Post Session: Quick Review

Indian equity markets traded on a lackluster note throughout the day and ended the session with modest cut. The equity benchmarks made a cautious start and traded slightly in red in early deals, as traders opted to book profit after four days of continuous rally. Traders remained on sidelines after the statistics from FICCI’s quarterly survey on manufacturing suggests slightly less optimistic outlook for the manufacturing sector in the Q3 (October- December 2017-18) as the percentage of respondents reporting higher production in third quarter has fallen in comparison to the previous quarter. The proportion of respondents reporting higher output growth during the Q3 (October- December 2017-18) has fallen to 47 from 50% in Q2. Investors took note that the government is likely to take a less conservative fiscal approach after the Gujarat elections and adopt a more populist tone in the upcoming Union Budget. A close contest in Gujarat elections means government will expedite the implementation of pro-poor/rural policies.

However, buying crept in late morning session and entered into positive territory as traders took some support with finance ministry’s statement that the government is committed to growth revival by increasing public investment while maintaining fiscal deficit target of 3.2 per cent for the current fiscal. Some support also came from Finance Minister Arun Jaitley’s statement that the government is in favour of the idea of bringing petroleum products such as petrol, diesel and LPG (cooking gas) under the ambit of Goods and Services Tax (GST) regime but they are waiting for a consensus from the state governments in this respect. Meanwhile, highlighting the importance of services sector in improving the condition of exports, the Commerce & Industry Minister Suresh Prabhu has said that the government is working on a strategy to boost share of services in total exports from the country. He said that in my opinion services should be one of the most critical drivers of the growing economy and must be brought to the forefront. But, markets in last hour of trade witnessed sharp sell-off and ended with modest cut.

On the global front, Asian markets closed mixed, amid cautious trades following the negative lead overnight from Wall Street and as investors awaited the final votes on the US tax reform bill. The European markets were trading in red. Trading volumes were expected to become more and more thin throughout the week, ahead of the Christmas holiday. German exports and imports will hit record highs in 2018, the BGA trade association said, adding that companies in Europe’s largest economy will continue to reap benefits of a recovery in the United States, the European Union and China.

Back home, select cement companies traded under pressure after India Ratings and Research (Ind-Ra) in its latest report has said that the operating profits of cement companies in India, which use a high proportion of pet coke, may fall by around one percent, following the government’s decision to hike the import duty on petcoke from the current 2.5 percent to 10 percent. Anil Dhirubhai Ambani Group stocks like Reliance Communications, Reliance Infrastructure, Reliance Naval, Reliance Capital and Reliance Power closed in green.

The BSE Sensex ended at 33786.83, down by 49.91 points or 0.15% after trading in a range of 33754.94 and 33956.31. There were 14 stocks advancing against 17 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.38%, while Small cap index was up by 0.87%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 3.29%, Metal up by 0.88%, Capital Goods up by 0.87%, Industrials up by 0.80% and Basic Materials up by 0.69%, while Auto down by 0.37%, Bankex down by 0.35%, Energy down by 0.21%, PSU down by 0.11% and Telecom down by 0.09% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Motors - DVR up by 2.26%, Wipro up by 1.83%, Larsen & Toubro up by 1.45%, ONGC up by 1.40% and Hero MotoCorp up by 1.33%. (Provisional)

On the flip side, Dr. Reddy’s Lab down by 1.96%, Bharti Airtel down by 1.50%, Tata Steel down by 1.13%, HDFC down by 1.01% and Mahindra & Mahindra down by 1.00% were the top losers. (Provisional)

Meanwhile, pointing to factors like rupee appreciation, subdued demands along with issues related to Goods and Services Tax (GST) regime, Federation of Indian Chambers of Commerce and Industry (FICCI) in its latest quarterly survey has said that manufacturing sector outlook is slightly less optimistic in third quarter of the current fiscal year (Q3).

It reported that overallthe capacity utilization in manufacturing remains low. The average capacity utilization for the manufacturing sector is about 75% for Q-2 2017-18 as reported in the survey which is similar to that of Q-1 2017-18. While, inventory situation hasn't changed much, with  90% of the participants in Q-2 (July- September 2017-18) as compared to 92% in previous two quarters maintaining either more or same average levels of inventory.

As per the survey, percentage of respondents expecting higher production has fallen to 47% in Q3 from 50% in Q-2, while respondents expecting lower production come down to 15% in Q3 from 18% as reported in the previous quarter. Besides, the report also said that demand will remain subdued as percentage of respondents expecting higher order books also came down to 42% in Q3 as against 47% in Q2.

The survey which assessed the expectations of manufacturers of twelve major sectors, also found that appreciation of rupee to keep exports outlook less optimistic in Q3, while the most of the companies may also hire less workforce in next three months. However, FICCI Survey expects higher growth for Auto, Capital Goods, Metal and Metal Products in third quarter, while lower growth for Cement and Ceramics, Food Products, Leather & Footwear and Textiles & Technical Textiles sector.

The CNX Nifty ended at 10446.30, down by 16.90 points or 0.16% after trading in a range of 10437.15 and 10494.45. There were 25 stocks advancing against 25 stocks declining on the index. (Provisional)

The top gainers on Nifty were Hindalco up by 1.87%, Hero MotoCorp up by 1.81%, ONGC up by 1.43%, Wipro up by 1.35% and Larsen & Toubro up by 1.29%. (Provisional)

On the flip side, Eicher Motors down by 1.94%, Dr. Reddy’s Lab down by 1.86%, Bharti Airtel down by 1.33%, Mahindra & Mahindra down by 1.29% and Ambuja Cement down by 1.20% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 8.11 points or 0.11% to 7,535.98, Germany’s DAX decreased 7.74 points or 0.06% to 13,208.05 and France’s CAC decreased 12.87 points or 0.24% to 5,370.04.

Asian equity markets made a mixed closing on Wednesday as the final vote on the US tax bill entered a crucial phase. Senate Republicans voted late Tuesday night to approve their final tax overhaul, which would cut taxes for businesses and individuals while widening American budget deficit and income inequality. However, a technical vote in the House is still needed before it can be sent to President Donald Trump's desk. China stocks ended lower in thin trade and as liquidity in the banking system tightened. Meanwhile, Hong Kong stocks ended slightly in red as weakness in financial and IT stocks offset strength in property and utility plays. Though, Japanese shares ended a choppy session marginally higher as a weaker yen on US tax cut hopes and gains in the financial sector helped outweigh renewed sell-off in construction shares in the wake of bid-rigging allegations.