Post Session: Quick Review

Indian equity benchmarks traded on a lackluster note throughout the day and closed the session with cut of around four tenth of a percent. The selling dragged the Nifty below 9600 level to end the trade at three week closing low. Selling was majorly witnessed in Oil & Gas, IT and PSU counters. The equity benchmarks made a cautious start and traded on choppy note in early deals pressurized by weak global cues as US Federal Reserve raised interest rates and on worries over political turmoil. The Fed raised rates for the second time in three months and said it would begin cutting its holdings of bonds and other securities this year, signaling its confidence in a growing US economy and strengthening job market. US President Donald Trump is being investigated by special counsel Robert Mueller for possible obstruction of justice, citing unidentified officials.  On domestic front, some pessimism crept in after a foreign brokerage firm highlighted that the likely increase in farm loan waivers will dampen sentiments on PSU banks, NBFCs. The agri stress indicates that Tamil Nadu, Karnataka and Haryana may follow up with farm loan waivers, taking the total farm loan waivers to about $28 billion from $10 billion. The report added that assuming these are staggered over five years, the annual rise in consolidated fiscal deficit works out to 25 bps of GDP. Else, other developmental expenditure would be compromised, potentially softening a capex cycle upturn.

Meanwhile, four major lenders SBI, PNB, Axis Bank and HDFC Bank voiced concerns over stress in the telecom sector and flagged possibility of defaults by debt-laden operators at a meeting with an inter-ministerial group. The bankers expressed apprehensions on the financial viability of the telecom companies and their capacity to service the huge debt that they carry on their books. Bankers told the government that telecom companies are on the verge of defaults as competitive pressures, post the launch of Reliance Jio in September last year, have created a severe financial stress on the business dynamics of the industry.

On the global front, Asian markets closed mostly in red, with investors in Japan looking ahead to a central bank policy review to conclude on Friday. China’s central bank left interest rates for open market operations unchanged, shrugging off an overnight increase in the US Federal Reserve’s key policy rate. European markets were trading in red amid investors eyeing upcoming policy decisions by the Swiss National Bank and the Bank of England later in the day. Retail sales in the UK declined more than expected in May after the prior month was bolstered by good weather that included Easter. UK Office for National Statistics said that retail sales fell 1.2% in May from the prior month, compared to the previous 2.5% gain which was revised from an initial 2.3% advanced.

The BSE Sensex ended at 31059.57, down by 96.34 points or 0.31% after trading in a range of 31026.48 and 31229.44. There were 11 stocks advancing against 19 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index was down by 0.22%, while Small cap index was up by 0.36%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 2.26%, Healthcare up by 0.81%, FMCG up by 0.19% and Basic Materials up by 0.04%, while Oil & Gas down by 1.19%, IT down by 1.06%, PSU down by 1.06%, TECK down by 1.05% and Capital Goods down by 0.74% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Reliance Industries up by 1.89%, Cipla up by 1.77%, Wipro up by 1.70%, Dr. Reddy’s Lab up by 1.31% and Sun Pharma up by 0.99%. (Provisional)

On the flip side, TCS down by 2.46%, Larsen & Toubro down by 1.50%, ONGC down by 1.30%, Mahindra & Mahindra down by 1.15% and GAIL India down by 1.01% were the top losers. (Provisional)

Meanwhile, amid ongoing debate over demonetization impact on the economy, the Chief Statistician of the government, TCA Anant has said that effects of demonetization will be clearer towards end of the current fiscal after data from the government and company accounts come in. He also mentioned that the short term figures could not assess these impacts and as statistician, he will need to see the trajectories and work out the analysis.

Anant further said that even if the move has affected the economy at multiple levels, it should not be seen just from the perspective of cash replacement as it has also benefited in many ways to the country and added that the note ban has improved digital transactions and tax collection. He noted that the overall trajectory of growth post-November to pre-November has seen a distinct structural break.

On the upcoming Goods and Services Tax (GST) regime, Anant said that it would improve the quality of the statistical data as it would plug leakages in the sales tax regime and so improvement in quality of measurement along with the linkage with informal activity will actually make GDP compilation better.

The CNX Nifty ended at 9576.45, down by 41.70 points or 0.43% after trading in a range of 9560.80 and 9621.40. There were 12 stocks advancing against 39 stocks declining on the index. (Provisional)

The top gainers on Nifty were Aurobindo Pharma up by 7.10%, Reliance Industries up by 1.81%, Cipla up by 1.70%, Wipro up by 1.68% and Dr. Reddy’s Lab up by 1.15%. (Provisional)

On the flip side, Indian Oil Corporation down by 3.10%, Bharti Infratel down by 2.95%, BPCL down by 2.88%, TCS down by 2.43% and Hindalco down by 1.90% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 53.41 points or 0.71% to 7,420.99, Germany’s DAX decreased 88.08 points or 0.69% to 12,717.87 and France’s CAC decreased 43.06 points or 0.82% to 5,200.23.

Asian equity markets ended mostly in red on Thursday, with a sharp overnight fall in crude oil prices, the Federal Reserve's relatively hawkish tone and a widening probe into Russia's role in the US election weighing on markets. The Federal Reserve raised its key interest rate by 25 basis points, as widely expected despite the recent weakness of core inflation. Japanese shares fell slightly in choppy trade as the yen's strength pressured exporters and an overnight drop in US Treasury yields dragged down financial stocks. The dollar dropped to an eight-week low against the yen after a Washington Post report said that the special counsel overseeing the federal investigation into Russian interference in the 2016 election is looking into whether US President Donald Trump tried to obstruct justice. However, Chinese shares closed marginally higher after the International Monetary Fund on Wednesday raised China's growth projections but called for deep reforms to transition its economy to more sustainable growth.