Post Session: Quick Review

Indian equity benchmarks traded in red for most part of the day and ended the session with cut of more than eight tenth of a percent, with the Nifty breaching 9800-mark. The markets opened on a firm note but selling crept in which dragged the markets lower to end at nearly two weeks closing low. Infosys, HDFC and Reliance Industries dragged the markets the most. Infosys has posted biggest 2 day fall since April 2013. The equity benchmarks made a positive start and traded in fine fettle in early deals as traders opted to buy beaten down but fundamentally strong stocks after last session’s steep fall. Buying in banking counters too aided sentiments, on reports that the government and RBI are in talks to shore up public sector bank capital in a time-bound manner due to the higher provisioning burden on these lenders. These measures could include a combination of capital raising from the market, dilution of government holding, additional capital infusion by the government, mergers based on strategic decision and sale of non-core assets. Separately, the government is also looking to set up a new mechanism to speed up decisions on possible mergers among state-run lenders in order to push consolidation in the public sector banking space.

Investors turned pessimistic after the private report highlighted that consumer confidence in India declined in the second quarter of this year amid concerns regarding job security and lower optimism on employment prospects. Besides, cautionary spending by consumers towards the end of 2016 still had some impact on the quarter under consideration. Some selling also crept in on report that as many as 322 infrastructure projects worth Rs 150 crore or above each have seen cost overrun of Rs 1.71 lakh crore due to delays and other reasons by March 2017. Furthermore, according to the RBI data during the week to August 4, there was an incremental credit de-growth of Rs 1.1 trillion. This comes after a record low full year credit growth in FY17 when credit growth slipped to the lowest in the past six decades at 5.1%. This was the lowest since fiscal 1953 when it grew a tepid 1.8%. Investors took  note of the India Meteorological Department (IMD) weekly press release which highlighted that about a quarter of the country has received deficient rainfall in the first half of the monsoon, but hopes the situation will improve in the second half. The Met department states that there is a 4% deficit rain across the country, but 26% part of the country has received deficient rain.

On the global front, Asian markets closed mostly in red, as US-South Korea joint military drills kicked off and a key meeting of global central bankers loomed. North Korea warned that joint US-South Korean military exercises will be adding fuel to the fire of already heightened tensions with Washington and its allies. Confidence at Japanese manufacturers rose in August to its highest level in a decade led by producers of industrial materials, in a further sign of broadening economic recovery. European markets were trading in red as geopolitical tensions continued to weigh on markets’ sentiments, dampening demand for risk-related assets such as equities.

Back home, Infosys closed in red after multiple brokerages have downgraded the stock following Vishal Sikka’s resignation as the chief executive and managing director. The research house sees significant senior level departures over next six months till new CEO is found and also sees downside risks to guidance for FY18/19. Separately, at least three US-based law firms sent out statements saying they would initiate class-action lawsuits against Infosys for unlawful business practices, an exercise that is not uncommon with US-listed companies every time they go through a change, especially in the case of mergers and acquisitions.

The BSE Sensex ended at 31252.99, down by 271.69 points or 0.86% after trading in a range of 31220.53 and 31641.81. There were 6 stocks advancing against 25 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 1.50%, while Small cap index was down by 1.02%. (Provisional)

The top losing sectoral indices on the BSE were IT down by 2.19%, TECK down by 2.01%, Healthcare down by 1.78%, PSU down by 1.75% and Power down by 1.65%, while there were no gaining indices on BSE. (Provisional)

The top gainers on the Sensex were Axis Bank up by 0.61%, Mahindra & Mahindra up by 0.21%, HDFC up by 0.11%, TCS up by 0.09% and ITC up by 0.05%. (Provisional)

On the flip side, Infosys down by 5.64%, Adani Ports & Special Economic Zone down by 2.88%, Dr. Reddy’s Lab down by 2.42%, Sun Pharma down by 2.04% and Lupin down by 2.01% were the top losers. (Provisional)

Meanwhile, on the back of increasing domestic coal production, India’s dependence on the imported coal has fallen by 6.37 percent to 191.95 million tonnes (MT) in the financial year 2016-17 (FY17) as compared to 203.95 MT in the previous financial year. As per the government’s data report, higher production by Coal India (CIL) has helped the country to move towards regime of coal surplus situation.

Besides, thermal and steam coal imports also witnessed reduction by falling 17.37 per cent to 29.82 MT at the top 12 major ports, during April-July period of this fiscal and handling of coking coal also dipped 4.45 per cent to 16.51 MT as against 17.27 MT in the corresponding period in the previous financial year.  On the other hand, the country’s total coal production stood at 659.27 MT as against the demand of 884.87 MT.

India is the third-largest producer of coal after China and the US but is still facing fuel demand supply problem and in an effort to meet the country’s growing fuel demand, the government has announced plans to boost CIL’s annual production to the level of 1 billion tonnes by 2019.

The CNX Nifty ended at 9751.45, down by 85.95 points or 0.87% after trading in a range of 9740.10 and 9884.35. There were 9 stocks advancing against 42 stocks declining on the index. (Provisional)

The top gainers on Nifty were Axis Bank up by 0.88%, Mahindra & Mahindra up by 0.62%, Tech Mahindra up by 0.62%, Eicher Motors up by 0.28% and ITC up by 0.21%. (Provisional)

On the flip side, Infosys down by 5.76%, Bank of Baroda down by 3.53%, Indian Oil down by 3.19%, Adani Ports & Special Economic Zone down by 2.90% and Dr. Reddy’s Lab down by 2.52% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 13.49 points or 0.18% to 7,310.49, Germany’s DAX decreased 48.95 points or 0.4% to 12,116.24 and France’s CAC decreased 22.68 points or 0.44% to 5,091.47.

Asian equity markets closed mostly lower on Monday after the ouster of White House chief strategist Steve Bannon by US President Donald Trump and the start of joint military drills by the US and South Korea today. The dollar edged away from four-month lows against the yen and oil held stable while gold prices were little changed ahead of the US Federal Reserve's annual central banking symposium in Jackson Hole, Wyoming on Thursday and Friday. Japanese stocks fell to a fresh 3-1/2-month low as global investors remained cautious amid worries over whether the Trump administration will be able to implement growth boosting measures. However, Chinese shares ended higher after the country's securities regulator said China Unicom's $11.7 billion ownership reform plan hasn't violated rules.