Post Session: Quick Review

Indian equity benchmarks traded on a lackluster note throughout the day and ended the session with cut of more than three tenth of a percent, with Nifty slipping below 10,350 mark. The market breadth was in favour of declines with one stock advancing against every two declining ones. The benchmarks made a cautious start and traded tad below neutral lines in early deals amid weak global cues and as investors closely watched crude oil prices and corporate earnings. Later, some buying crept in as net direct tax collections, which are made up of personal and corporate taxes, was up by 15.2 percent to Rs 4.39 lakh crore in the first seven months (April to October) of the financial year 2018. According to the Ministry of Finance, the collection up to October 2017 indicates that 44.8 percent of the annual budget target of direct taxes (Rs 9.8 lakh crore) had been achieved. Separately, Arvind Panagariya has said that observing the recent increase in India’s ease of doing business ranking by the World Bank was long overdue. He added that the country as a place for business was a lot more attractive than its ranking suggests. Additionally, the street took note that Private Equity (PE) and Venture Capital (VC) investments in India touched a new high of $21.8 billion in 2017 till date (January-October), surpassing the previous record of $19.6 billion in 2015.

Selling crept in the second half of the day, as investors booked profits. Meanwhile, a private survey highlighted that India has slipped to the 7th position this quarter in business optimism ranking. Last quarter, India was ranked second in the survey. India has also slipped from its 1st position last quarter to 8th position this time in terms of revenue expectations. In terms of profitability, confidence has dropped with only 54 percent respondents showing optimism as against 69 percent in the last quarter. Separately, there was cautiousness in the India Inc too with the Insolvency and Bankruptcy Board of India (IBBI) tightening the due diligence framework on resolution applicants, including promoters. Corporate resolution applicants including promoters will now be put through a stringent test as regards their credibility and creditworthiness before a resolution plan is approved by the committee of creditors. Select real estate sector stocks were under pressure on private report that post demonetization and structural reforms, business sentiments in the real estate sector has hit the lowest levels of optimism, especially in the northern and western markets of the country and the next 12 to 18 months are likely to be the ‘under observation’ period for the sector.

On the global front, Asian markets closed mostly in red. Investors remained cautious, in an address to the South Korean parliament, Trump addressed tensions with North Korea, saying that it has interpreted America’s past restraint as weakness. China reported a trade balance surplus of $26.62 billion for October, well narrower the $39.50 billion expected, while exports rose 6.9% and imports jumped 17.2%. The European markets were trading mostly in green as investors continued to focus on corporate earnings reports. The Bank of England said that British companies are likely to keep on increasing investment at a modest pace over the next year before weaker increases over the following two years.

Back home, telecom stocks displayed mixed reactions after Fitch report enlightened that India’s financially stressed telecom industry is likely to see mid-single-digit percentage revenue growth in 2018, helped by increased data consumption and higher blended tariffs after the slump in 2017. The telecom industry, weighed down by nearly Rs 5 lakh-crore of debt, had for the first time registered a de-growth of 2% in FY17, as it has been battling fierce price competition triggered by the entry of Reliance Jio just over a year back.

The BSE Sensex ended at 33251.91, down by 118.85 points or 0.36% after trading in a range of 33157.68 and 33484.70. There were 11 stocks advancing against 20 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.65%, while Small cap index was down by 0.81%. (Provisional)

The few gaining sectoral indices on the BSE were IT up by 0.50%, TECK up by 0.18% and Capital Goods up by 0.08%, while Telecom down by 1.37% Energy down by 1.35%, Metal down by 1.33%, Oil & Gas down by 1.10% and Basic Materials down by 1.05% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Axis Bank up by 3.45%, Asian Paints up by 2.24%, Sun Pharma up by 2.02%, Cipla up by 1.92% and Coal India up by 1.23%. (Provisional)

On the flip side, Bharti Airtel down by 3.75%, Tata Motors down by 2.97%, Lupin down by 2.18%, SBI down by 2.16% and Tata Motors - DVR down by 2.10% were the top losers. (Provisional)

Meanwhile, with a view to ensure the Corporate Insolvency Resolution Process results in a credible and viable Resolution Plan, the Insolvency and Bankruptcy Board of India (IBBI) has enacted stricter norms for the approval process of resolution plans submitted under the insolvency law. The amended rules now require an applicant’s antecedents and credit worthiness to be checked. The amendments in the corporate person’s resolution process come in the wake of a rising number of cases filed under the insolvency law and subsequent concerns in certain quarters on whether the promoter of a company can submit a resolution plan.

The amendments make clear that promoters can submit a resolution plan, provided they are subjected to strict disclosure requirements - the antecedents, credit worthiness and credibility of a resolution applicant, including promoters will now be considered by the committee of creditors. The rules now make it incumbent upon the resolution professional to ensure that the plan presented contains relevant details to assess credibility of the resolution applicants. The resolution applicants' details in terms of convictions, disqualifications, criminal proceedings, categorisation as wilful defaulter as per RBI guidelines, debarment imposed by SEBI, if any, would have to be disclosed. Information about any transaction with the corporate debtor in the last two years should also be furnished.

Under the Insolvency and Bankruptcy Code, which is implemented by the IBBI, any resolution plan has to be cleared by the committee of creditors. The resolution process is to be completed within 180 days and the deadline could be extended. Once an application is admitted by the National Company Law Tribunal (NCLT) under the Code, then an insolvency resolution professional is appointed who would take care of the company concerned during the whole process.

The CNX Nifty ended at 10312.65, down by 37.50 points or 0.36% after trading in a range of 10285.50 and 10384.25. There were 24 stocks advancing against 26 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tech Mahindra up by 4.12%, Axis Bank up by 3.52%, Asian Paints up by 2.38%, Cipla up by 2.25% and Sun Pharma up by 2.15%. (Provisional)

On the flip side, Vedanta down by 3.93%, Bharti Airtel down by 3.61%, Tata Motors down by 2.81%, Yes Bank down by 2.53% and Lupin down by 2.33% were the top losers. (Provisional)

The European markets were trading mostly in green; UK’s FTSE 100 increased 2.85 points or 0.04% to 7,515.96, Germany’s DAX increased 7.18 points or 0.05% to 13,386.45, while France’s CAC decreased 4.49 points or 0.08% to 5,476.15.

The Asian markets made mostly a lower closing on Wednesday, the mood in the regional markets remained cautious since beginning as geopolitical worries resurfaced in the Middle East and commodity prices weakened after the release of Chinese trade data. Chinese markets too gave up earlier gains to end on a flat note as traders digested mixed trade data. Chinese exports climbed an annual 6.9 percent in dollar terms, while the Imports surged 17.2 percent from a year ago to beat estimates, leaving a trade surplus of $38.2 billion for the month. Japanese market ended lower as escalating tensions between OPEC members Saudi Arabia and Iran helped spur demand for yen.