Benchmarks end lower on Wednesday; Nifty holds 10,300 mark

Indian equity benchmarks ended the Wednesday’s trade in red terrain and key gauges went home with around half a percent cut amid feeble global cues. After a cautious start, markets traded choppy  for most part of the day, as there was some cautiousness in the India Inc 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. Selling, which emerged in last leg of trade, mainly dragged the benchmarks lower to end near intraday lows, though losses remained restricted near their support levels of 10,300 (Nifty) and 33,200 (Sensex). Sentiments also remained down beat on a private survey highlighting 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.

Traders lacking any supportive cues were eyeing the movement of international crude oil prices, which may lift inflation and hit economic growth. Traders largely overlooked report that net direct tax collections rose by 15.2 percent to Rs 4.39 lakh crore between April and October this fiscal. This amounts to 44.8 percent of the total Budget estimate of direct taxes of Rs 9.8 lakh crore for 2017-18. Arvind Panagariya’s statement that the country as a place for business is a lot more attractive than its ranking suggests, too failed to boost investors’ confidence. Market participants also failed to get any solace with report 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.

Weakness in European counters too dampened sentiments, with CAC, DAX and FTSE trading lower in early deals amid 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. Asian markets ended mostly in red, as 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.

Back home, there was some cautiousness due to further weakness of rupee too, which after witnessing a massive plunge of 35 paise to a fresh one-week low was showing further weakness on increased demand for the US currency from importers. On the sectoral front, telecom stocks edged lower, despite the Department of Telecommunications (DoT) planning to finalise the new telecom policy by February 2018. Talking about BharatNet, the flagship project of the government to provide broadband services in rural and remote areas, the government said telecom service providers (TSP) have come forward for utilising the BharatNet connectivity. Select real estate sector stocks were under pressure on private report that post demonetization and structural reforms, business sentiment 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.

Finally, the BSE Sensex declined 151.95 points or 0.46% to 33,218.81, while the CNX Nifty was down by 47.00 points or 0.45% to 10,303.15.

The BSE Sensex touched a high and a low of 33,484.70 and 33,157.68, 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 declined 0.77%, while Small cap index was down by 0.96%.

The only gaining sectoral indices on the BSE were IT up by 0.39% and TECK was up by 0.09%, while Metal down by 1.55%, Energy down by 1.50%, Telecom down by 1.49%, Oil & Gas down by 1.30% and PSU down by 1.21% were the top losing indices on BSE.

The top gainers on the Sensex were Axis Bank up by 3.41%, Asian Paints up by 2.51%, Cipla up by 2.07%, Sun Pharma up by 1.89% and Bajaj Auto up by 1.26%. On the flip side, Bharti Airtel down by 3.73%, Tata Motors down by 2.92%, SBI down by 2.35%, Lupin down by 2.09% and ICICI Bank down by 2.05% were the top losers.

Meanwhile, in a move to protect domestic players against cheap imports, India has initiated an anti-dumping investigation against import of a certain kind of paper from Indonesia, Thailand and Singapore following complaints from some domestic industry. The West Coast Paper Mills, Tamil Nadu Newsprint and Papers, Ballarpur Industries and JK Paper had submitted an application with the Directorate General of Anti-dumping and Allied Duties (DGAD) for initiation of anti-dumping investigation into imports of 'Uncoated Paper' from the three countries.

In a notification, DGAD said that it has found sufficient prima facie evidence of dumping of such paper from these countries. This paper is used as a photocopy or copy paper. It also said that the authority hereby initiates an investigation into the alleged dumping, and consequent injury to the domestic industry to determine the existence, degree and effect of the alleged dumping and recommend the amount of anti-dumping duty, which if levied, would be adequate to remove the injury to the domestic industry. The period of investigation covers April 2016 to June 2017 (15 months). However, for the purpose of injury investigation, the period will cover the data from 2013-2016.

Countries carry out anti-dumping probe to determine whether their domestic industries have been hurt because of a surge in cheap imports. As a counter measure, they impose duties under the multilateral regime of WTO. The duty is aimed at ensuring fair trading practises and creating a level-playing field for domestic producers vis-a- vis foreign producers and exporters. India has already imposed anti-dumping duty on several products to tackle cheap imports from countries, including China.

The CNX Nifty traded in a range of 10,384.25 and 10,285.50. There were 22 stocks in green as against 27 stocks in red, while one stock remained unchanged on the index.

The top gainers on Nifty were Tech Mahindra up by 4.14%, Axis Bank up by 3.91%, Asian Paints up by 2.33%, Cipla up by 2.21% and Sun Pharma up by 2.16%. On the flip side, Vedanta down by 3.65%, Bharti Airtel down by 3.51%, Tata Motors down by 2.51%, Lupin down by 2.37% and Yes Bank down by 2.34% were the top losers.

European markets were trading in red; France’s CAC decreased 14.61 points or 0.27% to 5,466.03, Germany’s DAX slipped 12.43 points or 0.09% to 13,366.84 and UK’s FTSE 100 was down by 1.23 points or 0.02% to 7,511.88.

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.