Benchmarks end flat as geo-political concerns resurface

Indian equity benchmarks ended the choppy day of trade on flat note with negative bias on Wednesday, as investors girded for another round of geopolitical tensions after US President Donald Trump threatened to annihilate North Korea. Frontline gauges swung between green and red throughout the day, as traders remained cautious ahead of outcome of two-day Fed policy review later in the day. Sentiments also remained dampened with SBI Research stating that economy has been on a downslide since September 2016 and the slowdown is real and not technical, calling for more public spending to arrest the slide. The report advocated upping of spends by the government as a solution to the problem at hand. Meanwhile, exporters fearing that a staggering Rs 65,000 crore could get stuck in GST refunds have asked the government to fast-track the refund process and avoid further deterioration in their liquidity situation. The 22nd meeting of the GST Council, chaired by Union Finance Minister Arun Jaitley, will be held on October 6 to deliberate on GSTN glitches and ironing out issues faced by exporters.

However, traders took some solace with report that the government may soon unveil a package of measures to speed up growth, generate employment, lift exports and step up investment in infrastructure. A broad framework to boost the economy was discussed in a meeting of ministers and officials chaired by finance minister Arun Jaitley late Tuesday evening as the government grappled with a slump in growth. Traders also get some sense of relief with World Bank India chief Junaid Ahmad’s statement that effective implementation of the new tax regime will help the economy achieve 8% plus growth and described GST a ‘tectonic shift’. Junaid Ahmad, further highlighting the positive impact of GST, said that the economic corridors of India will change on the back of the new tax regime.

On the global front, European markets made weak opening and trading flat in early deals, with rate-sensitive banking shares edging lower. British retail sales unexpectedly surged in August, boosting the chance the Bank of England will raise interest rates at its next meeting. Asian markets closed mixed, ahead of a policy decision by the US Federal Reserve. Booming shipments of cars and electronics in August drove up Japan’s exports at the fastest pace in nearly four years, further evidence that overseas demand is strong enough to support healthy economic growth.

Back home, steel stocks showed shine after ICRA in its report highlighted that domestic steel firms will see improved profitability in near term. A 14% increase in domestic steel prices since June 2017, led by a sharp recovery in international steel prices and growth in domestic demand in the April-August period has brought much-needed cheer in the steel sector. Select tyre stocks remained on buyers’ radar, as government imposed anti-dumping duty on import of certain type of radial tyres used in buses and trucks to protect domestic manufacturers from below cost shipments from China for five years. Telecom stocks showed mixed trend as the Telecom Regulatory Authority of India (TRAI) has more than halved the interconnect usage charge (IUC) from October 1 and said the fee will be scrapped from 2020, in a move that it said would benefit consumers. IUC has been reduced to 6 paise a minute from 14 paise a minute and to zero starting January 1, 2020, based on the view that costs incurred by operators will drop.

Finally, the BSE Sensex slipped 1.86 points or 0.01% to 32,400.51, while the CNX Nifty was down by 6.40 points or 0.06% to 10,141.15.

The BSE Sensex touched a high and a low of 32,499.88 and 32,383.82, respectively and there were 13 stocks on gaining side as against 18 stocks on losing side on the index.

The broader indices ended in red; the BSE Mid cap index slipped 0.07%, while Small cap index was down by 0.14%.

The top gaining sectoral indices on the BSE were Capital Goods up by 0.54%, Healthcare up by 0.23%, FMCG up by 0.15%, Energy up by 0.07% and Industrials was up by 0.01%, while Telecom down by 0.77%, Auto down by 0.69%, Consumer Durables down by 0.66%, Consumer Discretionary Goods & Services down by 0.49% and Utilities was down by 0.46% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddy’s Lab up by 3.33%, Tata Steel up by 1.64%, ITC up by 1.27%, Wipro up by 1.07% and SBI up by 1.03%. On the flip side, Hero MotoCorp down by 2.29%, Tata Motors down by 1.98%, Sun Pharma down by 1.96%, Hindustan Unilever down by 1.66% and Power Grid down by 1.35% were the top losers.

Meanwhile, the Information Technology (IT) trade body, the National Association of Software and Services Companies (NASSCOM) has said that resumption of fast processing of applications filed under H1-B work visa programme by the United States (US) will help Indian IT firms, who are the biggest users of these visas, to efficiently conduct their business even as they continue to focus on reducing their reliance on visas.

Nasscom President R Chandrasekhar has said that over the last few years, the applications for work visas by Indian IT firms have halved as the companies are leveraging new technologies to reduce dependence on visas to send workers to client sites. He also said that this is certainly a welcome move and they were expecting this to come. He noted that, usually when priority visa processing is suspended, it is done for 2 months or so and this time, it was more, which was different. The US has resumed fast processing of H-1B work visas in all categories subject to Congress-mandated limit, five months after it was suspended temporarily to handle the huge rush of applications for the work visas popular among Indian IT professionals.

R Chandrasekhar has explained that the premium processing route is important because for special skill sets, it is difficult to anticipate the requirements in advance and file applications. When a petitioner requests the agency’s premium processing service, the US citizenship and immigration services (USCIS) guarantees a 15-day processing time. If the 15-day processing time is not met, the agency will refund the petitioner’s premium processing service fee and continue with expedited processing of the application.

The CNX Nifty traded in a range of 10,171.05 and 10,134.20. There were 20 stocks in green as against 31 stocks in red on the index.

The top gainers on Nifty were Dr. Reddy’s Lab up by 3.72%, Bank of Baroda up by 2.46%, Tata Steel up by 1.63%, ITC up by 1.44% and ONGC up by 1.24%. On the flip side, BPCL down by 2.45%, Hero MotoCorp down by 2.39%, Tata Motors down by 2.15%, Ambuja Cement down by 2.12% and Sun Pharma down by 1.81% were the top losers.

European markets were trading flat; UK’s FTSE 100 rose 3.85 points or 0.05% to 7,279.10 and France’s CAC was up by 6.3 points or 0.12% to 5,243.74, while Germany’s DAX was down by 5.15 points or 0.04% to 12,556.64.

Asian equity markets ended mixed on Wednesday following positive overnight cues from Wall Street and Europe. Investors adopted a cautious stance ahead of the US Federal Reserve's monetary policy decision due later in the day, with many expecting no change in interest rates. That said, the accompanying statement may offer the details of how the central bank plans to start shrinking its $4.5 trillion balance sheet. Chinese stocks ended higher amid optimism that Beijing will maintain stability in financial markets ahead of next month's key party congress meeting. Japanese shares closed on a flat note as investors digested upbeat exports data and the yen went into a consolidation mode ahead of the Bank of Japan's (BoJ) monetary policy meeting, scheduled Thursday.