Markets start new F&O series on pessimistic note; Nifty holds 10k mark

Recovery in last leg of trade helped Indian equity benchmarks to pare most of their early losses, but was not enough to pull indices into green terrain on Friday. Markets went home with modest cut, as traders opted to book profit ahead of Reserve Bank of India’s two-day monetary policy meeting, which is set to begin next week on August 1. Domestic bourses made a weak start to the new F&O series with both Nifty and Sensex declining below their crucial 10,000 and 32,300 levels respectively. Traders remained concerned with banking major ICICI 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. Markets extended sell-off in afternoon trade and even went to test crucial 9,950 (Nifty) and 32,100 (Sensex) levels, as some anxiety spread among the investors with Niti Aayog chief Amitabh Kant’s statement that the government needs to adopt the model of build, operate and transfer (BOT) for infrastructure projects. These projects then should be given to private companies as the government is incapable of handling the maintenance and operations of such projects.

However, the key gauges got some support near those intraday low levels as they trim most of their losses from thereon and ended above their crucial 10,000 (Nifty) and 32,300 (Sensex) levels, as investors continued hunt for fundamentally strong stocks. Traders got some support with report from the prestigious Massachusetts Institute of Technology (MIT), which said that monsoon has strengthened over north central India in the last 15 years, indicating a reversal in the general perception that the region has dried up in over a decade. Traders also get some solace after Standard & Poor’s (S&P) ratings in its latest report 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.

On the global front, European markets were trading in red in early deals, 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. Asian markets ended mostly in red, as investors looked ahead to more corporate earnings and were cautious on the dollar.

Back home, gems and jewellery stocks remained on buyers’ radar, as the government expects export growth of six per cent a year for the industry, which is going to be the new normal. Gems and jewellery net exports declined in FY’16 to $32 billion, as compared to $36.2 billion the previous year. Meanwhile, 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 by over two percent 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).

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 too managed to hold its crucial 32,300 mark despite declining over seventy points. The broader markets, however outperformed benchmarks and ended the session with a gain of around half a percent. The market breadth was in the favour of decliners, as there were 1,255 shares on the gaining side against 1,388 shares on the losing side, while 168 shares remain unchanged.

Finally, the BSE Sensex declined 73.42 points or 0.23% to 32,309.88, while the CNX Nifty was down by 6.05 points or 0.06% to 10,014.50.

The BSE Sensex touched a high and a low of 32,381.36 and 32,104.66, respectively and there were 10 stocks on gaining side as against 21 stocks on losing side on the index.

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

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 was 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 was down by 0.61% were the top losing indices on BSE.

The top gainers on the Sensex were HDFC up by 3.20%, Infosys up by 2.63%, Adani Ports & SEZ up by 0.90%, ITC up by 0.90% and ONGC up by 0.76%. On the flip side, Dr. Reddy’s Lab down by 6.08%, Lupin down by 4.34%, Sun Pharma down by 3.89%, ICICI Bank down by 3.60% and Hero MotoCorp down by 2.04% were the top losers.

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. He also noted that it’s high time that the government should start the process of reverse BOT, must sell out projects and let the private sector handle it.

Apart from this, Kant has stated that the government should let private sector take charge of schools, airport, jails and colleges too. He also said that even running trains should be handed over to the private sector and government should restrict its role to planning and developing infrastructure. Adding further, he said that India needs to move into new areas of public private partnership (PPP). He pointed out that at least experience of many countries like Canada and Australia shows that private sector is capable of doing very good work in creation of quality infrastructure over a long period of time in social sector.

He also observed that there were huge opportunities for the private sector in India like station re-development projects, port construction and Sagarmala projects. He noted that there is no shortage of money in the market and the country can use the opportunity by de-listing its projects. He also mentioned that need of the hour is to market these projects well and added that even the freight corridor being built should be privatised.

The CNX Nifty traded in a range of 10,026.05 and 9,944.50. There were 22 stocks in green as against 29 stocks in red on the index.

The top gainers on Nifty were HDFC up by 3.31%, Yes Bank up by 3.14%, Infosys up by 2.71%, Kotak Mahindra Bank up by 1.46% and Indiabulls Housing up by 1.44%. On the flip side, Dr. Reddy’s Lab down by 5.93%, Lupin down by 4.16%, Sun Pharma down by 3.72%, ICICI Bank down by 3.60% and Hindalco down by 2.44% were the top losers.

The European markets were trading in red; Germany’s DAX decreased 97.82 points or 0.8% to 12,114.22, France’s CAC declined 70.64 points or 1.36% to 5,116.31 and UK’s FTSE 100 was down by 55.48 points or 0.75% to 7,387.53.

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.