Post Session: Quick Review

Indian equity markets traded below neutral line throughout the day and ended with cut of around seven tenth of a percent. Selling got accelerated in second half with Nifty slipping below 10,250 mark. The benchmarks snapped three day winning streak and the market breadth was slightly in favour of declines with one stock advancing against two declining ones. The street was eyeing Index of Industrial Production (IIP) data for October and inflation data based on Consumer Price Index (CPI) for November scheduled to be released later in the day. The benchmarks made a dismal start and traded with a cut of over one third of a percent in early deals. A private poll showed that India’s retail inflation likely breached the central bank’s 4% medium-term target in November after unseasonably heavy rains sent food prices soaring. The poll enlightened that the higher inflation rate is unlikely to push the Reserve Bank of India (RBI) to change its key rate any time soon. Separately, with the farm loan waiver pitch getting shriller by the day, former RBI governor Y V Reddy has said that the practice is not good for economic or credit culture and insisted that ultimately it is a political decision and cannot be justified in the longer run.

Additionally, investors took note of ASSOCHAM report which enlightened that the government needs to accord top priority to agriculture in the budget as a major shortfall in kharif production resulted in sluggish growth of farm sector in the second quarter this fiscal. While the year-to-year agriculture GVA (Gross Value Addition) growth for the July-September quarter of 2017-18 dropped to 1.7% from 4.1%, measured on basic prices, the fall looks quite sharp at current prices from 10% to 3.7%. The chamber observed that the shortfall in the second leg of the monsoon seems to have impacted the Kharif production. The street shrugged off the United Nations report that India’s economy is likely to expand by 7.2% in 2018 and go up further to 7.4% in the following year on the back of strong private consumption, public investment and the ongoing structural reforms. Economic outlook for South Asia is seen largely favourable and steady for the short term, notwithstanding significant medium-term challenges, said the ‘World Economic Situation and Prospects 2018’ report unveiled by United Nations Department of Economic and Social Affairs. 

Meanwhile, oil marketing companies like Bharat Petroleum Corporation (BPCL), Hindustan Petroleum Corporation (HPCL) and Indian Oil Corporation (IOC) and aviation companies like Jet Airways, SpiceJet and Interglobe Aviation closed in red following sharp rise in crude oil prices in international market. Brent crude oil prices were near 2015 highs after the unplanned closure of a major North Sea pipeline for repairs, knocking out significant supplies from a market that was already tightening due to OPEC-led production cuts. As the state elections lined up before general elections 2019, it is difficult for the government also to allow oil marketing companies hike petrol and diesel prices sharply.

On the global front, Asian markets closed mostly in red. Large Japanese manufacturers turned more optimistic about economic conditions in the October-December quarter, in another upbeat sign for an economy on a record run of growth. The business survey index (BSI) of sentiment at large manufacturers stood at plus 9.7, up from plus 9.4 in July-September. The European markets were trading in green amid cautious trade. Other major central banks, including the European Central Bank, Bank of England and the Swiss National Bank will announce their policy decisions on Thursday.

Back home, mixed reactions were displayed in paper stocks on expectation of robust growth demand. As per the reports, experts estimate 12% and four to five per cent growth in demand for packaging and writing & printing paper, respectively, next year. Writing & printing paper continues to face margin pressure in cheaper shipments from Southeast Asia.

The BSE Sensex ended at 33233.36, down by 222.43 points or 0.66% after trading in a range of 33179.75 and 33458.41. There were 7 stocks advancing against 24 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 1.06%, while Small cap index was down by 0.72%. (Provisional)

The sole gaining sectoral index on the BSE was Consumer Durables up by 0.02%, while Telecom down by 2.18%, Realty down by 1.66%, Power down by 1.27%, FMCG down by 1.04% and Bankex down by 0.99% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Dr. Reddy’s Lab up by 2.76%, ONGC up by 2.74%, Adani Ports & Special Economic Zone up by 2.38%, Lupin up by 0.98% and Infosys up by 0.87%. (Provisional)

On the flip side, Cipla down by 2.47%, Coal India down by 2.43%, Hero MotoCorp down by 2.08%, TCS down by 1.98% and Tata Motors - DVR down by 1.69% were the top losers. (Provisional)

Meanwhile, assessing the position of various industries post the implementation of Goods and Services Tax (GST), credit rating agency, Care Ratings in its latest quick survey report has said that on the whole majority are satisfied with the implementation of new tax regime. However, it noted that though the GST implementation is satisfactory, majority of industry players faced difficulty in filing GST returns.

The report titled ‘Post-GST Survey: December 2017’ examined impact of GST implementation on the operating and financial performance of industries on the basis of parameters like - inventory levels, input costs, demand supply matrix and profitability. It found that for the majority, disruptions caused by destocking were not significant, while position of re-stocking came back to normal in the most of the sectors. The survey further said that Infrastructure players would take some time before the position of stocks normalizes.

The survey also found that there was no perceptible change in the cost of raw materials and demand for products & services post GST implementation. Also, the festive season sales were not impacted for the majority of respondents. The survey further noted that most respondents were not sure of the GST impact on their profit margins.

The CNX Nifty ended at 10241.30, down by 80.95 points or 0.78% after trading in a range of 10230.20 and 10326.10. There were 12 stocks advancing against 38 stocks declining on the index. (Provisional)

The top gainers on Nifty were Dr. Reddy’s Lab up by 2.83%, ONGC up by 2.74%, Adani Ports & Special Economic Zone up by 2.37%, GAIL India up by 2.24% and Lupin up by 1.00%. (Provisional)

On the flip side, HPCL down by 4.20%, Bharti Infratel down by 3.29%, BPCL down by 3.02%, Coal India down by 2.46% and UPL down by 2.35% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 8.04 points or 0.11% to 7,461.52, Germany’s DAX increased 15.22 points or 0.12% to 13,138.87 and France’s CAC increased 10.75 points or 0.2% to 5,397.58.

Asian equity markets ended mostly in red on Tuesday as investors booked some profits after several days of advances. Markets await cues from key central bank meetings due this week as well as a major annual economic planning conference in Beijing that will set policy priorities for the next 12 months. Japanese shares ended lower as caution set in ahead of a two-day policy meeting of the US Federal Reserve beginning later today. Further, Chinese shares ended lower on growing expectations that China's central bank may raise open-market interest rates if the Fed decides to increase borrowing costs.