Post Session: Quick Review

Indian equity benchmarks traded on a weak note throughout the day and ended with a cut of around eight tenth of a percent. The winding of leverage stocks dragged the market lower with Nifty closing below 10,000 mark, while Sensex managed to hold on 32,000 mark but ends near two week closing low. The equity benchmarks pared all of their gains and entered into red terrain in early deals as traders were cautious after Singaporean based lender said that it suspects that there has been a change in the stance by the authorities to let the rupee appreciate more, but warned that it can hurt manufacturing and exports. Separately, SEBI has directed bourses to initiate action against 331 suspected shell companies that are listed and these scrips will not be available for trading this month. The regulators directive came after the Corporate Affairs ministry shared a list of 331 listed companies that are suspected to be shell entities and could even face compulsory delisting. Some concerns also came with Engineering exporters’ body EEPC stating that shipping companies are facing difficulties post GST as their drawback refunds will not be released till September-end or October.

Investors took note that Public Sector Banks (PSBs) have written off nearly Rs 2.5 lakh crore loans in the last five financial years. The finance ministry said quoting RBI data that as many as 27 public sector banks, including SBI and its five associates, in 2016-17 have written off Rs 81,683 crore, the highest in the last five fiscals. Realty sector stocks were under pressure after banks in consultation with the RBI, have decided not to extend loans to those projects which have not been registered under RERA. Banks have also sought additional collateral, including on personal properties of promoters, as guarantees while disbursing loans to a few real estate developers. Select auto stocks were under pressure after GST council yesterday approved the proposal to hike cess on SUVs, mid-sized, large and luxury cars to 25%, from 15%. Also, hybrid vehicles with engine capacity of more than 1500 cc and mid segment hybrid cars of less than 1500 cc fall in the category.

On the global front, Asian markets closed mixed, with early yuan figures from China on trade failing to lift sentiments. China’s exports and imports grew more slowly than expected in July, raising concerns over whether global demand is starting to cool even as major Western central banks consider scaling back their massive stimulus programs. The European markets were trading mostly in green as investors focused on a new round of earnings reports. German imports fell more sharply than exports in June, pushing the trade balance to a 10-month high. The data are likely to increase criticism of conservative Chancellor Angela Merkel, who is expected to win a fourth term in an election next month, for not boosting investments enough as a way to increase imports and support other countries.

The BSE Sensex ended at 32003.18, down by 270.49 points or 0.84% after trading in a range of 31915.20 and 32354.77. There were 7 stocks advancing against 24 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 1.21%, while Small cap index was down by 1.30%. (Provisional)

The few gaining sectoral indices on the BSE were Metal up by 1.56%, Basic Materials up by 0.27% and Consumer Durables up by 0.04%, while Realty down by 4.43%, PSU down by 2.00%, Oil & Gas down by 1.97%, Power down by 1.90% and Energy down by 1.71% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Cipla up by 2.59%, Tata Steel up by 2.40%, Bajaj Auto up by 1.01%, Hindustan Unilever up by 0.48% and Adani Ports up by 0.28%. (Provisional)

On the flip side, Dr. Reddy’s Lab down by 5.13%, Coal India down by 2.79%, ITC down by 2.14%, SBI down by 1.91% and ICICI Bank down by 1.57% were the top losers. (Provisional)

Meanwhile, welcoming the Goods and Services Tax (GST) council’s move to reduce the rate for all job works in textile sector from 18% to 5%, the Confederation of Indian Textile Industry (CITI) has described the move as a big breather to small job work manufacturers in all segments of textile value chain and added that it would facilitate the free flow of business across the value chain.

CITI further said that with this relief, the textile industry can claim full input credit and it would also avoid any inverted duty and strengthen the global competitiveness of the textile sector apart from benefiting the domestic consumers. However, the industry body expressed disappointment on the postponement of reduction of GST rate for manmade fibre and synthetics from 18% to 12%.

At the same time, CITI expressed a need of some safeguard measures for the industry in order to ensure the Make in India initiative does not wash away in the avalanche of imports, noting that imports are now cheaper than domestic products as the countervailing duty (CVD) and special additional duty (SAD) on imports have become Integrated GST. The GST Council, headed by Finance Minister Arun Jaitley comprising representatives from all states, last week decided to tax all job works in the textile sector at 5 per cent.

The CNX Nifty ended at 9978.15, down by 79.25 points or 0.79% after trading in a range of 9947.00 and 10083.80. There were 14 stocks advancing against 37 stocks declining on the index. (Provisional)

The top gainers on Nifty were Hindalco up by 3.40%, Vedanta up by 3.27%, Cipla up by 2.35%, Tata Steel up by 2.32% and GAIL India up by 1.11%. (Provisional)
On the flip side, Dr. Reddy’s Lab down by 5.34%, BPCL down by 4.40%, Bharti Infratel down by 3.91%, Indian Oil down by 3.53% and Coal India down by 2.78% were the top losers. (Provisional)

The European markets were trading mostly in green; Germany’s DAX increased 2.71 points or 0.02% to 12,259.88, France’s CAC increased 1.08 points or 0.02% to 5,208.97, while UK’s FTSE 100 decreased 6.84 points or 0.09% to 7,525.10.

Asian equity markets made a mixed closing on Tuesday as a stronger yen hit exporters in Japan, oil prices slipped on concerns about major oil producers' wavering commitment to output caps and China reported disappointing trade data. Japanese shares fell as the US dollar changed hands in the upper 110 yen range. Meanwhile, Chinese shares ended little changed as the export and import figures fell short of expectations. Chinese exports climbed 7.2 percent year-over-year in July in dollar terms, well below the 11.0 percent spike economists had expected. Imports rose 11.0 percent from a year ago, much slower than the expected growth of 18.0 percent. Separately, central bank data showed that China's foreign exchange reserves increased by $24 billion to a 9-month high of $3.08 trillion in July, as tight regulation contained the outflow.