Post Session: Quick Review

Indian equity benchmarks traded in green throughout the day and ended the session on a strong note with Nifty closing above 9850 mark. The equity benchmarks made a gap-up opening and traded in fine fettle in early deals as traders took some encouragement with Finance Minister Arun Jaitley’s statement that Goods and Services Tax (GST) collections have exceeded estimates in the first month of the landmark levy’s rollout, despite a significant number of assessees not having filed returns yet. Jaitley added that the total collection under GST for July is pegged at Rs 92,283 crore. Extrapolating Budget targets, the central government’s July tax revenue should be Rs 48,000 crore and that of states Rs 43,000 crore, adding up to Rs 91,000 crore. Separately, the Finance Ministry has expressed its confidence of meeting the 3.2% fiscal deficit target for the financial year 2017-18, despite the low dividends from the Reserve Bank of India (RBI) and muted proceeds from stake sales in public sector enterprises till now. The RBI paid just Rs 30,659 crore to the government as dividend for 2016-17, which was much below the estimated Rs 58,000 crore. Some support also came with NITI Aayog’s statement that enhancing access to low-cost capital to businesses could serve as an important vehicle for improving the business environment, especially in poor states like Bihar.  

Meanwhile, Commerce Minister Nirmala Sitharaman said that exporters need help and hand holding as they face global headwinds and the government is looking at all options to support them, particularly small and medium players. The minister’s comments assume significance as India’s export growth slowed to eight-month low of 3.94 per cent in July, while the rupee is strengthening and interest rates not declining fast enough. Investors took note that the Reserve Bank of India (RBI) has directed banks to refer 50 dud accounts to bankruptcy court if they are unable to find a resolution in three months, in the second such list that the regulator has sent out in bid to clean up the bad corporate debt problem. The move will pinch banks even more as they make higher provisions on loans of companies referred to the insolvency process. 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 closed mostly in green, showing a rebound a day after a North Korean missile test over Japan. China’s state planning head said that the country can meet its 2017 economic growth targets but may struggle to meet its investment and foreign investment goals. The European markets were trading in green as North Korea jitters subsided. On the data front, UK consumer credit figures, euro zone sentiments and preliminary inflation data for Germany are all likely to be release out during market trade.

The BSE Sensex ended at 31640.49, up by 252.10 points or 0.80% after trading in a range of 31533.02 and 31727.98. There were 25 stocks advancing against 6 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 1.61%, while Small cap index was up by 1.33%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 2.62%, Oil & Gas up by 2.18%, Energy up by 2.14%, Basic Materials up by 1.92% and Realty up by 1.62%, while there were no losers on BSE. (Provisional)

The top gainers on the Sensex were Reliance Industries up by 2.09%, Adani Ports & Special Economic Zone up by 1.83%, HDFC up by 1.57%, Coal India up by 1.39% and Tata Steel up by 1.26%. (Provisional)

On the flip side, Mahindra & Mahindra down by 1.28%, Dr. Reddy’s Lab down by 0.42%, NTPC down by 0.27%, Cipla down by 0.19% and Infosys down by 0.15% were the top losers. (Provisional)

Meanwhile, India Inc, which was recovering from the demonetization move, has been hit by Goods and Services Tax (GST). Credit rating agency, ICRA in its latest report has said that the profitability of India Inc got hurt with the margins contracting by as much as 1.80% to 15.7% on a year-on-year basis on account of introduction of new tax regime.

As per the report, the aggregate revenues growth rate of 448 companies reduced to 5.3% in the preceding January-March period, as against growth rate of 8.3% in the quarter-ago period and 10.6% in the year-ago period and this has led to a major contraction in profit margins of India Inc. The rating agency further noted that companies’ rushing to clear inventory by offering discounts and lower primary sales ahead of the GST rollout, were the main reasons for fall in earnings.

ICRA also blamed recovery in raw material prices for contraction in earnings across few sectors, noting that sector-specific dynamics like increasing competitive pressure in telecom and regulatory hurdles in pharmaceuticals played a spoil sport.

The CNX Nifty ended at 9886.50, up by 90.45 points or 0.92% after trading in a range of 9850.80 and 9909.45. There were 40 stocks advancing against 11 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bosch up by 6.02%, Hindalco up by 4.07%, Indian Oil up by 3.67%, BPCL up by 3.35% and Vedanta up by 2.22%. (Provisional)

On the flip side, Tech Mahindra down by 1.38%, Mahindra & Mahindra down by 1.23%, Dr. Reddy’s Lab down by 0.44%, NTPC down by 0.36% and Lupin down by 0.33% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 17.62 points or 0.24% to 7,355.05, Germany’s DAX increased 52.87 points or 0.44% to 11,998.75 and France’s CAC increased 16.94 points or 0.34% to 5,048.86.

Asian equity markets ended mostly higher on Wednesday as the concerns triggered by North Korea's missile firing eased somewhat. North Korea said the launch of an intermediate-range ballistic missile over Japan was to counter US and South Korean military drills. While US President Donald Trump offered a surprisingly subdued response to the missile launch, the UN Security Council has condemned the missile provocation, but stopped short of imposing new sanctions or other specific measures to rein in Pyongyang. Gains in exporters on the back of a weaker yen and solid retail sales data helped Japanese shares recover all of the previous session's losses. Meanwhile, China stocks ended flat as strong gains in airline operators and resources firms were offset by weakness in banking stocks with investors awaiting first-half results for some of the country’s biggest banks.