Indian market gives up most of its gains in final hour

Indian stocks markets showed a volte-face on the final day of June F&O series, as what started on a promising note ended as a dismal show. The frontline indices pared most of intraday gains to close marginally in green, with the S&P BSE Sensex ending below its crucial 31,000 mark, while the Nifty50 settled just a tad above 9,500 mark. Sentiments got some support with the report that India's GDP growth witnessed a trough in January-March quarter, but going forward the economy is expected to see gradual improvement in growth numbers primarily driven by consumption. The report added that consumption has recovered from the demonetization shock and while external demand may be down, it remains supportive of growth. Some support also came with the report that investments in domestic capital markets via participatory notes (P-notes) have surprisingly surged to a seven-month high of Rs 1.81 lakh crore at the end of May despite stringent norms put in place by SEBI to curb inflow of illicit funds. According to Sebi data, total value of P-note investments in Indian markets - equity, debt and derivatives - increased to Rs 1,80,718 crore at May-end after hitting a four-month low of Rs 1,68,545 crore at the end of April.

However, the sanguinity in local markets was under check as profit booking in Energy and Healthcare counters exerted downside pressure on the frontline indices and dragged them even below to the psychological 9,550 (Nifty) and 30,900 (Sensex) levels. Investors remained cautious after hawkish comments from major central banks signaled rate hikes and that the era of stimulus might be coming to an end. In Britain, Bank of England Governor Mark Carney surprised many by conceding a hike was likely to be needed as the economy came closer to running at full capacity. Further, some weakness also came with the private report indicating that Loan waiver schemes being doled out to farmers could have a significant impact on state government finances and pose risk of further fiscal slippages. Four states-- Uttar Pradesh, Maharashtra, Punjab and Karnataka, which account for around one-third of India's population-- have announced farm loan waivers and other state governments are likely to feel pressure to implement similar policies, particularly in states with upcoming elections.

On the global front, Asian equity markets ended higher on Thursday, reflecting investors' confidence in the global economic outlook after central bankers around the world signaled that interest rates may need to rise. Japanese shares closed near their highest level in nearly two years as the yen held steady despite North Korea's warning that the country would keep building up its nuclear arsenal regardless of sanctions, pressure or military attack. Investors are awaiting the release of China's official monthly indexes on factory and service sector activity Friday. The numbers are widely watched early indicators of the health of the world's No. 2 economy and investors will be watching fresh insight into China's recovery. Meanwhile, European markets steadied as bank stocks extended a winning streak, after the US Federal Reserve cleared capital return plans from big banks.

Back home, the market breadth remained in favor of Advances, as there were 1616 shares on the gaining side against 958 shares on the losing side, while 163 shares remain unchanged.

Finally, the BSE Sensex gained 23.20 points or 0.08% to 30857.52, while the CNX Nifty was down by 12.85 points or 0.14% to 9,504.10. 

The BSE Sensex touched a high and a low of 31097.92 and 30794.61, respectively and there were 14 stocks on gaining side as against 17 stocks on the losing side.
The broader indices ended in green; the BSE Mid cap index gained 0.34%, while Small cap index was up by 0.98%.

The top gaining sectoral indices on the BSE were Metal up by 2.15%, Basic Materials up by 1.16%, Telecom up by 1.10%, Realty up by 1.01% and FMCG up by 0.73%, while Energy down by 0.18%, Healthcare down by 0.09%, Bankex down by 0.08%, PSU down by 0.06% and Auto down by 0.03% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 3.48%, Tata Steel up by 2.85%, Cipla up by 1.43%, Bharti Airtel up by 1.39% and Bajaj Auto up by 1.10%. On the flip side, Kotak Mahindra Bank down by 1.95%, Tata Motors - DVR down by 1.84%, Tata Motors down by 1.40%, SBI down by 1.39% and Sun Pharma down by 1.23% were the top losers.

