Post Session: Quick Review

Indian equity markets traded in red throughout the day and ended the session with a cut of around half a percent points. Nifty fell below 9600 level and the Midcap lost over a percent on profit booking ahead of long weekend. Equity markets will remain shut on Monday for Ramzan Id holiday. The equity benchmarks made a cautious start and traded in red in early deals after the domestic brokerage firm highlighted that with more states announcing farm loan waiver schemes, if the trend continues the total write-down could add up to Rs 1.5- 2.3 trillion, and banks will bear the brunt. So far, Maharashtra and UP have waived nearly 30-40% of outstanding agri-bank credit, while for Punjab it was 15%. In the meanwhile, Karnataka has also announced farm loan waiver scheme. There is high probability that more states like Madhya Pradesh, Gujarat, Rajasthan, Haryana, may join the bandwagon. The report raised concern that if this plays out and assuming 20-30% of outstanding agri-bank loans are waived, the total loan waiver could add up to a sizeable around Rs 1.5-2.3 trillion (1.0-1.5% of 2017-18 GDP).

Separately, credit rating agency ICRA said that asset quality pain for banks is expected to continue in fiscal year ended March 2018 due to restructuring by banks, weakness in some large corporate accounts and events like waiver of farm loans. It expects gross non-performing assets (GNPAs) of Indian banks to increase to 9.9% to 10.2% by March 2018 from 9.5% in March 2017 with fresh slippages of loans expected at 3% to 4% in the fiscal. IT counter witnessed hectic activity as Prime Minister Narendra Modi readies to go to the United States this weekend, the Indian information technology industry hopes that he will talk tough on visa issues plaguing the sector, as well as highlight the contributions India is making towards hiring locals in the US. The H-1B work visas, which allow highly skilled foreign workers to travel to the US, have been at the centre of a storm since US President Donald Trump’s presidential campaign.

On the global front, Asian markets closed mixed, with China in focus after the country’s banking regulator sought more information on credit risks linked to loans to major companies that bought major assets abroad. Japanese manufacturing activity slowed in June as new orders grew at the slowest pace in seven months, a sign of a slight weakening in domestic demand. European markets were trading in red as investors monitored oil prices and focused on any developments from the EU Summit in Brussels. The euro zone’s manufacturing PMI rose to 57.3, from 57.0 in the preceding month.

The BSE Sensex ended at 31138.99, down by 151.75 points or 0.48% after trading in a range of 31110.39 and 31365.39. There were 9 stocks advancing against 22 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 1.09%, while Small cap index was down by 1.41%. (Provisional)

The top losing sectoral indices on the BSE were PSU down by 1.55%, Auto down by 1.50%, Industrials down by 1.31%, Consumer Durables down by 1.25% and Consumer Disc down by 1.21%, while there were no gainers on the sectoral front. (Provisional)

The top gainers on the Sensex were Power Grid up by 1.69%, Sun Pharma up by 1.15%, Wipro up by 0.96%, Hindustan Unilever up by 0.61% and Dr. Reddy’s Lab up by 0.55%. (Provisional)

On the flip side, Tata Motors - DVR down by 2.32%, SBI down by 2.05%, Hero MotoCorp down by 2.01%, Tata Motors down by 1.94% and Tata Steel down by 1.55% were the top losers. (Provisional)

Meanwhile, with the beginning of the final countdown of the Goods and Services Tax (GST) rollout from July 1, 2017, Union Power Minister Piyush Goyal, allayed fears of the industry saying that power tariffs will not rise across the country post GST implementation and made it clear that industry associations have not sought postponement of it.

Goyal further said that the technical issues of all the sectors with regard to GST have been resolved in the meeting with 75 industry associations, except two issues -the issue of tax on a product made up of fly ash and the other one is a dual slab rate structure for cable industry products, noting that these two issues require more consultations.

Union Power Minister said that the industry is enthusiastic about the transition to a more transparent tax regime and termed the GST as the biggest reform that ever happened in independent India. He further highlighted advantage of it, saying the assessee will only have to enter the sales invoice and after that all the returns are auto-populated. Goyal also mentioned that any transformation of this nature will have teething problems and require a transition period.

The CNX Nifty ended at 9572.60, down by 57.40 points or 0.60% after trading in a range of 9565.30 and 9647.65. There were 12 stocks advancing against 39 stocks declining on the index. (Provisional)

The top gainers on Nifty were Power Grid up by 1.88%, Vedanta up by 1.24%, Sun Pharma up by 1.01%, Aurobindo Pharma up by 0.98% and Wipro up by 0.76%. (Provisional)

On the flip side, Bank of Baroda down by 2.82%, Indian Oil Corporation down by 2.45%, Eicher Motors down by 2.20%, Tata Motors down by 2.07% and Bosch down by 2.00% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 30.09 points or 0.4% to 7,409.20, Germany’s DAX decreased 42.02 points or 0.33% to 12,751.98 and France’s CAC decreased 14.44 points or 0.27% to 5,267.49.

Asian equity markets made a mixed closing on Friday as the dollar remained bolstered against the yen and crude oil prices pulled away from ten-month lows. The release of the US Senate's plan to repeal and replace Obamacare evoked muted response as there is opposition to the bill on both sides of the Republican ideological spectrum. Japanese shares closed a tad higher as a recovery in oil prices helped offset a firmer yen. Chinese shares ended higher as tight liquidity conditions eased and investors shrugged off news that the country's banking regulator has ordered lenders to check exposure to rapidly growing firms. Meanwhile, Hong Kong shares ended flat amid concerns that MSCI's decision this week to include China-listed shares to its emerging market benchmark could weaken the city's role as a gateway to investing in China. The markets in Indonesia are closed through June 28 in observance of Eid-ul-Fitr.