Post Session: Quick Review

Indian equity markets traded on lackluster note throughout the day and ended the session with modest gains. The benchmarks continued their rally for sixth straight session with Nifty closing above 10,350 mark. The benchmarks managed to keep their head above water in early deals as sentiments remained upbeat taking support with Moody’s Investors Service report that Indian companies will see improved credit profiles in 2018 driven by solid economic and EBITDA growth, backed by new production capacity and benign commodity prices. In a report titled Non-financial corporate - India, 2018 Outlook, the rating agency said that with the disruption from the Good and Services Tax (GST) implementation diminishing, economic activity in India would recover by next year. Investors took note that the government sought to tighten the Insolvency and Bankruptcy Code (IBC) through an ordinance to ensure that willful defaulters and promoters of companies in loan default over an extended period of time won’t be able to get their hands back on assets during the resolution process. The President has given its approval to IBC amendment.

Meanwhile, NITI Aayog vice-chairman Rajiv Kumar said that India GDP growth rate in Q2 is likely at 6.2-6.3% and for the full year could be closer to 7% and for Second-half growth has to be 7.5%. The Budget for 2018-19 should focus on the social sector and an attempt should be made to provide universal health insurance cover to citizens. There was buzz in today’s trade with the Cabinet giving its nod for constitution of the 15th Finance Commission that will decide the tax-sharing formula between the Centre and states for five years beginning FY21. Its recommendations will have to be in place before April 1, 2020. Separately, a report highlighted that Corporate India witnessed significant deal activity in the September quarter this year, as private equity invested $8.7 billion and M&A transactions attracted $2.1 billion. The investment of private equity and venture capital increased 180 percent in value terms over the last year to reach $8.7 billion in the July-September quarter of 2017.

However, selling crept in between after a foreign brokerage report highlighted that trade deficit has ballooned to $88 billion between April and October, up 60 percent from the comparable period a year ago due to weak exports and a sharp rise in imports. The composition of the export basket, even if well- diversified, has prevented the economy from benefiting from the upturn in the regional export cycle this year. The report noted that further, GST-related uncertainty and the effect of duty-drawback have added to the headwinds. Insurance stocks ICICI Prudential Life Insurance Company, HDFC Standard Life Insurance Company and SBI Life Insurance Company closed in red on report that tax rate may increase under new direct tax law. The increase in tax rate will have one-time impact on EV (embedded value) and going forward lower NBAP (New Business Achieved Profit margins).

On the global front, Asian markets closed mostly in red, while Chinese stocks edged lower after Beijing took steps to halt the proliferation of small online lenders. The European markets were trading in red on expected lower trading flows due to Thanksgiving. The UK economy expanded in the third quarter as expected. The Office for National Statistics (ONS) said gross domestic product expanded by a seasonally adjusted 0.4% in the three months ended September 30. Year-over-year, UK economic growth expanded 1.5% in the third quarter, matching the prior quarter’s growth.

Back home, mixed reactions were displayed in aviation stocks. In order to provide a major boost to air connectivity in the Northeast, 92 new routes will be opened in the region in the second round of the government’s ‘Udaan’ scheme. Separately, passengers should brace themselves for a fare increase, as the government is likely to raise the passenger services fee (PSF) by at least 38% to meet the cost of security at Indian airports.

The BSE Sensex ended at 33605.28, up by 43.73 points or 0.13% after trading in a range of 33468.30 and 33670.19. There were 10 stocks advancing against 20 stocks declining on the index, while 1 stock remained unchanged. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.35%, while Small cap index was up by 0.54%. (Provisional)

The top gaining sectoral indices on the BSE were IT up by 1.40%, Energy up by 0.93%, TECK up by 0.91%, Consumer Durables up by 0.54% and Capital Goods up by 0.45%, while Telecom down by 0.70%, Metal down by 0.22%, Auto down by 0.21% and Utilities down by 0.10% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Infosys up by 2.85%, Sun Pharma up by 2.15%, Reliance Industries up by 1.63%, Power Grid up by 1.06% and Axis Bank up by 1.02%. (Provisional)

On the flip side, Dr. Reddy’s Lab down by 1.96%, Adani Ports & Special Economic Zone down by 1.87%, Bajaj Auto down by 1.41%, Asian Paints down by 1.12% and NTPC down by 0.83% were the top losers. (Provisional)

Meanwhile, the Union Cabinet has given its green signal to India’s membership for European Bank for Reconstruction and Development (EBRD), in a move to enhance India's international profile and promote its economic interests. The Department of Economic Affairs, Ministry of Finance is going to take necessary steps for that.

As per the government’s notification, the move will improve investment opportunities of the country as well as the competitive strength of the Indian firms, and provide an enhanced access to international markets in terms of business opportunities, procurement activities, consultancy assignments etc. Besides, it is expected to increase the scope of cooperation between India and EBRD through co-financing opportunities in manufacturing, services, Information Technology, and Energy. Going further, the membership of EBRD will also drive the growth of country’s export.

India will have to make minimum initial investment of approx 1 million euros for the membership and by this investment, the country will get the minimum 100 shares in the bank. The financial implication could be higher if India wants to buy more shares.

The CNX Nifty ended at 10351.85, up by 9.55 points or 0.09% after trading in a range of 10307.30 and 10374.30. There were 21 stocks advancing against 29 stocks declining on the index. (Provisional)

The top gainers on Nifty were Infosys up by 2.60%, Sun Pharma up by 2.01%, Reliance Industries up by 1.98%, Yes Bank up by 1.89% and Eicher Motors up by 1.56%. (Provisional)

On the flip side, Dr. Reddy’s Lab down by 2.19%, Adani Ports & Special Economic Zone down by 1.83%, Indiabulls Housing down by 1.66%, Bajaj Auto down by 1.27% and Asian Paints down by 1.16% were the top losers. (Provisional)

The European markets were trading mostly in red; UK’s FTSE 100 decreased 21.42 points or 0.29% to 7,397.60, Germany’s DAX decreased 26.81 points or 0.21% to 12,988.23, while France’s CAC increased 9.7 points or 0.18% to 5,362.46.

Asian equity markets ended mostly in red on Thursday, taking the lead from a quiet overnight session on Wall Street as investors parsed through minutes from the US central bank. Hong Kong stocks ended sharply lower, with the benchmark Hang Seng falling back below the 30,000 point mark after the previous session’s breakthrough, as a tumble in mainland stocks soured sentiments. Further, Chinese shares ended lower, with the blue-chip index suffering its worst fall in nearly 1-1/2 years as worries about a selloff in the bond market bled into equities. Meanwhile, Japanese markets were closed for a public holiday.