for ‘Printing and Reproduction of Recorded Media’ group declined by 0.7% to 141.7 (provisional) from 142.7 (provisional) for the previous month and the index for ‘Manufacture of Wood and Products of Wood and Cork’ group declined by 0.5% to 130.6 (provisional) from 131.3 (provisional) for the previous month.

The index for ‘Manufacture of Pharmaceuticals, Medicinal Chemical and Botanical Products’ group declined by 0.2% to 120.8 (provisional) from 121.0 (provisional) for the previous month. Among the items in the group, the index for ‘Manufacture of Rubber and Plastics Products’ group was down by 0.1% to 108.6 (provisional) from 108.7 (provisional) for the previous month, The index for ‘Manufacture of Electrical Equipment’ group decreased by 0.2% to 108.3 (provisional) from 108.5 (provisional) for the previous month, The index for ‘Manufacture of Machinery and Equipment’ group was down by 0.1% to 108.3 (provisional) from 108.4 (provisional) for the previous month and the index for ‘Manufacture of Furniture’ group slipped 2.6% to 114.2 (provisional) from 117.3 (provisional) for the previous month.

On the other hand, the index for ‘Manufacture of Beverages’ group increased by 0.3% to 117.5 (provisional) from 117.2 (provisional) for the previous month, the index for 'Manufacture of Textiles' group rose by 0.3% to 113.6 (provisional) from 113.3 (provisional) for the previous month, the index for ‘Manufacture of Paper and Paper Products’ group rose by 0.7% to 116.4 (provisional) from 115.6 (provisional) for the previous month and the index for ‘Manufacture of Chemicals and Chemical Products’ rose by 0.3% to 111.7 (provisional) from 111.4 (provisional) for the previous month.

The index for ‘Manufacture of other Non-Metallic Mineral Products’ group surged by 1.9% to 111.4 (provisional) from 109.3 (provisional) for the previous month, the index for ‘Manufacture of Basic Metals’ group surged 2.0% to 96.8 (provisional) from 94.9 (provisional) for the previous month, the index for ‘Manufacture of Fabricated Metal Products, Except Machinery and Equipment’ group rose by 1.1% to 108.1 (provisional) from 106.9 (provisional) for the previous month, the index for ‘Manufacture of Computer, Electronic and Optical Products’ group rose by 0.6% to 109.1 (provisional) from 108.5 (provisional) for the previous month, the index for ‘Manufacture of Motor Vehicles, Trailers and Semi-Trailers’ group was up by 0.6% to 111.3 (provisional) from 110.6 (provisional) for the previous month and the index for ‘Manufacture of Other Transport Equipment’ group rose by 0.8% to 109 (provisional) from 108.1 (provisional) for the previous month.

The CNX Nifty ended at 9614.30, up by 7.40 points or 0.08% after trading in a range of 9580.45 and 9627.40. There were 26 stocks advancing against 25 stocks declining on the index. (Provisional)

The top gainers on Nifty were Reliance Industries up by 3.47%, Bank of Baroda up by 1.77%, Hindustan Unilever up by 1.47%, Dr. Reddy’s Lab up by 1.35% and ICICI Bank up by 1.32%. (Provisional)

On the flip side, Yes Bank down by 3.00%, Cipla down by 2.25%, ITC down by 1.85%, HDFC down by 1.27% and Tata Motors - DVR down by 1.17% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 27.94 points or 0.37% to 7,528.38, Germany’s DAX increased 73.56 points or 0.58% to 12,838.54 and France’s CAC increased 48.95 points or 0.93% to 5,310.69.

Asian equity markets ended mostly in red on Wednesday as the markets awaited the Federal Reserve's decision on monetary policy in the US. The Fed is widely expected to raise interest rates, with markets looking for details regarding the reduction of the central bank's massive balance sheet. Japanese shares closed slightly lower as investors stayed away from making bets ahead of the Fed's interest-rate decision due later today, the Bank of England meeting on Thursday and the BoJ's two-day policy review ending on Friday. Chinese shares lost ground as reports alleging a probe of the head of financial conglomerate Anbang Insurance Group overshadowed positive data showing signs of stabilization in the world's second-largest economy. Chinese factory output grew an annual 6.5 percent in May to beat forecasts and retail sales advanced 10.7 percent, while fixed-asset investment growth moderated in the first five months.