Post Session: Quick Review

Indian equity benchmarks traded on a weak note and ended the session with cut of around a percent. The equity market is not getting much support from the macros and the fear of higher valuations without a meaningful recovery in earnings has now started to grip market participants. The market breath was in favour of declines with one stock advancing against every two declining ones.  The benchmarks made a positive start but slipped into red terrain with frontline gauges breaching their crucial 10,300 (Nifty) and 33,300 (Sensex) levels.  The sentiments were dampened as India’s Industrial production growth slowed down to 3.8% in the month of September 2017, as against 5.7% in September 2016, after hitting nine-month high of 4.3% in August 2017. The slowdown was mainly due to subdued performance of the manufacturing sector, coupled with contraction in output of consumer durables. Manufacturing sector, which accounts for more than three-fourths of the entire index, slowed to 3.4% in September, from 5.8% in the same month previous year. Separately, investments in the Indian capital market through participatory notes (P-notes) plunged to an over eight-year low of Rs 1.23 lakh crore at September-end in view of stringent norms put in place by regulator Securities and Exchange Board of India (SEBI). According to SEBI data, the total value of P-notes investments in Indian markets - equity, debt and derivatives - slumped to Rs 1,22,684 crore at September-end after hitting seven-and-a-half year low of Rs 1,25,037 crore at the end of August.

Meanwhile, IT stocks were buzzing in today’s trade as Gartner highlighted in its report that IT spending in Indian banking and securities firms is expected to grow by 11.7 per cent to reach $9.1 billion this year, driven by investments in digital payments infrastructure. It added that the transition of the Indian banking sector to a cashless society is creating many opportunities of technology investments into digital payments infrastructure. Mixed reactions were witnessed in aviation sector stocks after a report by global consultancy and research firm Centre for Asia Pacific Aviation (CAPA), said that more than 150 million passengers are expected to take flights from Indian airports in the next financial year (2018-19), making the country the world’s third largest aviation market for departures.

Select stock specific action was witnessed on account of quarterly results. Reliance Communications (RCom) tumbled on huge Q2 losses and delays in its strategic debt restructuring. The telecom operator, which decided to shut down its 2G and 3G services and concentrate on working as a mobile virtual network operator (MVNO), posted a consolidated loss of Rs 2,709 crore for the September quarter. Idea Cellular closed in red on back of poor Q2 numbers. The company in the quarter ended September 2017 (Q2FY18) has reported loss of Rs 1106.8 crore against profit Rs 91.5 crore in the same quarter last fiscal. The company’s revenue was down 8.6 percent at Rs 7,465 crore against Rs 8,166.5 crore. The average revenue per user was at Rs 132 against Rs 141. Larsen and Toubro (L&T) closed in red as investors negatively reacted to the company’s tepid order inflow guidance. The company has maintained its full year revenue growth guidance of 12% but won’t be meeting order inflow guidance 12-14%.

On the global front, Asian markets closed mostly in red, with Japan’s Nikkei 225 index ending lower for the fourth straight session. Hong Kong’s trade-reliant economy posted slower growth in the third quarter, but strong consumption and rebounding exports led the government to nudge up its growth outlook for 2017. Supported by improving retail sales, a rebound in mainland tourist arrivals and strong global trade, the economy grew a seasonally-adjusted 0.5% in the third quarter. That compared with upwardly revised 1.1% growth previously. The European markets were trading mostly in red, as disappointing company updates weighed on European shares, while a weaker pound helped the FTSE outperform. The French group lowered its 2018 earnings and cash flow forecasts due to lower than expected power consumption, lower availability of some of its nuclear reactors in early 2018 and a drop in capacity compensation in Britain.

The BSE Sensex ended at 33015.96, down by 298.60 points or 0.90% after trading in a range of 32999.98 and 33417.30. There were just 6 stocks advancing against 25 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.19%, while Small cap index was down by 0.45%. (Provisional)

The only gaining sectoral index on the BSE was IT up by 0.22%, while Telecom down by 2.18%, Consumer Durables down by 1.90%, Metal down by 1.84%, Capital Goods down by 1.55% and Realty down by 1.43% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were TCS up by 2.28%, Mahindra & Mahindra up by 1.12%, Sun Pharma up by 0.89%, Kotak Mahindra Bank up by 0.33% and NTPC up by 0.20%. (Provisional)

On the flip side, Adani Ports & Special Economic Zone down by 4.38%, ONGC down by 3.75%, Coal India down by 3.13%, HDFC down by 2.17% and Larsen & Toubro down by 1.90% were the top losers. (Provisional)

Meanwhile, lauding the government’s move to cut Goods and Services Tax (GST) rates on over 200 items, the Confederation of All India Traders (CAIT) has said that the move will be a game changer in simplifying the tax regime and encourage its wider adoption. It added that the move will also provide a big relief to traders who were depressed lot post GST implementation.

CAIT further noting effects of the move on the government’s revenue said that there will be a loss of about Rs 34,000 crore due to this. However, traders' body ensured that the trading community will compensate for such losses by making all efforts to widen the tax net base, if it is taken in confidence and various procedures are eased. CAIT while listing the move’s benefits for the industry also pointed on non- performance of the GST portal and expressed a need to look on this issue immediately.

The GST Council in its 23rd meeting, slashed the tax rate on 178 items from 28% to 18%. Only 50 items have been left in the 28% bracket that include products in luxury and sin goods category and some with large revenue implications such as tobacco products, automobile, washing machine and air-conditioners.

The CNX Nifty ended at 10223.20, down by 98.55 points or 0.95% after trading in a range of 10216.25 and 10334.15. There were 13 stocks advancing against 37 stocks declining on the index. (Provisional)

The top gainers on Nifty were TCS up by 1.76%, Mahindra & Mahindra up by 1.30%, Sun Pharma up by 1.14%, UPL up by 0.67% and HPCL up by 0.37%. (Provisional)

On the flip side, Adani Ports & Special Economic Zone down by 4.52%, Aurobindo Pharma down by 4.32%, ONGC down by 3.58%, Coal India down by 3.52% and Bharti Infratel down by 3.22% were the top losers. (Provisional)

The European markets were trading mostly in red; Germany’s DAX decreased 17.42 points or 0.13% to 13,110.05, France’s CAC decreased 14.48 points or 0.27% to 5,366.24, while UK’s FTSE 100 increased 13.44 points or 0.18% to 7,446.43.

Asian equity markets ended mostly lower on Monday as investors awaited a slew of data from China, Japan and Australia this week for directional cues. Concerns about political instability in the UK and Saudi Arabia also weighed on markets. The pound came under selling pressure after a report that 40 Conservative members of Parliament intend to sign a letter of no-confidence in British Prime Minister Theresa May. Japanese shares fell sharply to end near two-week low, with realty and technology stocks pacing the decliners after recent rallies. Meanwhile, Chinese shares ended higher, powered by banking firms, as investors cheered Beijing’s deregulation in the financial sector, mitigating wider concerns about higher corporate borrowing costs as bond yields rose.