Late hour selloff drag benchmarks near neutral lines on F&O expiry

Markets went home empty handed on July month F&O expiry despite trading jubilantly for most part of the day. It was the final hour of trade which played spoil sports for Indian equity benchmarks and rally got fizzled out with key indices ended unchanged, as traders opted to book profits at higher levels. Markets kick started the day on optimistic note, hitting lifetime highs of 32,672.66 (Sensex) and 10,114.85 (Nifty) levels, as sentiments remained up-beat with news that retirement fund body the Employees’ Provident Fund Organisation is planning to pump in Rs 22,500 crore in exchange traded funds in 2017-18 following approval from the central board of trustees to increase the equity investment from 10 per cent to 15 per cent. Traders also took some comfort with report that Bharatiya Janata Party (BJP) strengthened its foothold in Bihar after Nitish Kumar ended his party, JDU’s mahagathbandhan or Grand Alliance with Lalu Yadav’s RJD and the Congress last evening and joined hands with his former partner BJP.

Investors also took note of global financial services major report that the Reserve Bank of India is expected to go for a 25 basis points (bps) repo rate cut in its policy review meet on August 2 as inflation is likely to have reached a new normal of 4 percent. The report highlighted that inflation in India has fallen dramatically, and though the excessively low level it witnessed this fiscal is not sustainable, the rebound may not be too sharp either. However, markets failed to hold their early gains and started moving southward to end flat on account of late selling in bluechips like Reliance Industries, ITC, Infosys, TCS and Bharti Airtel. A string of mixed-to-weak corporate earnings also soured sentiment.

On the global front, European markets trading mostly in green in early deals as investors reacted to a slew of earnings reports. Growth in bank loans to euro zone corporations slowed sharply in June but household lending held at a post-crisis high and a key money supply indicator, which often predicts future economic activity firmed. Asian markets rallied on Thursday after the US Federal Reserve kept interest rates unchanged on Wednesday.

Back home, stocks related to infra space edged higher despite Global Infrastructure Outlook report that India is underperforming in terms of spending needs (in relation to GDP) in several infrastructure segments, within its peer group. On earning front, Dr. Reddy’s Laboratories ended with a cut of over three percent after it reported 57 percent decline in profit for the April June quarter impacted by GST-led destocking. Shares of the country’s largest car maker Maruti Suzuki pared most of their gains after a mixed set first quarter earnings. The company reported a net profit of Rs 1,560 crore, missing street expectation for a profit of Rs 1,690 crore.

The NSE’s 50-share broadly followed index Nifty declined marginally but managed to hold its psychological 10,000 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex gained marginally and ended the session above its crucial 32,300 mark. The broader markets struggled in last hour of trade and ended the session with a cut of over half a percent. The market breadth was in the favour of decliners, as there were 880 shares on the gaining side against 1,846 shares on the losing side, while 150 shares remain unchanged.

Finally, the BSE Sensex rose marginally by 0.84 points to 32,383.30, while the CNX Nifty was down marginally by 0.10 points to 10,020.55.

The BSE Sensex touched a high and a low of 32,672.66 and 32,325.33, respectively and there were 11 stocks on gaining side as against 20 stocks on losing side on the index.

The broader indices ended in red; the BSE Mid cap index declined 0.55%, while Small cap index was down by 0.52%.

The few gaining sectoral indices on the BSE were Bankex up by 0.79%, Capital Goods up by 0.15% and Realty up by 0.01%, while Telecom down by 1.88%, IT down by 1.76%, TECK down by 1.64%, Healthcare down by 1.18% and Energy was down by 1.06% were the top losing indices on BSE.

The top gainers on the Sensex were HDFC up by 5.83%, HDFC Bank up by 2.18%, Asian Paints up by 1.32%, Kotak Mahindra Bank up by 1.21% and SBI up by 0.86%. On the flip side, Dr. Reddy’s Lab down by 3.29%, Tata Motors - DVR down by 3.07%, TCS down by 2.76%, Tata Motors down by 2.43% and Bharti Airtel down by 2.40% were the top losers.

Meanwhile, in a bid to develop India’s infrastructure, improve economic growth and community well being, the Global Infrastructure Hub (GI Hub) in its report titled 'Global Infrastructure Outlook' has said that the country will need investments to the tune of around $4.5 trillion by 2040. It also noted that this will make India the second largest infrastructure market after China.

The report has stated that the significant demand for infrastructure investment in India over the next 25 years is likely to be driven by increasing income levels and economic prosperity. It also noted that if the sustainable development goals (SDGs) are to be accounted, the country is projected to require an additional $888 billion by 2030 to provide universal household access to electricity and water. In absolute terms, it explained that the total investment needed to meet the SDGs is greatest in India, a total of $1.3 trillion of investment is needed by 2030, more than China, which is $ 257 billion.

As per the report, the cost of providing infrastructure to support global economic growth and for closing the infrastructure gaps is forecast to reach $94 trillion by 2040, with a further $3.5 trillion needed to meet the UN SDGs of access to drinking water and electricity by 2030, bringing the total to $ 97 trillion.  The firm, which conducted an intensive study of 50 countries and seven industry sectors, also found out that by 2040, the global population will grow by 25% touching almost 2 billion people. Adding further, it said that rural to urban migration continues with the urban population growing by 46%, triggering massive demand for infrastructure support.

The CNX Nifty traded in a range of 10,114.85 and 10,005.50. There were 18 stocks in green as against 33 stocks in red on the index.

The top gainers on Nifty were HDFC up by 5.80%, Yes Bank up by 4.32%, HDFC Bank up by 2.41%, Indusind Bank up by 1.68% and Zee Entertainment up by 1.63%. On the flip side, Dr. Reddy’s Lab down by 3.21%, Tech Mahindra down by 3.11%, Tata Motors - DVR down by 3.03%, TCS down by 2.91% and Tata Motors down by 2.60% were the top losers.

The European markets were trading mostly in green; France’s CAC increased 5.31 points or 0.1% to 5,195.48 and UK’s FTSE 100 was up by 6.24 points or 0.08% to 7,458.56, while Germany’s DAX was down by 58 points or 0.47% to 12,247.11.

All the Asian equity markets ended in green on Thursday as a slew of corporate earnings came through and as markets digested the Federal Reserve's widely expected decision to hold interest rates steady at the end the Federal Open Market Committee's two-day policy meeting Wednesday. While the Fed laid the groundwork to soon begin winding down its massive stimulus program, investors honed in on the committee's choice of language on when the move to trim the central bank's balance sheet would kick off. Normalization of the balance sheet would be implemented ‘relatively soon’, the post meeting statement noted. This was a slight tweak compared to the Fed's use of ‘this year’ after the June meeting. Japanese shares ended up on expectations that the Bank of Japan would maintain its monetary stimulus program longer than most other global central banks. Further, Chinese shares ended little changed even as data showed China's major industrial firms posted increased profit growth in June.