Post Session: Quick Review

Indian equity benchmarks traded on a weak note throughout the day and ended the session with cut of around four tenth of a percent. The market breath was neutral with one stock advancing against every declining stock. The equity benchmarks made a somber start and traded in red in early deals as growing concerns over another test by North Korea kept investors across the globe on the edge. Sentiments also remained dampened with government saying that names of over 2.09 lakh firms have been struck off from register of companies for failing to comply with regulatory requirements and action has been initiated to restrict operations of their bank accounts. The Centre has also stepped up action against such entities by bringing in restrictions on the operation of their bank accounts by their existing directors and authorized representatives. Besides, cracking the whip, SEBI barred 19 domestic and foreign entities from securities markets for manipulation in issuances of global depository receipts and warned several others including FIIs. Separately, noting that work is still in progress to reform India's public-sector banks (PSBs), Reserve Bank of India’s (RBI) former governor Raghuram G Rajan said that one of the biggest challenge is cleaning up of their balance sheets. He also said that it is extremely important that the banks get back into the business of lending as that is holding up the economy at this particular point of time.

Investors took note that demonetization has hurt the informal economy and triggered a rush for distress labour under job guarantee scheme (MGNREGA), says Economic Survey-II, though the wages available under the scheme may also have helped contain rural unrest and a political backlash to some extent. The official document capturing the state of economy for 2016-17, noted that there was a 14-week stretch when demand for work surged before falling into a familiar groove following March, 2017. Separately, this year’s kharif harvest may be lower than 2016 because of floods in several states and lower planting of some crops. The output of pulses and oilseeds is expected to fall because of lower planting, while production of rice, the main kharif crop, is likely to be the same as last year as higher yields will offset lower sowing. The street shrugged off foreign brokerage report which highlighted that economic activity in the country lost some pace amid GST related disruptions but underlying growth momentum remains strong and the country may clock 6.7 per cent growth this fiscal.

On the global front, Asian markets closed mostly in red, as tension on the Korean peninsula weighed on sentiments. A poll showed that Japan’s economy likely grew at a slower pace than initially estimated in the second quarter, on expected downward revisions in capital spending growth. The European markets were trading in red on the eve of a European Central Bank meeting. The ECB’s latest interest rate decision is due on Thursday with no major policy changes expected. The euro zone monetary authority is unlikely to provide big hints on its strategy for eventually winding down, or tapering, its asset purchase program.

The BSE Sensex ended at 31671.85, down by 137.70 points or 0.43% after trading in a range of 31586.53 and 31727.85. There were 10 stocks advancing against 21 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.12%, while Small cap index was up by 0.35%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 0.84%, Basic Materials up by 0.55%, Energy up by 0.32%, Realty up by 0.17% and Utilities up by 0.05%, while Healthcare down by 1.36%, FMCG down by 1.10%, IT down by 0.59%, Consumer Durables down by 0.55% and TECK down by 0.51% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Coal India up by 1.30%, Reliance Industries up by 0.86%, Kotak Mahindra Bank up by 0.81%, NTPC up by 0.53% and Maruti Suzuki up by 0.40%. (Provisional)

On the flip side, Sun Pharma down by 3.73%, Tata Motors - DVR down by 2.46%, ITC down by 2.44%, Lupin down by 2.33% and Axis Bank down by 1.86% were the top losers. (Provisional)

Meanwhile, raising concerns over the performance of infra debt funds (IDFs) which are investment vehicles for facilitating the flow of long-term debt to the infrastructure sector, credit rating agency, Icra has said that IDFs have failed to grow even after two years due to lack of good projects and banks’ troubles on asset quality and tepid credit growth, noting that they are yet to come of age and make a significant impact in the infrastructure financing space.

The rating agency said that availability of few operational projects with track record of satisfactory performance of one year and banks’ reluctance to shed these operational projects have dampened the growth of IDFs business. Icra further noted that they are likely to remain marginal players over the medium term and in order to maintain prudent economic capital levels, it suggested that IDF-NBFCs should raise capital over medium term as they also scale up and portfolio mix evolves.

As per Icra’s report, the total credit for IDF-NBFCs- where the IDF is set up as a company-has grown slightly by 1.2 per cent of banks’ exposure to the infrastructure sector, by increasing to Rs 11,200 crore in March 2017 and following the same trend of slower growth pace, the assets under management for IDF-Mutual Funds - where the IDF takes trust route - stood at Rs 2,900 crore as of June 2017.

The CNX Nifty ended at 9915.50, down by 36.70 points or 0.37% after trading in a range of 9882.55 and 9931.55. There were 19 stocks advancing against 32 stocks declining on the index. (Provisional)

The top gainers on Nifty were Indiabulls Housing up by 1.95%, Hindalco up by 1.69%, Ultratech Cement up by 1.27%, Coal India up by 1.24% and GAIL India up by 0.91%. (Provisional)

On the flip side, Sun Pharma down by 3.63%, Bosch down by 3.29%, ITC down by 2.56%, Lupin down by 2.28% and Axis Bank down by 2.12% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 43.25 points or 0.59% to 7,329.67, Germany’s DAX decreased 16.92 points or 0.14% to 12,106.79 and France’s CAC decreased 13.91 points or 0.27% to 5,072.65.

Asian equity markets ended mostly lower on Wednesday as tensions between the US and North Korea persisted and investors kept an eye on Hurricane Irma, which is bearing down on the Caribbean islands and Florida, just days after Harvey disrupted refineries along the Texas coast. Also, the European Central Bank meets on Thursday and it isn't entirely clear whether the central bank will send a new policy message regarding the timing of an exit from its ultra-loose monetary policy. Japanese shares ended almost on a flat note even as the dollar edged lower against the yen to hover near a 4-1/2-month low amid the simmering North Korea tensions. Meanwhile, Chinese shares pared early losses to end little changed on expectations that Beijing will step up reform of state-owned enterprises.