Post Session: Quick Review

Indian equity benchmarks traded in negative territory throughout the day and ended the session with cut of more than a percent. The equity indices snapped a four-session winning streak as the sharp sell-off on account of geopolitical concerns dragged the Nifty to end below 9,800 mark. The equity benchmarks made a gap-down opening and traded with pessimism, as traders opted to book profit after four days of continuous rally after North Korea fired a missile over northern Japan, fuelling worries of fresh tension between Washington and Pyongyang. Traders also remained concerned with a NITI Aayog report that it found that there is a huge gap between what the state governments have done to improve ease of doing business and what the enterprises know of these improvements. NITI Aayog has recommended reforming labour laws and a greater flexibility in their implementation to enhance ease of doing business. The NITI Aayog-IDFC Institute survey also found that a substantial chunk of the enterprises surveyed were not aware of many of the improvements undertaken both by the Union and state governments. Some selling also crept in, on reports that RBI sent fresh list of defaulters to be send to NCLT by mid-December if unresolved. Videocon Industries, JP Associates, Uttam Galva, Monnet Power, Jai Balaji, Shakti Bhog, SEL Manufacturing, Castex, Visa Steel, Ruchi Soya, Orchid Chemicals and IVRCL are list of companies to be sent to NCLT.

Meanwhile, a recent government dossier has listed nearly 17,000 companies as the main conduits for moving around slush money after the sudden demonetization of Rs 500 and Rs 1000 notes on November 8 last year. As per the report, the government will launch a multi-agency crackdown on about 17,000 companies including some stock market listed investment advisory firms, realty businesses, hotels, grain mills, jewellery traders and a few film production and media houses for funneling thousands of crore of undisclosed funds over the last several months. Investors shrugged off India Ratings and Research (Ind-Ra) report which highlighted that a new nationwide goods and services tax (GST) rollout will have positive impact on state governments’ finances in the medium to long term. Even in the short term, it said that the impact on aggregate state finances will be positive but the picture varies across states. The market may remain volatile this week as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. August 2017 series to next month i.e. September 2017 series. The near month July 2017 derivatives contracts will expire on Thursday i.e. August 31, 2017.

On the global front, Asian markets barring Shanghai Composite closed in red after North Korea fired missile over Japan. Japan’s household spending unexpectedly fell in July from a year earlier after last month’s spike, casting some doubt on the sustainability of a domestic demand-driven economic recovery seen as vital to boosting tepid inflation. The European markets were trading in red on account of rising geopolitical tensions and a surging euro. British house price growth eased to a three-month low in August, adding to signs that the squeeze on household spending since last year’s Brexit vote has led to a slowdown in the housing market.

Back home, ACC, Bank of Baroda and Tata Power closed in red after NSE decided to exclude these stocks from Nifty50, while HPCL and UPL closed in green on addition in Nifty50. Majority of sugar stocks were under pressure after India, the world biggest sugar consumer, imposed inventory level limits on sugar mills in an attempt to keep prices under control during the upcoming festive season.

The BSE Sensex ended at 31392.81, down by 358.01 points or 1.13% after trading in a range of 31360.81 and 31739.80. There were 2 stocks advancing against 29 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.86%, while Small cap index was down by 1.06%. (Provisional)

The losing sectoral indices on the BSE were Telecom down by 1.84%, Energy down by 1.58%, Consumer Durables down by 1.57%, Power down by 1.53% and Utilities down by 1.33%, while there were no gainers on BSE. (Provisional)

The only gainers on the Sensex were Wipro up by 0.10% and Mahindra & Mahindra up by 0.06%. (Provisional)

On the flip side, NTPC down by 2.80%, Tata Motors - DVR down by 2.50%, Sun Pharma down by 2.38%, Reliance Industries down by 2.29% and ONGC down by 2.12% were the top losers. (Provisional)

Meanwhile, in order to keep prices under control during the festival season, the government has imposed stock limits on sugar mills for the next two months. The move would boost availability of sugar in the open market, preventing mills from artificially withholding of sugar during the high demand festive season of September and October.

Food Minister Ram Vilas Paswan said that the mills for the month of September can hold upto 21 per cent of the total sugar available with them and for the October month, the stock limit would be 8 per cent of the total sugar availability with the mills during entire 2016-17 marketing year (October- September).

At present, in retail market sugar prices are ruling at more than Rs 40 per kg, while branded sugar is available at Rs 50 per kg. Recently, with an aim to restrict cheap inward shipments and maintain domestic prices, the government had increased import duty on sugar to 50 per cent, up from 40 per cent.

The CNX Nifty ended at 9793.90, down by 118.90 points or 1.20% after trading in a range of 9783.75 and 9887.35. There were 4 stocks advancing against 47 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tech Mahindra up by 1.23%, Mahindra & Mahindra up by 0.14%, Zee Entertainment up by 0.12% and Wipro up by 0.05%. (Provisional)

On the flip side, Bank of Baroda down by 2.98%, NTPC down by 2.91%, Hindalco down by 2.72%, Sun Pharma down by 2.39% and Tata Power down by 2.35% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 97.25 points or 1.31% to 7,304.21, Germany’s DAX decreased 201.02 points or 1.66% to 11,922.45 and France’s CAC decreased 71.34 points or 1.4% to 5,008.41.

Asian equity markets ended mostly lower on Tuesday and safe heaven assets climbed after North Korea launched a ballistic missile over Japan, reigniting geopolitical worries. The missile flew over the northern Japanese island of Hokkaido and landed in the sea. Japanese shares ended lower as the yen surged to four-month highs against the dollar and data on household spending and employment painted a mixed picture of the economy. While household spending unexpectedly fell in July, the jobless rate held steady at a seasonally adjusted 2.8 percent in the month. Though, Chinese shares shrugged off weak regional cues to end marginally higher as investors looked ahead to the latest readings on the country's manufacturing and service sectors.