Post Session: Quick Review

Indian equity markets traded on a firm note throughout the day and ended the session with good gains, with Nifty reclaiming 9,900 mark. Equity benchmarks rebounded in today’s trade after yesterday’s steep fall, backed by short covering in beaten down stocks, amid stable June quarter earnings season so far and on account of positive global cues. The equity benchmarks made a gap-up opening and traded in fine fettle in early deals taking support with NITI Aayog Vice Chairman Arvind Panagariya’s statement that the country’s Gross Domestic Product (GDP) could touch $8 trillion over the coming 15 years by maintaining 8 percent growth annually. With the current level of growth, he noted that living standards and amenities that are taken for granted by Western countries could become available to a very large part of the Indian population in the next 15 years. Separately, rating agency Fitch’s latest report stated that new indirect tax regime Goods and Services Tax (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.

Some optimism also came with private report stating that India will reclaim its position as the fastest growing major global economy this year, partly propelled by benefits from a new tax system and bolstered by an expected central bank interest rate cut. The report highlighted that the new national tax will replace multiple cascading taxes levied by the central and state governments which economists in the poll were unanimous in saying would have either a positive or very positive effect on long-term GDP growth. Meanwhile, finance minister Arun Jaitley described the GST as a win- win deal for all as it will expand the tax net, end inspector raj and bring down prices of goods. Investors took note that state governments are taking several steps such as setting up of single window system for approvals with an aim to improve ease of doing business. Department of Industrial Policy and Promotion (DIPP) Secretary said that as many as 17 states have made laws to provide single window system.

On the global front, Asian markets closed mostly in green, with China turning around after a few days of losses. A poll found Japanese manufacturers and service providers’ business confidence held steady at high levels in July, underlining the central bank’s upbeat view on the economy. European markets were trading in green as investors focused on earnings news flow and looked ahead to the European Central Bank’s (ECB) monetary policy decision the following day. British inflation unexpectedly slowed last month for the first time since October, dousing expectations among investors that the Bank of England might soon raise interest rates for the first time in a decade.

Back home, telecom stocks Bharti Airtel, Idea Cellular, Reliance Communications, MTNL and Tata Tele (Maharashtra) closed in green with major telcos push for doubling mobile call termination charge. Bharti Airtel, Vodafone and Idea Cellular -- sought doubling of interconnection usage charge (IUC), a key input for mobile tariffs, saying that terminating incoming calls on their networks costs 30-35 paise per minute.

The BSE Sensex ended at 31963.40, up by 252.41 points or 0.80% after trading in a range of 31793.72 and 31978.89. There were 25 stocks advancing against 6 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 1.02%, while Small cap index was up by 0.98%. (Provisional)

The top gaining sectoral indices on the BSE were Telecom up by 2.95%, Metal up by 1.91%, Healthcare up by 1.86%, FMCG up by 1.61% and Realty up by 1.60%, while there were no losing indices on BSE. (Provisional)

The top gainers on the Sensex were Bharti Airtel up by 3.10%, Coal India up by 3.04%, Dr. Reddy’s Lab up by 2.63%, ITC up by 2.58% and TCS up by 1.94%. (Provisional)

On the flip side, Hero MotoCorp down by 0.74%, Infosys down by 0.51%, Adani Ports & Special Economic Zone down by 0.42%, Bajaj Auto down by 0.39% and ICICI Bank down by 0.07% were the top losers. (Provisional)

Meanwhile, pegging the current weighted average provisioning at 42 per cent by banks towards 12 accounts identified by the Reserve Bank of India (RBI) for reference to the National Company Law Tribunal under the Insolvency and Bankruptcy Code in FY18, credit rating agency, India Ratings and Research (Ind-Ra) in its latest report has said that for the resolution of these 12 accounts Indian banks may require Rs 180 billion additional minimum provisioning and added that this would reduce banks’ profitability by 25 per cent in the financial year 2018 (FY18).

Ind-Ra further forecasted that the outlook towards mid-size public sector banks (PSBs) remains negative, as these banks could experience disproportionate pressure on the profit and loss accounts (P&L) due to the additional provision burden. It further noted that the profitability of a few large PSBs in FY18 will be stretched due to this move and would lead to pressure on their standalone ratings.

As per the report, out of the total Rs 180 billion required provisioning, the iron and steel sector contributes around Rs 105 billion and the infrastructure sector Rs 41 billion. The credit rating agency further said that the fear of insolvency will force all stakeholders to seek remedial measures and resolve stress swiftly, which will be positive, in the event it occurs.

The CNX Nifty ended at 9902.25, up by 75.10 points or 0.76% after trading in a range of 9851.65 and 9904.45. There were 39 stocks advancing against 12 stocks declining on the index. (Provisional)

The top gainers on Nifty were Aurobindo Pharma up by 4.08%, Bharti Airtel up by 3.22%, Hindalco up by 3.04%, Coal India up by 2.82% and Zee Entertainment up by 2.73%. (Provisional)

On the flip side, Ultratech Cement down by 3.00%, ACC down by 1.45%, ICICI Bank down by 0.64%, Bharti Infratel down by 0.57% and Infosys down by 0.48% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 11.93 points or 0.16% to 7,402.15, Germany’s DAX increased 3.96 points or 0.03% to 12,434.35 and France’s CAC increased 8.88 points or 0.17% to 5,182.15.

Asian equity markets ended mostly in green on Wednesday as investors remained optimistic about China's ongoing economic transition and looked ahead to policy statements from the European and Japanese central banks, due Thursday. The dollar stayed on the defensive on doubts over US President Donald Trump's ability to deliver tax reforms, while oil prices pulled back slightly on industry data showing a rise in US crude inventories. Chinese shares ended higher as investors piled into banking, consumer and resources shares after robust economic growth data earlier in the week and on expectations that Beijing is stepping up efforts to reform lumbering and inefficient state companies. Japanese shares closed marginally higher in choppy trade, with buying in defensive stocks offsetting worries about the impact of a stronger yen as the US dollar flounders.