Post Session: Quick Review

Indian equity markets traded on a firm note throughout the day and ended the session in green, with Nifty closing above 9,900 mark for first time ever. Market capitalization of India’s most valued firm Reliance Industries (RIL) surpassed Rs 5 lakh crore level in trade. Shares of the company have been on a rising spree since the launch of its telecom unit Reliance Jio Infocomm in September last year. The equity benchmarks made an optimistic start and traded in fine fettle in early deals amid sustained inflows by foreign institutional investors. Foreign investors have poured nearly Rs 11,000 crore in the capital markets in the first two weeks of July, supported by the trouble-free rollout of GST and stimulating Indian economy. The latest inflow comes following a net infusion of over Rs 1.62 lakh crore in the previous five months (February-June) on several factors. Traders also took support from the latest edition of the OECD’s economic outlook report on India, which said that economic growth is projected to remain strong and India will remain the fastest growing G20 economy. It said that the acceleration of structural reforms in the Indian economy, with the efforts made by Prime Minister Narendra Modi led BJP government in the centre, is bringing a new growth impetus, which has won the confidence of the people by increasing public wages and pensions that will support consumption. Separately, India’s trade deficit narrowed in June after swelling to a 30-month high in May even as exports grew slowly in the month. Exports grew 4.39%, a four-month low in the 10-months of continuous growth, to $23.5 billion. Trade deficit was $8.1 billion in the year ago period and $13.84 billion in May.

Some buying also crept in led by rally in banking stocks after Gujarat High Court dismissed Essar Steel’s petition against the Reserve Bank of India (RBI). Essar Steel is amongst the 12 stressed companies that RBI has shortlisted for insolvency proceedings. Separately, the government is working on a consolidation agenda in a bid to create 3-4 global-sized banks and reduce the number of state-owned lenders to about 12.  Meanwhile, both houses of Parliament were adjourned until Tuesday after making obituary references to members who passed away recently and to victims of Amarnath Yatra terror attack in which seven people were killed.

On the global front, Asian markets closed mostly in green. South Korean shares closed at a record high as global investors snapped up riskier assets on views that the US central bank will proceed cautiously with further policy tightening. China’s economy grew faster than expected in the second quarter as industrial output and consumption picked up and investment remained strong, though analysts expect slower growth over the rest of the year as policymakers seek to reduce financial risk. The European markets closed mostly in red. The British and EU Brexit negotiators met, pledging to get down to work in negotiations on the UK’s divorce terms from the European Union.

Back home, Religare Enterprises and Fortis Healthcare closed in red after rating agency India Ratings downgraded RHC Holding’s NCDs to default. RHC Holding, along with Oscar Investments jointly owns the two companies. The rating agency said that a default was a result of RHC failing in servicing its coupon obligations on its non-convertible debentures. Tobacco stocks like ITC, Godfrey Phillips India and VST Industries closed in red on reports that the Goods and Services Tax (GST) Council is likely to meet today to consider a cess on tobacco.

The BSE Sensex ended at 32063.93, up by 43.18 points or 0.13% after trading in a range of 32045.17 and 32131.92. There were 23 stocks advancing against 8 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.05%, while Small cap index was up by 0.02%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 1.14%, Basic Materials up by 1.10%, Metal up by 1.03%, IT up by 0.98% and TECK up by 0.93%, while FMCG down by 2.03% was the sole losing indices on BSE. (Provisional)

The top gainers on the Sensex were Wipro up by 3.35%, Adani Ports & Special Economic Zone up by 2.00%, Cipla up by 1.67%, ICICI Bank up by 1.51% and Infosys up by 1.38%. (Provisional)

On the flip side, ITC down by 4.43%, Coal India down by 1.32%, Maruti Suzuki down by 0.47%, Tata Motors - DVR down by 0.46% and Axis Bank down by 0.41% were the top losers. (Provisional)

Meanwhile, the government is actively working towards consolidation of public sector banks (PSBs) with a view to create 3-4 global-sized banks and reduce the number of state-owned lenders to about 12. In the medium term, the 21 PSBs would get consolidated to 10-12. As part of a three-tier structure, there would be at least 3-4 banks of the size of the country’s largest lender State Bank of India (SBI). Some region-centric banks like Punjab and Sind Bank and Andhra Bank will continue as independent entities, while some mid-size lenders would also co-exist.

Enthused by the success of SBI merger, the Finance Ministry is considering clearing another such proposal in the public sector banking space by this fiscal end if bad loan situation comes under control by then. According to former RBI governor C Rangarajan, the system will have some large banks, some small banks, some local banks and so forth. He added that what is needed in the system is variety.

In the last consolidation drive, five associate banks and Bharatiya Mahila Bank (BMB) merged with the SBI on April 1, 2017. The five associate banks were State Bank of Bikaner and Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of Mysore (SBM), State Bank of Patiala (SBP) and State Bank of Travancore (SBT). With the merger, the total customer base of SBI reached around 37 crore people with a branch network of around 24,000 and nearly 59,000 ATMs across the country.

The CNX Nifty ended at 9916.15, up by 29.80 points or 0.30% after trading in a range of 9894.70 and 9928.20. There were 38 stocks advancing against 13 stocks declining on the index. (Provisional)

The top gainers on Nifty were Ultratech Cement up by 2.88%, Vedanta up by 2.80%, Wipro up by 2.75%, HCL Tech up by 2.15% and Zee Entertainment up by 2.00%. (Provisional)

On the flip side, ITC down by 3.65%, GAIL India down by 1.55%, Coal India down by 1.42%, Yes Bank down by 1.13% and Tata Motors - DVR down by 0.51% were the top losers. (Provisional)

The European markets were trading mostly in red; Germany’s DAX decreased 57.03 points or 0.45% to 12,574.69, France’s CAC decreased 12.65 points or 0.24% to 5,222.66, while UK’s FTSE 100 increased 18.83 points or 0.26% to 7,397.22.

Asian equity markets ended mostly in green on Monday as weak US retail sales and inflation data served to cool Fed rate hike speculation and data showed the Chinese economy grew more than expected in the second quarter. Though, Chinese shares ended lower as a series of profit warnings from small-cap companies and the government's focus on increased regulatory scrutiny overshadowed encouraging GDP data. China's GDP grew 6.9 percent year-on-year in the second quarter of 2017, the National Bureau of Statistics said. That was unchanged from the previous quarter and exceeded expectations for a rise of 6.8 percent. On a quarterly basis, GDP growth stood at 1.7 percent - in line with expectations and up from 1.3 percent in the previous three months. Retail sales jumped an annual 11.0 percent in June, beating forecasts for 10.6 percent and up from 10.7 percent in May, while industrial output climbed 7.6 percent from last year, topping expectations for an increase of 6.5 percent. Fixed asset investment gained an annual 8.6 percent - unchanged from the previous month and beating forecasts for 8.5 percent. Meanwhile, the Japanese markets were closed for the Marine Day holiday.