Post Session: Quick Review

Indian equity markets traded in red for most part of the day and ended with modest cut. The street remained cautious ahead of mid-term review of foreign trade policy due later today, RBI policy tomorrow and Gujarat elections on Saturday. Though, the markets tried to recover during the second half but it was short lived. A private poll enlightened that the Reserve Bank of India (RBI) looks set to keep its policy rate on hold on Wednesday, after inflation accelerated to a seven-month high and stronger economic growth reduced the need for monetary stimulus. The market breadth was in favour of declines with two stocks advancing against three declining ones. The benchmarks made a dismal start and traded in red in early deals. The sentiments were also dampened after global ratings firm Fitch lowered India’s growth forecast for FY’19 to 7.3% from 7.4% earlier. In its observation on India published in its Global Economic Outlook, Fitch has noted that the rebound in the Indian economy during the September’17 quarter, with GDP growing by 6.3% y-o-y, up from 5.7% in 2Q17 was weaker than it expected. Separately, activity in India’s dominant services industry shrank in November as rising prices, driven up in part by the new national sales tax, took a toll on both foreign and domestic demand. November’s Nikkei/IHS Markit Services Purchasing Managers’ Index fell to 48.5 - its lowest since August - from 51.7 in October, well below the 50 mark that separates expansion from contraction.

Investors took note that Finance Secretary Hasmukh Adhia has called a meeting of tax officials from the Centre and States on December 9, to assess the trend in revenue collections from the Goods and Services Tax (GST) and review measures to further boost compliance. Meanwhile, export oriented stocks remained buzzing in today’s trade as the key policymakers led by Commerce Minister Suresh Prabhu will unveil the mid-term review of the foreign trade policy today. Exporters have been voicing concerns about challenges on account of implementation of GST. Aviation stocks closed in green on report that India’s domestic passenger traffic grew by 20.4% in October. The report enlightened that India’s domestic demand was highest amongst major aviation markets like Australia, Brazil, China, Japan, Russia and the US. PSU banking stocks were buzzing in today’s trade on report that the finance ministry is working with state-run lenders to frame a common set of rules for valuation of stressed assets for faster resolution of loans extended by consortia of banks. In cases of joint lending, banks are unable to arrive at a common valuation, stalling the resolution process. Also, individually, banks fear that if they agree to a certain haircut, it may not stand the scrutiny of vigilance agencies. The new norms will address such concerns.

On the global front, Asian markets closed mostly in red. Growth in China’s services sector activity picked up to a three-month high in November, buoyed by a solid rise in new business, though the rate of expansion remained moderate and weaker than the long-run trend. Japan’s service sector activity grew at a slower pace in November due to a slowdown in outstanding business, but new orders remained relatively strong and business sentiment improved, suggesting the economy will continue to expand in coming months. The European markets were trading mostly in red, amid latest news surrounding Brexit talks and fresh economic data. Activity in the UK service sector dropped more than expected in November, dampening optimism over the British economy as the sector makes up approximately 80% of gross domestic product.

Back home, Reliance Communications (RCom) closed in red amid reports that a public relation firm Fortuna Public Relations has approached Mumbai bench of National Company Law Tribunal (NCLT) against Anil Ambani-run firm for insolvency proceedings, alleging the telecom operator failed to its pay dues. Meanwhile, Fitch withdrew Reliance Communications’ rating for commercial reasons.

The BSE Sensex ended at 32797.26, down by 72.46 points or 0.22% after trading in a range of 32682.52 and 32893.05. There were 7 stocks advancing against 24 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index was up by 0.51%, while Small cap index down by 0.01%. (Provisional)

The top gaining sectoral indices on the BSE were Telecom up by 0.88%, Energy up by 0.52%, Bankex up by 0.37%, Healthcare up by 0.19% and Oil & Gas up by 0.07%, while Power down by 0.92%, Metal down by 0.82%, Basic Materials down by 0.72%, Utilities down by 0.68% and Capital Goods down by 0.61% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were SBI up by 2.01%, Bharti Airtel up by 1.42%, Reliance Industries up by 1.05%, Sun Pharma up by 0.51% and Cipla up by 0.34%. (Provisional)

On the flip side, Wipro down by 2.33%, Hero MotoCorp down by 2.32%, ONGC down by 1.71%, Tata Steel down by 1.61% and Bajaj Auto down by 1.56% were the top losers. (Provisional)

Meanwhile, India’s services sector growth lost its momentum in the month of November, as sustained pain from the country’s Goods and Services Tax (GST) regime triggered significant decline in demand and lower customer turnout. Even as the manufacturing sector received greater inflows of new work in the month, input cost inflation and unfavorable demand conditions, also pulled the index below the 50.0 no-change mark. The seasonally adjusted Nikkei Services Business Activity Index fell to 48.5 in the month of November from 51.7 in the month of October. The Nikkei India Composite PMI Output Index, which measures both manufacturing and services was also down to 50.3 in November from 51.3 in October.

According to the survey report, the service activity fell due to a drop in new business, weighed down by GST. Input cost inflation accelerated in November month, by rising at fastest pace since October 2013 and reflecting this burden, service providers increased their average selling prices in November. However, amid intensive competitive conditions, manufacturing companies could not fully pass higher cost burdens to their consumers. The sharpest rise in input prices was noted in chemicals, steel and petroleum products. 

However, in a positive development, staffing levels in the Indian service sector increased in November for a third month in succession, but at modest pace.  Besides, factory employment also grew at the fastest pace since September 2012 in response to stronger growth in new orders. The report also found that inflows of new works in the manufacturing sector quickened to fastest since October 2016.

The CNX Nifty ended at 10121.50, down by 6.25 points or 0.06% after trading in a range of 10069.10 and 10147.95. There were 17 stocks advancing against 33 stocks declining on the index. (Provisional)

The top gainers on Nifty were SBI up by 2.17%, Bajaj Finance up by 2.03%, Yes Bank up by 1.98%, Reliance Industries up by 1.41% and IndusInd Bank up by 1.33%. (Provisional)

On the flip side, Wipro down by 2.40%, Hero MotoCorp down by 2.20%, ONGC down by 1.95%, Tata Steel down by 1.79% and Eicher Motors down by 1.76% were the top losers. (Provisional)

The European markets were trading mostly in red; Germany’s DAX decreased 7.43 points or 0.06% to 13,051.12, France’s CAC decreased 8.04 points or 0.15% to 5,381.25, while UK’s FTSE 100 increased 20.64 points or 0.28% to 7,359.61.

Asian equity markets ended mostly in red on Tuesday after oil prices fell over 1 percent overnight and Brexit talks did not yield a breakthrough on the withdrawal issues. Encouraging services sector data from China helped to limit regional losses to some extent. Chinese shares ended lower even as survey results from IHS Markit revealed the country's private sector growth momentum improved marginally in November. The Caixin composite output index rose to 51.6 from October's 16-month low of 51.0, suggesting the economy has maintained stability and there was no imminent risk of a significant decline in its growth rate. The pace of manufacturing growth picked up from October's four-month low, while services activity grew the most in three months. China's official nonmanufacturing PMI also rose to 54.8 in November from 54.3 in October. Further, Japanese shares ended lower as tech stocks succumbed to heavy selling pressure hit by a tech sell-off on Wall Street overnight.