Post Session: Quick Review

Indian equity markets traded on a lackluster note throughout the day and ended the session with cut of around two tenth of a percent as disappointing quarterly earnings weighed on the sentiments. Markets tried to recover in last hour of trade but were short-lived. The NSE Nifty started off the August series falling below 10,000-mark but managed to gain some strength to cross 10,000 mark. The street has now shifted focus to Reserve Bank of India’s two-day monetary policy meeting, which is set to begin next week on Tuesday, while the outcome is expected on Wednesday. The equity benchmarks made a weak start in early deals as traders remained concerned with banking major ICICI Bank reporting an eight percent fall in first quarter profit from a year earlier to Rs 2,049 crore, though the bank said it was optimistic about containing its bad loans after the three months to June saw the smallest rise in soured assets for seven quarters. Dr. Reddy’s Lab extended fall to the second straight day after the Mumbai-based pharma company reported disappointing earnings for the June quarter. Biocon fell after its consolidated net profit fell 51.2% year-on-year to Rs 81.3 crore in the quarter ended June, missing estimates, mainly due to weakening of the US dollar and destocking ahead of implementation of goods and services tax (GST).

Meanwhile, Amitabh Kant, chief executive officer of government’s policy think tank NITI Aayog, has said that the government entities needs to adopt the model of build, operate and transfer (BOT) for maintenance and operations of infrastructure projects, including the big ones like dedicated freight corridor and national highways. He also said that these projects then should be given to private companies as the government is incapable to handle them. Investors shrugged off the private report which enlightened that India’s M&A deal value in the first half of this year has reached $29.2 billion, an all time high since 2001. The January-June period of this year attracted 181 deals worth $29.2 billion, 56.7% higher compared with the corresponding period last year and even surpassed the first half 2012 level which was the historical high for deal making in India.

On the global front, Asian markets closed mostly in red, as investors looked ahead to more corporate earnings and were cautious on the dollar. China’s registered urban unemployment rate stayed below 4 percent for the second consecutive quarter as the world’s No. 2 economy maintained a robust growth trajectory in 2017’s first half. The European markets were trading in red as fresh political tensions in Washington dampened market sentiment. Euro zone economic sentiments rose slightly for a third consecutive month in July to a new 10-year high, against expectations of a dip from June.

The BSE Sensex ended at 32309.88, down by 73.42 points or 0.23% after trading in a range of 32104.66 and 32381.36. There were 11 stocks advancing against 20 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.48%, while Small cap index was up by 0.35%. (Provisional)

The top gaining sectoral indices on the BSE were IT up by 1.05%, TECK up by 0.80%, FMCG up by 0.23%, Auto up by 0.21% and Industrials up by 0.20%, while Healthcare down by 1.73%, Metal down by 1.39%, Realty down by 0.67%, Basic Materials down by 0.62% and Capital Goods down by 0.61% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were HDFC up by 2.64%, Infosys up by 2.40%, Kotak Mahindra Bank up by 1.45%, Adani Ports & Special Economic Zone up by 0.88% and ONGC up by 0.83%. (Provisional)

On the flip side, Dr. Reddy’s Lab down by 5.93%, Sun Pharma down by 4.01%, Lupin down by 3.94%, ICICI Bank down by 3.50% and Hero MotoCorp down by 2.36% were the top losers. (Provisional)

Meanwhile, large Indian corporates’ revenues are expected to witness growth of around 10 per cent annually over next 2 fiscal years. Global credit rating agency, Standard & Poor's (S&P) ratings in its latest report has said that the credit quality of top corporates which is on the path of recovery is likely to improve over the next two years and will lead to revenue growth.

The report based on ‘the analysis of top 100 companies according to market capitalisation’ said that the corporates’ profitability will also be supported by rising demand and moderate inflation. It further noted that growth trends are reversing in India’s corporate field, as commodity focused sectors set to grow faster than export-focused industries such as information technology and pharmaceuticals and heavy industries’ progress is also likely to be more pronounced. However, S&P found that asset-light industries will face headwinds.

S&P expects the oil and gas sector to maintain its vastly improved EBITDA margins, while telcos are likely to see a compression in margins due to intense competition. It further noted that the key for deleveraging is to keep the debt levels under check through low capex as demand is still elusive. The report also sees increasing consolidation in domestic focused sectors, asset sales in infrastructure & power utilities and outbound acquisitions in export-focused sectors over the next two years.

The CNX Nifty ended at 10002.15, down by 18.40 points or 0.18% after trading in a range of 9944.50 and 10026.05. There were 21 stocks advancing against 30 stocks declining on the index. (Provisional)

The top gainers on Nifty were Yes Bank up by 3.31%, HDFC up by 2.77%, Infosys up by 2.54%, Kotak Mahindra Bank up by 1.81% and Indusind Bank up by 1.51%. (Provisional)

On the flip side, Dr. Reddy’s Lab down by 5.92%, Lupin down by 3.92%, Sun Pharma down by 3.86%, ICICI Bank down by 3.58% and Bharti Infratel down by 2.77% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 48.85 points or 0.66% to 7,394.16, Germany’s DAX decreased 75.57 points or 0.62% to 12,136.47 and France’s CAC decreased 67.32 points or 1.3% to 5,119.63.

Asian equity markets closed mostly lower on Friday as investors booked profits following a selloff in US technology stocks overnight. Disappointing earnings results from Amazon intensified worries about corporate earnings. Japanese shares closed lower despite the release of better-than-expected economic data. In economic news, Japan's unemployment rate was beneath expectations and household spending rose more than forecast in June. Overall nationwide consumer prices gained in line with expectations.