Post Session: Quick Review

Indian equity markets kept altering between red and green territory throughout the day but ended the session with modest cut taking cues from global counterparts. The consolidation continued on the street with Nifty snapping its three days winning streak. Market breath turned in favour of decline in last hour of trade. The equity benchmarks made a positive start in early deals with reports that India has told the World Bank that it has improved processes for granting construction permits sufficiently to pip the current topper, New Zealand, in the next edition of the Doing Business report. India was ranked 185 among 190 nations surveyed on the parameter of getting a construction permit in the study conducted last year. Selling crept in between as the fear of uncertainty over the implementation of the Goods and Services Tax (GST) has cast its shadow on manufacturing activities as growth in the sector fell to a four-month low in June, showed the widely-tracked Nikkei purchasing managers' index (PMI). The PMI dropped to 50.9 in June from 51.6 the previous month, as a softer rise in new orders resulted in weaker growth in production. Besides, Fitch Ratings said that the newly-implemented Goods and Services Tax (GST) will support productivity and boost the long-term growth prospects but is unlikely to increase tax revenue in the short-term. Fitch said smaller firms, many of which still keep their books manually, are likely to find the transition particularly difficult. Traders also took note that while above normal rains has raised hopes of a bumper harvest this year, in the wake of supply crunch, prices of vegetables such as tomato, peas and beans have surged sharply over the last one week in Haryana, Punjab and Chandigarh.

On the global front, Asian markets closed in red, as earlier gains were quashed by tensions on the Korean peninsula after North Korea fired a missile that landed in Japanese waters, deepening concerns over the isolated nation’s nuclear capabilities. North Korea test-launched an intermediate-range ballistic missile on Tuesday, days before leaders from the Group of 20 nations are due to discuss steps to rein in Pyongyang’s weapons programmes. The European markets were trading in red as investors mulled North Korea’s claim that it had become a nuclear state. UK construction sector activity pulled back from in June from what had been a 17-month high the prior month.

Back home, telecom stocks were under pressure after telecom group GSMA said that the disruptive pricing due to heightened competition in the Indian telecom space would continue for at least another year and the situation is no different from other markets where carriers were cutting tariff to beat competition. Jio’s entry in September last year on the back of freebies has dragged the earnings of telcos for three consecutive quarters. Auto stocks showed mixed trend on reports that the Maharashtra government has decided to increase tax on the registration of all new vehicles by 200 basis points. Pharma stocks witnessed mixed reactions after ICRA in its report highlighted that Indian pharmaceutical industry is likely to witness moderation in growth in the next three years mainly due to decline in revenues from the US, its largest overseas market, and increased competition. The agency added that already 21 leading players’ overall aggregate revenues grew only by 7.4 per cent in FY 2017 as against 10.1 per cent posted in FY 2016.

The BSE Sensex ended at 31204.49, down by 17.13 points or 0.05% after trading in a range of 31166.37 and 31353.46. 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 0.39%, while Small cap index was down by 0.09%. (Provisional)

The few gaining sectoral indices on the BSE were Energy up by 1.30%, Oil & Gas up by 0.50% and IT up by 0.21%, while Healthcare down by 0.80%, Telecom down by 0.78%, Realty down by 0.68%, FMCG down by 0.57% and Auto down by 0.57% were top the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Reliance Industries up by 2.68%, HDFC up by 1.32%, Kotak Mahindra Bank up by 1.05%, Infosys up by 0.90% and Adani Ports & Special Economic Zone up by 0.90%. (Provisional)

On the flip side, Hero MotoCorp down by 2.27%, Axis Bank down by 1.99%, Dr. Reddy’s Lab down by 1.63%, ITC down by 1.37% and Tata Motors - DVR down by 1.37% were the top losers. (Provisional)

Meanwhile, ahead of the G20 summit in Germany on July 7-8, an international body for global financial system, the Financial Stability Board (FSB), in its status report ‘progress in financial regulatory reforms in various jurisdictions’ has placed India in the league of countries that are compliant or largely compliant on implementation of priority area reforms.

In the report, India has been found to be compliant on the Basel III reforms in area of risk-based capital, while on the liquidity coverage ratio, it is listed as largely compliant. With regard to the Net Stable Funding Ratio (NSFR), India figured among the countries where “final rule published but not in force, or draft regulation published”. Regarding compensation related reforms, it was placed among the jurisdictions where all except a few (three or less) FSB Principles and Standards implemented.

The FSB report further said that in the shadow banking, India remained among the jurisdictions where the final implementation measures are in force for valuation, liquidity management and stable net asset for monetary market funds, while final adoption measures were taken for implementing an incentive alignment regime and disclosing requirements on securitisation. It further added that on trade reporting in the over-the-counter derivatives market, India was among the countries where necessary regulatory framework was being implemented.

The CNX Nifty ended at 9609.50, down by 5.50 points or 0.06% after trading in a range of 9595.50 and 9650.65. There were 20 stocks advancing against 31 stocks declining on the index. (Provisional)

The top gainers on Nifty were Reliance Industries up by 2.99%, BPCL up by 1.22%, HDFC up by 1.09%, Kotak Mahindra Bank up by 1.09% and Infosys up by 1.03%. (Provisional)

On the flip side, Dr. Reddy’s Lab down by 2.30%, Indiabulls Housing down by 2.26%, Hero MotoCorp down by 2.02%, Axis Bank down by 1.74% and Bank of Baroda down by 1.67% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 4.6 points or 0.06% to 7,372.49, Germany’s DAX decreased 22.6 points or 0.18% to 12,452.71 and France’s CAC decreased 6.13 points or 0.12% to 5,189.59.

Asian equity markets ended in red on Tuesday as oil prices dipped after eight days of gains and North Korea launched another ballistic missile in the direction of Japan, prompting US President Donald Trump to declare it is ‘hard to believe South Korea and Japan will put up with this much longer’. Japanese shares ended lower as the yen rebounded strongly following North Korea's claim that it has successfully test-launched an intercontinental ballistic missile. Further, Chinese shares fell as investors booked some profits after recent gains following US index provider MSCI's decision last month to include China-listed stocks in its Emerging Markets Index.