Post Session: Quick Review

Indian equity markets traded on a weak note throughout the day and ended the session in red, with NSE Nifty backtracking from its all-time peak and dipping below the 9,850-level. The fall in the market was led by profit-booking at record levels by market participants, weak trend at other Asian markets amid concerns about Donald Trump’s economic agenda as he struggle to pass key health care legislation. The equity benchmarks made a gap-down start as traders remained on sidelines after the industry body, Associated Chambers of Commerce & Industry of India (ASSOCHAM) in its latest report stated that the inflation outlook is expected to remain quite muted at least till festival season of Durga Puja and Diwali. Though, Fitch Ratings said that the new indirect tax regime GST is likely to be beneficial for auto, cement and organized retail sectors, but will have a negative impact on oil and gas, and SME sectors. The implementation risks will remain over the next 12 months due to the complexities of adopting the new system amid a culture of poor compliance, particularly among the traditional retail and SME sectors. Separately, a private report showed that India’s Current Account Deficit (CAD) is likely to widen to 1.3% of GDP in 2017 from 0.6% in 2016, largely owing to stronger domestic growth in the second half of this year. The report highlighted that the import demand is expected to resume once GST disruptions settle down after July. The report said lower commodity prices and adverse base effects will continue to cap the year-on-year growth rates in second half of 2017, partly offsetting the continued recovery in advanced economies.

Pharma stocks gained some traction after CARE Ratings report highlighted that despite pricing pressure and stiff competition, the Indian Pharma exports to the USA may go up in 2017-18 as $50 billion worth of drugs are expected to become off-patented during the current year giving hope to boost export market. Mixed reactions were displayed by banking stocks with India Ratings and Research enlightening that Indian banks, taking 12 of the country’s largest defaulters to bankruptcy court under a central bank directive will need to make additional provisioning of at least 180 billion rupees ($2.8 billion). Index heavyweight Reliance Industries (RIL) remained under pressure after the government ordered the company along with Shell and ONGC to pay a combined $3 billion in penalty following an arbitration award in the Panna Mukta Tapti (PMT) oil field dispute that went in favour of the government.

On the global front, Asian markets closed mixed. China’s economy expanded faster-than-expected in the second quarter, setting the country on course to comfortably meet its 2017 growth target and giving policymakers room to tackle big economic challenges ahead of key leadership changes later this year. European markets were trading mostly in red on back of a disappointing set of results from blue chips including Ericsson and Lufthansa, while scaled-back expectations of rate hikes at central banks spurred some profit-taking in financials. Consumer price inflation (CPI) in the UK unexpectedly eased in June, pulling back from a previous 4-year high.

Back home, cigarette stocks like ITC, VST Industries, Golden Tobacco, NTC Industries and Godfrey Phillips India closed in red after the GST Council revised the cess rates on cigarettes upwards to address an anomaly under the new regime that had resulted in lower tax incidence than before under GST regime.

The BSE Sensex ended at 31722.39, down by 352.39 points or 1.10% after trading in a range of 31626.44 and 31911.61. There were 20 stocks advancing against 11 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.66%, while Small cap index was down by 0.55%. (Provisional)

The top gaining sectoral indices on the BSE were Healthcare up by 0.33%, IT up by 0.33%, TECK up by 0.26%, Auto up by 0.17% and Capital Goods up by 0.15%, while FMCG down by 6.16%, Energy down by 1.06%, Realty down by 0.93%, Utilities down by 0.84% and Oil & Gas down by 0.72% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Asian Paints up by 1.84%, Sun Pharma up by 1.42%, ONGC up by 1.16%, Dr. Reddy’s Lab up by 1.07% and Axis Bank up by 0.99%. (Provisional)

On the flip side, ITC down by 12.69%, Reliance Industries down by 2.02%, SBI down by 0.87%, Power Grid down by 0.83% and NTPC down by 0.54% were the top losers. (Provisional)

Meanwhile, on the back of expectations that $55 billion worth of drugs will become off-patented during 2017-19, credit rating agency, Care ratings in its latest report has said that Indian pharma export volumes to US are likely to rise in 2017-18 and will create an opportunity for Contract Research and Manufacturing Services (CRAMS) segment.

Of the total exports of $ 16.8 billion during the year 2016-17, majority of the exports, accounting for 40.6% were to the American continent followed by 19.7% to Europe, 19.1% to Africa and 18.8% within Asia. The credit rating agency however reported that due to pricing pressure and stiff competition, the total pharma exports from India during April-May 2017 fell by 8.5 percent to $2.5 billion and exports to USA decreased by 23% y-o-y to $723.4 million during the same period, adding that the industry will continue to witness pricing pressure in the US generics market due to consolidation of distribution channels and increase in competition.

The report further said that the pharma industry is also likely to face competition from other countries to get Abbreviated New Drug Application (ANDA) approval. It noted that in domestic market, the revenue growth rate of the industry was impacted on the back of stricter enforcement of Drug Price Control Order and going forward, with implementation of GST, there will be no major change in the prices of medicines.

The CNX Nifty ended at 9829.00, down by 86.95 points or 0.88% after trading in a range of 9792.05 and 9885.35. There were 30 stocks advancing against 21 stocks declining on the index. (Provisional)

The top gainers on Nifty were Eicher Motors up by 2.23%, Asian Paints up by 1.94%, HCL Tech up by 1.65%, Sun Pharma up by 1.46% and ONGC up by 1.12%. (Provisional)

On the flip side, ITC down by 12.69%, GAIL India down by 2.11%, Reliance Industries down by 1.98%, Aurobindo Pharma down by 1.70% and Tata Power down by 1.62% were the top losers. (Provisional)

The European markets were trading mostly in red; Germany’s DAX decreased 66.81 points or 0.53% to 12,520.35, France’s CAC decreased 15.71 points or 0.3% to 5,214.46, while UK’s FTSE 100 increased 0.61 points or 0.01% to 7,404.74.

Asian equity markets made a mixed closing on Tuesday and the dollar extended losses after two more Republican Senators opposed the Republican healthcare bill, casting doubts over prospects for reforms backed by US President Donald Trump. Japanese shares ended lower as trading resumed after a long holiday weekend, and as the yen gained against the dollar on concerns about Trump's economic agenda and cautious rhetoric from Fed Chair Janet Yellen. Chinese stocks ended on a steady note as investors hunted for bargains after sharp drop in small-cap shares the previous day. Meanwhile, Hong Kong stocks rose as gains in the technology and energy sectors offset losses in financial stocks.