Post Session: Quick Review

Indian equity benchmarks traded on a weak note throughout the day and ended in red for fourth consecutive session. Sentiment remained downbeat due to sustained capital outflows by foreign funds and retail investors on the domestic bourses. Nifty ended at 1 month closing low and the market breath was in favour of Decline with Advance-Decline ratio at 1:9. The equity benchmarks made a sluggish start in early deals as sentiments were under pressure on account of global cues as tensions between North Korea and the US added a dollop of geopolitical uncertainty to markets. In the latest escalation of tensions between Washington and Pyongyang, the isolated Asian country threatened a missile strike at US territory Guam. That saber-rattling came a day after US President Donald Trump said he would respond with fire and fury like the world has never seen if the country doesn’t halt its threats. The street took note that India’s agricultural exports have declined to $33.87 billion in 2016-17 from $43.23 billion in 2013-14. The primary reasons for decline in export of agricultural commodities are low commodity prices in the international market, which has made exports uncompetitive.

Some selling also crept in on foreign brokerage’s report that India’s industrial production is expected to be anemic 0.3 per cent for June, partly on account of retailers reducing stocks before the implementation of GST. The report added that before the implementation of Goods and Services Tax (GST), destocking was triggered largely owing to a steep fall in demand from consumers as they delayed purchases on expectation of getting better price post the new indirect tax regime. Separately, banking stocks were under pressure on credit rating agency’s report that the Indian banking industry continued to remain under pressure in the first quarter of current financial year (Q1FY18) because of slower pace in growth rate of credit and deposits, it added that the non performing assets (NPAs) also remained high as of June 2017. Traders failed to get any sense of relief with report that direct tax collections jumped 19% in the first four months of the current fiscal as demonetization of higher denomination currency brought in more number of individuals in tax net. Collections of direct taxes, which are made up of personal and corporate taxes, soared to Rs 1.90 lakh crore in April-July.

On the global front, Asian markets closed mostly in red, as investors fretted on lingering North Korea tensions, sending Seoul shares skidding to two-month lows even as the previous day’s rush into safe-haven assets appeared to slow. Japan’s core machinery orders unexpectedly fell for a third consecutive month in June, underscoring companies’ reluctance to boost spending and conflicting with recent signs that the economic recovery is gathering momentum. European stocks were trading in red as investors monitored new corporate earnings and geopolitical tensions surrounding North Korea. Manufacturing production in the UK was unchanged as forecast in June, though industrial output registered a larger than expected increase, bolstering optimism over the British economy.

Back home, Tata Motors extended losses in response to its disappointing June quarter (Q1) results announced the previous day. Adani Power tumbled after its consolidated net loss widened to Rs 454 crore in Q1, from Rs 232.6 crore in year-ago quarter. Revenue growth was tepid, rising 3.8 percent to Rs 5,590 crore from Rs 5,386 crore on year-on-year basis. Operating profit fell 9.5 percent to Rs 1,560 crore and margin contracted to 27.9 percent from 32 percent.

The BSE Sensex ended at 31626.02, down by 171.82 points or 0.54% after trading in a range of 31422.80 and 31756.27. There were 10 stocks advancing against 21 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 1.97%, while Small cap index was down by 2.90%. (Provisional)

The only gaining sectoral indices on the BSE were IT up by 0.63% and TECK up by 0.23%, while Realty down by 3.67%, Industrials down by 2.82%, Healthcare down by 2.57%, Auto down by 2.38% and Utilities down by 2.20% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Infosys up by 1.40%, Wipro up by 0.77%, ITC up by 0.66%, TCS up by 0.52% and Larsen & Toubro up by 0.52%. (Provisional)

On the flip side, Tata Motors down by 8.15%, Tata Motors - DVR down by 7.82%, Dr. Reddy’s Lab down by 4.67%, Sun Pharma down by 2.77% and Cipla down by 2.47% were the top losers. (Provisional)

Meanwhile, global credit rating agency, Care Ratings in its latest research report on ‘Performance of banks’ has said that the Indian banking industry continued to remain under pressure in the first quarter of current financial year (Q1FY18) because of slower pace in growth rate of credit and deposits, it added that the non performing assets (NPAs) also remained high as of June 2017.

The report stated that , growth in bank credit to agriculture and allied activities, services, industry and retail sector (personal loans) was lower as of June 2017 as against the same period in the previous year, while credit growth to manufacturing also remained sluggish, continuing to be negative. However, the agency found that the banks registered healthy other income in Q1FY18, driven by their profit in treasuries, while the net profits of the banks also witnessed growth.

Care Ratings further noted that overall volume of bank’s business has still to pick up which will depend on the economy of the country. Besides, the agency found public sector banks are more stressed than private banks and said that gross NPAs’ growth lowered in the first quarter of FY18 as against same period in previous year, increasing by 25.8%.

The CNX Nifty ended at 9851.85, down by 56.20 points or 0.57% after trading in a range of 9776.20 and 9892.65. There were 17 stocks advancing against 34 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tech Mahindra up by 3.02%, Aurobindo Pharma up by 1.96%, Infosys up by 1.58%, Larsen & Toubro up by 0.84% and Wipro up by 0.68%. (Provisional)

On the flip side, Tata Motors down by 8.40%, Tata Motors - DVR down by 7.95%, Dr. Reddy’s Lab down by 4.90%, Bank of Baroda down by 3.93% and Eicher Motors down by 3.84% were the top losers. (Provisional)

The European markets were trading mostly in red; UK’s FTSE 100 decreased 73.78 points or 0.98% to 7,424.28, Germany’s DAX decreased 79.68 points or 0.66% to 12,074.32 and France’s CAC decreased 17.9 points or 0.35% to 5,127.80.

Asian equity markets closed mostly lower on Thursday as geopolitical tensions persisted, the yen stayed firm and oil struggled for direction after rising on Wednesday on EIA data showing a sharp decline in crude inventory for sixth week in a row. Meanwhile, investors looked ahead to US producer and consumer inflation data due this week for additional clues on the Fed's rate outlook. Japanese shares ended marginally lower as the yen remained stronger against the dollar and official data showed Japan's core machinery orders, an indicator of capital spending, unexpectedly fell for a third consecutive month in June, underscoring the fragile nature of the country's export-driven economic recovery. Further, Chinese shares ended lower as material stocks succumbed to profit taking after recent sharp gains.