Meanwhile, Union Cabinet led by Prime Minister Narendra Modi has approved the recommendations of the 7th Central Pay Commission (CPC) on allowances for Central government employees with 34 modifications which will impose an additional annual burden of Rs 30,748 crore on the exchequer. The revised rates of the allowances shall come into effect from July 1, 2017 and shall benefit over 48 lakh employees. The modifications are based on the recommendations made by the Committee on Allowances (CoA) in its report submitted to the Finance Minister on April 27, and the Empowered Committee of Secretaries set up to screen the recommendations of the 7th Pay Commission. The 7th CPC had examined a total of 197 allowances, suggesting abolition of 53 allowances and subsumption of 37 others. The government made 34 modifications, deciding not to do away with 12 allowances.

Sharing the details of it, Finance Minister Arun Jaitley has said that Pay Commission had recommended reduction in the HRA rates to 24% for X, 16% for Y and 8% for Z category of cities. He noted that current HRA is at 30% for X, 20% for Y and 10% for Z category of cities. However, he pointed out that as the HRA at the reduced rates may not be sufficient for employees falling in lower pay bracket, it has been decided that HRA will not be less than Rs 5,400, Rs 3,600 and Rs 1,800 for X, Y and Z category of cities, respectively. He noted that this floor rate has been calculated at 30%, 20% and 10% of the minimum pay of Rs 18,000 and added that this will benefit more than 7.5 lakh 1 to 3 levels of employees.

Talking about Siachen allowance, Jaitley has said that level 9 and above will get Rs 42,500 as compared to Rs 31,500 recommended by Pay Commission. He also said that for level 8 and below it would be Rs 30,000 against Rs 21,000 recommended by the Pay Commission. Adding further, he said that additional allowances has been restructured, the government has doubled medical allowance for pensioners to Rs 1,000. However, he noted that the Pay Commission had recommended Rs 500 as medical allowance for pensioners.

On the dress allowance, the minister has stated that various types of allowances are paid at present for provisioning and maintenance of uniforms/outfits such as Washing Allowance, Uniform Allowance, Kit Maintenance Allowance and Outfit Allowance. He explained that these have been rationalised and subsumed in newly proposed Dress Allowance to be paid annually in four slabs-Rs 5,000, Rs 10,000, Rs 15,000 and Rs 20,000 for various category of employees. He added that this allowance will continue to be paid to nurses on a monthly basis in view of high maintenance and hygiene requirements.

The CNX Nifty traded in a range of 9,575.80 and 9,493.80. There were 25 stocks in green as against 26 stocks in red on the index.

The top gainers on Nifty were Vedanta up by 3.81%, Axis Bank up by 3.80%, Tata Steel up by 2.51%, Indiabulls Housing Finance up by 2.31% and Cipla up by 1.87%. On the flip side, Tata Motors - DVR down by 2.28%, Kotak Mahindra Bank down by 2.08%, SBI down by 1.30%, Tata Motors down by 1.24% and TCS down by 0.90% were the top losers.

The European markets were trading mostly in red; Germany’s DAX decreased 18.64 points or 0.15% to 12,628.63, France’s CAC decreased 33.21 points or 0.63% to 5,219.69, while UK’s FTSE 100 increased 20.16 points or 0.27% to 7,407.96.

Asian equity markets ended in green on Thursday, reflecting investors’ confidence in the global economic outlook after central bankers around the world signaled that interest rates may need to rise. Bank of England Governor Mark Carney indicated on Wednesday that monetary stimulus may need to be withdrawn to some extent in future, if UK wages pick up and business investment strengthens. Meanwhile, the dollar wallowed at one-year lows against the euro despite media reports suggesting that markets misinterpreted comments made a day earlier by ECB President Mario Draghi about adjustment in the central bank's monetary stimulus. Chinese shares ended higher as investors awaited monthly indexes on factory and service sector activity on Friday for further clues on the world's second-largest economy. Further, Japanese shares closed near their highest level in nearly two years as the yen held steady despite North Korea's warning that the country would keep building up its nuclear arsenal regardless of sanctions, pressure or military attack. Investors also shrugged off weak retail sales figures, which showed that Japanese retail sales fell a seasonally adjusted 1.6 percent sequentially in May. The Indonesian markets remains closed today.