Indian benchmarks end on negative note; Nifty manage to hold 9650 mark

It turned out to be a vulnerable performance from Indian benchmark indices on Tuesday, as they failed to snap the session in the green territory and settled marginally below the neutral lines. Sentiments remained subdued after finance minister Arun Jaitley said that the economy will have to face short-term challenges in implementing the biggest tax reforms since Independence. He further added that the official launch of the GST will take place on the midnight of June 30 at a function, which will be organised in Central Hall of Parliament. The optimism in domestic markets petered out completely by the end of trade and the benchmarks even drifted in to the negative territory despite getting off to a gap-up opening. Shares of IT companies rose following overnight rebound in US technology stocks, while banking stocks declined after Punjab joined Maharashtra and Uttar Pradesh in announcing sops for farmers. Punjab Chief Minister Amarinder Singh on Monday announced a total waiver of entire crop loans of 8.75 lakh small and marginal farmers.

Some concerns also came with report that foreign portfolio investors (FPIs) sold shares worth a net Rs 250 crore on June 19, 2017. However, the downside risks for the frontline indices was limited by Fitch Ratings' latest report indicating that India's economic growth is expected to rise by 7.4% and 7.6% in the next two fiscal years. The rating agency added that the investment in India is also expected to witness gradual rise owing to transmission of supportive monetary policy along with the government's various structural reforms. Some support also came with India, pitching for a greater engagement with BRICS (Brazil, Russia, India, China and South Africa) nations on issues the international community addressed during BRICS Foreign Ministers meeting in Beijing. Meanwhile, Airline stocks such as SpiceJet, IndiGo and Jet Airways gained traction after passengers carried by domestic airlines grew by close 18% to 465.87 lakhs during January-May 2017 as against 396.04 lakhs in the corresponding period of previous year. 

On the global front, Asian equity markets made a mixed closing on Tuesday, with Japan's Nikkei index climbing around a percent, as the dollar hit a three-week high against the yen. Chinese shares remained subdued as investors await a decision on whether the MSCI index committee will include China A-shares in its Emerging Market Index. This will be China's fourth attempt at MSCI inclusion, after being passed over the first three times. Further, Hong Kong stocks declined as excitement over the city's plans for a new listing board for new economy companies waned, and investors shifted their attention to economic fundamentals. Meanwhile, European stocks were trading higher led by advances among tech and consumer-related shares.

Back home, the market breadth remained pessimistic, as there were 1229 shares on the gaining side against 1428 shares on the losing side, while 171 shares remained unchanged.

Finally, the BSE Sensex declined 14.04 points or 0.04% to 31297.53, while the CNX Nifty was down by 4.05 points or 0.04% to 9,653.50. 

The BSE Sensex touched a high and a low of 31392.53 and 31261.49, respectively and there were 15 stocks on gainers side as against 16 stocks on the losers side on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.19%, while Small cap index was up by 0.16%.

The top gaining sectoral indices on the BSE were IT up by 0.97%, Consumer Durables up by 0.97%, TECK up by 0.75%, Industrials up by 0.70% and Oil & Gas up by 0.54%, while Utilities down by 0.28%, Consumer Disc down by 0.27%, Power down by 0.21%, FMCG down by 0.16% and Bankex down by 0.16% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Motors up by 3.28%, Tata Motors - DVR up by 1.68%, ONGC up by 1.60%, Infosys up by 1.54% and Cipla up by 1.18%. On the flip side, Power Grid down by 2.00%, Lupin down by 1.63%, Axis Bank down by 1.56%, HDFC down by 1.22% and Hero MotoCorp down by 1.02% were the top losers.

Meanwhile, Indian economy is likely to pick up pace in the next two fiscal years. The Credit rating agency, Fitch Ratings in its latest report ‘Global Economic Outlook’ has forecasted the Gross Domestic Product (GDP) of the country to grow at 7.4 per cent this year and 7.6 per cent in the next fiscal year buoyed by rising public spending on infrastructure. The rating agency added that the investment in India is also expected to witness gradual rise owing to transmission of supportive monetary policy along with the government’s various structural reforms.

The report further said that the upcoming Goods & Services Tax (GST) regime will facilitate trade within India and reduce transaction costs. However, the rating agency also pointed that the demonetization move did have a material impact on spending and its lagged effect on the economy is quite puzzling and the effects would be expected to be quite rapidly felt - but partly reflects the challenges of measuring spending in an economy with a large informal sector.'

Moreover, Fitch Ratings predicted that the consumer price index (CPI) Inflation would rise as the current low food price effect will fade, but expecting to remain firmly within the central bank’s target range. It also said that investment dipped into negative territory (-2.1 per cent). This partly reflected poor construction activity, which fell by 3.7 per cent, an unprecedentedly low level in recent years and added that investment has been persistently weak in recent years.

Talking about other nations, the rating agency said that global economic growth is expected to rise from 2.5 percent last year to 2.9 percent in 2017 and 3.1 percent in 2018, the highest rate since 2010. Besides, it stated that the current year’s faster growth reflects a synchronised improvement across both advanced and emerging market economies, while pointing that this improving global picture implies an evolving monetary policy outlook.

The CNX Nifty traded in a range of 9,676.50 and 9,643.75. There were 26 stocks in green as against 25 stocks in red on the index.

The top gainers on Nifty were Tata Power up by 5.51%, Tata Motors up by 3.13%, Tata Motors - DVR up by 2%, ONGC up by 1.84% and Infosys up by 1.55%. On the flip side, Power Grid down by 2.07%, Eicher Motors down by 1.92%, Lupin down by 1.74%, Bosch down by 1.62% and GAIL India down by 1.43% were the top losers.

The European markets were trading mostly in green; UK’s FTSE 100 increased 9.84 points or 0.13% to 7,533.65, Germany’s DAX increased 42.16 points or 0.33% to 12,931.11 and France’s CAC increased 21.2 points or 0.4% to 5,331.92.

Asian equity markets made a mixed closing on Tuesday, with Japanese markets leading regional gains, as comments from an influential Federal Reserve official that rising wages would boost US inflation helped lift the dollar to a three-week high against the Japanese yen. While another record close on Wall Street helped underpin investor sentiment, falling oil prices and uncertainty ahead of a decision by US index provider MSCI on whether to include China A-shares in its Emerging Market Index served to keep the underlying mood somewhat cautious.