Post Session: Quick Review

Indian equity benchmarks traded on a firm note for most part of the day but ended the session mixed. The last hour of trade dragged the markets lower erasing almost all of their early gains. The equity benchmarks traded in fine fettle in early deals, as traders took some support with report that India’s factory output expanded by a modest 1.2% in July, 2017, after contracting 0.17% in June, possibly on the back of some restocking by companies following the July 1 goods and services tax (GST) rollout and a marginal uptick in the core sector. Investors took note of the joint report by ASSOCHAM-EY, which highlighted that if India has to maintain a sustained gross domestic product (GDP) growth of 9-10 per cent per annum, it is crucial that the manufacturing sector grows steadily at 14-15 per cent per annum over the next three decades. The report added that while the Goods and Services Tax (GST) has to a large extent addressed prevailing regulatory issues, states across India must individually look into bureaucratic obstacles along with other obstructive regulations and policies on priority, based on their own manufacturing goals.

Public sector banks were buzzing on reports that the government is exploring the sale of capitalization bonds to meet the burgeoning capital requirements of state-run lenders, mostly the weaker ones that are finding it difficult to raise resources from the market. Select dairy stocks were buzzing after the Cabinet Committee on Economic Affairs (CCEA) on Tuesday approved a Dairy Processing and Infrastructure Development Fund with an outlay of Rs 10,881 crore for 2017-18 to 2028-29 to boost the dairy sector. Telecom stocks displayed mixed reactions on report that the Telecom Commission (TC) has asked the inter-ministerial panel looking into the health of the telecom sector to consider ways for giving greater and immediate relief to telcos, which are facing high debt levels and falling revenues.

Selling crept in final hour of trade after a slump in oil marketing companies like Indian Oil Corporation, Bharat Petroleum Corporation (BPCL) and Hindustan Petroleum Corporation (HPCL) on report that the government is unlikely to pass on further rise in fuel prices to the consumers due to higher inflation. The report also highlighted that Finance Ministry is unlikely to roll back fuel excise tax hike due to fiscal constraints. Separately, a private report based on the latest annual earnings, showed that India’s corporate debt rose to a seven-year high at the end of March. More than a fifth of large companies did not earn enough to pay interest on their loans and the pace of new loans fell to the lowest in more than six decades.

On the global front, Asian markets closed mostly in red. Japanese wholesale prices rose at the fastest annual pace in nearly nine years in August as robust Chinese demand boosted commodity prices, offering glimmers of hope consumer inflation will accelerate toward the central bank’s 2 percent target. The European markets were trading mostly in green. The jobless rate in the UK unexpectedly fell in July while wage inflation registered a weaker-than-expected increase. The Office for National Statistics said that the rate of unemployment unexpectedly dropped to 4.3% in July, from the previous month’s reading of 4.4%.

Back home, Jubilant Foodworks’ closed in red after global financial research firm raised concerns on bugs being found in Domino’s Pizza’s seasoning sachets. The firm said that live bugs were found in the seasoning sachet and such an incident could potentially be serious for Domino’s franchise in India. Reliance Communications (RCom) closed in red on reports that Ericsson India has filed insolvency case against RCom. Ericsson India is against RCom- Aircel merger due to past dues.

The BSE Sensex ended at 32221.70, up by 63.04 points or 0.20% after trading in a range of 32126.77 and 32348.30. There were 13 stocks advancing against 18 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index declined 0.63%, while Small cap index was down by 0.48%. (Provisional)

The top gaining sectoral indices on the BSE were Healthcare up by 1.46%, Energy up by 0.59%, IT up by 0.14%, Bankex up by 0.13% and TECK was up by 0.13%, while Oil & Gas down by 1.56%, PSU down by 1.29%, FMCG down by 1.01%, Metal down by 0.92% and Basic Materials was down by 0.91% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Sun Pharma up by 5.27%, Reliance Industries up by 3.85%, Dr. Reddy’s Lab up by 2.37%, Lupin up by 1.39% and Tata Motors up by 0.90%. (Provisional).

On the flip side, ITC down by 2.18%, Cipla down by 1.14%, HDFC down by 0.95%, Hero MotoCorp down by 0.70% and Wipro down by 0.65% were the top losers. (Provisional)

Meanwhile, signaling lower spending, India Inc’s foreign direct investment (FDI) dropped 14.82 per cent to $1339.26 million during August 2017 from $1572.23 million in the same month of last year. The outward foreign direct investment declined 24.25 per cent in August 2017 as compared to $1768.02 million in July 2017.

According to the data released by the Reserve Bank of India, of the total investments in foreign ventures by Indian companies overseas, $944.14 million was in the form of issuance of guarantees, $184.44 million as loan and $210.68 million was part of equity investment.

Of all leading investors, Wipro put in $500 million into a wholly owned unit in the US, while Sintex–BAPL invested $102.50 million in a joint venture in Netherlands. Besides, Tata Communications invested $78.75 million in a wholly owned subsidiary in Singapore and ONGC Videsh invested $55.54 million in various joint ventures in Myanmar, Russia and Vietnam.

The CNX Nifty ended at 10082.70, down by 10.35 points or 0.10% after trading in a range of 10063.15 and 10131.95. There were 20 stocks advancing against 31 stocks declining on the index. (Provisional)

The top gainers on Nifty were Sun Pharma up by 4.90%, Tata Power up by 4.88%, Reliance Industries up by 3.25%, Dr. Reddy’s Lab up by 2.50% and Bank of Baroda up by 1.37%. (Provisional)

On the flip side, BPCL down by 6.70%, Indian Oil Corporation down by 4.67%, ITC down by 2.36%, Indiabulls Housing down by 1.67% and Eicher Motors down by 1.53% were the top losers. (Provisional)

The European markets were trading mostly in green; Germany’s DAX increased 5.35 points or 0.04% to 12,530.12, France’s CAC increased 2.76 points or 0.05% to 5,211.77, while UK’s FTSE 100 decreased 34.57 points or 0.47% to 7,366.12.

Asian equity markets ended mostly lower on Wednesday, despite US stocks hitting record highs overnight on expectations that a tax reform plan will get passed this year. Japanese shares ended higher as the dollar extended its sharp rally against the yen on easing concerns over North Korea and US hurricanes. Chinese shares posted modest gains to finish near 20-month highs after a survey showed investors were optimistic about economic conditions in August.