Post Session: Quick Review

Indian equity benchmarks traded on a lackluster note throughout the day and ended the session with minor cut. The equity benchmarks made a cautious start and traded slightly in red in early deals as traders remained on sidelines ahead of meeting of Prime Minister Narendra Modi with Finance Minister Arun Jaitley and other top officials to take stock of the situation and the discussion for remedial measures to bolster growth. PM will analyze the economic situation with Jaitley and secretaries of the finance ministry and explore options to stimulate the economy. Some pessimism also crept in on reports that India could be forced to cut spending on key infrastructure such as railways and highways as lower-than-expected tax collections and sluggish growth have upset the government’s budget calculations. Tax receipts were about $7.8 billion in July - a little over half the monthly target - mostly because millions of firms failed to comply with the new Goods and Services Tax (GST) system that harmonizes all state and federal sales taxes but is still a work in progress. The big worry is that economic growth, which slipped to a three-year low in the last quarter, could take a further hit if the public spending that largely underpinned expansion were to be slashed.

Separately, a foreign brokerage report highlighted that India’s current account deficit is expected to widen to 1.5% of GDP in 2017, from 0.6% in 2016, but net capital flows are expected to more than fund this deficit. The report added that the wider current account deficit in the second quarter and still- elevated trade deficit so far in July-August suggest that the current account deficit is set to widen sharply this year. Meanwhile, former Prime Minister Manmohan Singh warned of demonetization and hasty implementation of GST adversely impacting GDP growth. Singh, who had previously cautioned against note ban shaving off 2% of GDP, said demonetization of 86% of the currency in circulation and the hasty implementation of the GST have impacted informal and small scale sectors, which account of about 40% of the $2.5-trillion economy.

The downside was, however, capped on Moody’s report that India is likely to see increased Foreign Direct Investment (FDI) inflows on the back of reforms such as introduction of the Goods and Services Tax (GST) and the bankruptcy code. The report added that FDI in India grew by 18% during 2016 to touch $46 billion. Separately, World Economic Forum enlightened that India is the fourth fastest growing economy in the world. Besides, the private report stating that India will emerge as an economic superpower supplying more than half the increase in Asia’s potential workforce over the coming decade in a developing scenario where demography is shifting the balance of power in Asia, also supported the indices.

On the global front, Asian markets closed mostly in red, amid traders awaiting a Federal Reserve meeting for clues on US monetary policy. China’s new home prices rose in August at the slowest pace in seven months and fell or leveled off in more cities as government cooling measures dampened speculation, though there were no signs of a sharper correction that could damage the economy. The European markets were trading mostly in green. A steady flow of corporate news fueled strong price swings on a number of stocks.

Back home, shares of oil marketing companies (OMCs) Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) closed in green after credit rating agency Moody’s in its report enlightened that higher sales, improved margins and lower dividend payments will improve credit metrics of OMCs, which weakened in the previous year.

The BSE Sensex ended at 32398.31, down by 25.45 points or 0.08% after trading in a range of 32358.63 and 32524.11. There were 15 stocks advancing against 16 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.15%, while Small cap index was up by 0.35%. (Provisional)

The top gaining sectoral indices on the BSE were Utilities up by 1.22%, Oil & Gas up by 1.22%, Telecom up by 0.81%, Auto up by 0.68% and Industrials up by 0.56%, while Metal down by 0.57%, Healthcare down by 0.40%, Capital Goods down by 0.39%, Consumer Durables down by 0.35% and Energy down by 0.01% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Motors up by 4.72%, Tata Motors - DVR up by 3.41%, Kotak Mahindra Bank up by 1.60%, NTPC up by 0.54% and Cipla up by 0.52%. (Provisional)

On the flip side, Coal India down by 2.47%, Sun Pharma down by 1.31%, HDFC down by 1.00%, SBI down by 0.87% and Larsen & Toubro down by 0.80% were the top losers. (Provisional)

Meanwhile, pointing to the various reform measures, like introduction of a goods and services tax (GST) and the bankruptcy code, global credit rating agency, Moody's Investors Service in its latest report has said these reforms taken by the government may attract higher levels of foreign direct investment (FDI) in India.

In its report titled ‘Asia's structural reforms could get effectiveness boost from stronger global demand’, the rating agency also praised government’s initiative of raising FDI cap in a number of sectors along with steps taken towards the ease of doing business and noted that FDI has already increased substantially, albeit from a low base.

Along with hopes of rise in India’s FDI, Moody's Investors Service is also expecting increment in Indonesia’s FDI on the back of their government’s reforms over the past few years. The report further added that a robust global environment is likely to amplify the positive impact of the reforms on these two countries’ attractiveness to foreign investors.

Besides, the report found the global demand has been strengthening since the end of last year which has buoyed Asia Pacific’s trade-reliant economies. However, it said that faster export growth has yet to feed into a sustainable acceleration in output growth.

The CNX Nifty ended at 10149.35, down by 3.75 points or 0.04% after trading in a range of 10129.95 and 10178.95. There were 23 stocks advancing against 28 stocks declining on the index. (Provisional)

The top gainers on Nifty were GAIL India up by 5.43%, Tata Motors up by 4.77%, Tata Motors - DVR up by 3.36%, Bharti Infratel up by 2.30% and Kotak Mahindra Bank up by 1.91%. (Provisional)

On the flip side, Coal India down by 2.38%, Aurobindo Pharma down by 2.26%, Sun Pharma down by 1.26%, Hindalco down by 1.20% and SBI down by 1.02% were the top losers. (Provisional)

The European markets were trading mostly in green; UK’s FTSE 100 increased 15.6 points or 0.22% to 7,268.88, France’s CAC increased 5.11 points or 0.1% to 5,234.43, while Germany’s DAX decreased 9.8 points or 0.08% to 12,549.59.

Asian equity markets ended mostly lower on Tuesday, even as Japanese shares surged as traders returned to their desks after a long holiday weekend. Underlying sentiments remained cautious as investors awaited clues from the Fed and BoJ meetings. At a two-day policy meeting beginning later today, the Federal Reserve is expected to announce details on its trillions balance sheet unwinding. The Bank of Japan holds its regular policy meeting on Thursday with many expecting no change in its monetary policy stance. Chinese stocks fell slightly as liquidity worries resurfaced before the National Day holiday. Japanese shares hit its highest close in more than two years as investors drew confidence from a weakening yen and gains on Wall Street, while hopes of a snap election underpinned the market.