Post Session: Quick Review

Indian equity markets traded on a lackluster note throughout the day and ended the session with gains of more than three tenth of a percent. The markets surged in last hour of trade with Sensex surpassing above 34,000 mark on back of rally from industry heavyweight Reliance Industries. The market breadth was in favour of advances with three stocks advancing against every two declining ones. The equity benchmarks made a positive start and traded with marginal gains in early deals taking cues from industry body ASSOCHAM’s Year-Ahead Outlook report, which enlightened that India’s economic growth may touch 7% next year as the government’s policies tilt towards the country’s stress-ridden rural landscape in the penultimate year before the 2019 general elections. It said that against GDP growth of 6.3% in the second quarter of 2017-18, the economic expansion may reach the crucial 7% mark by the end of September 2018 quarter, while inflation may range between 4 to 5.5% towards the second half of the next calendar year with the monsoon being a key imponderable. Separately, a private report stated that Indian economy is expected to witness sharp recovery in the January-March quarter and its GDP growth likely to be around 7.5% for 2018.

However, the markets witnessed selling pressure in morning session and continued to trade slightly below neutral line till last leg of trade as the sentiments were dampened since the overseas investors have pulled out a massive Rs 7,300 crore from the country’s stock markets this month so far, primarily due to rising crude prices and widening fiscal deficit. Separately, as the government gets down to the business of drawing up the budget, there is a growing view among some influential sections that there should not be any spending cut on key programmes to meet the fiscal deficit target. Investors took note that firming crude oil prices in the global market is likely to cast its shadow on retail inflation, which has began to move northwards after hitting a low of 1.46 per cent in June, and may prompt the RBI to hold interest rates at least for some time in 2018. Oil prices were stable with Brent crude lingering near 2015 highs on the back of an outlook for healthy demand amid ongoing production cuts led by OPEC and Russia. Besides global oil prices, the impact of implementation of 7th Pay Commission, including the hike in house rent allowance, is likely put pressure on prices. Additionally, a report showed that North Korea is preparing to launch a satellite, as outside observers warn that the nuclear-armed regime’s space programme is a fig leaf for weapons tests. Pyongyang is under multiple UN sanctions over its nuclear and missile tests and is prohibited from carrying out any launch using ballistic missile technology including satellites.

On the global front, Asian markets closed mostly in red. Japan’s households spent more than expected in November while consumer inflation ticked up and the jobless rate hit a fresh 24-year low, offering the central bank some hope an economic recovery will drive up inflation to its 2 percent target. But the increase in prices was due mostly to a boost from rising fuel costs that is seen fading in 2018, keeping the Bank of Japan under pressure to maintain its huge monetary support even as other central banks seek an end to crisis-mode policies. South Korea exports likely rose for a 14th straight month in December, wrapping up the year with an upbeat tone as global demand for memory chips and petroleum goods from Asia’s third biggest exporter continued. The European markets were closed on account of National holiday.

Back home, public sector banking stocks were under pressure in today’s trade as according to the Reserve Bank of India (RBI) data, the bad loans problem of public sector banks (PSBs) has once again taken the centre stage, despite the government’s various efforts NPAs of PSBs reached to Rs 7,33,974 crore as of September, 2017, mainly due to corporate defaulters. Shares of Anil Dhirubhai Ambani Group (ADAG) - Reliance Communications, Reliance Infrastructure, Reliance Capital, Reliance Power, Reliance Naval and Engineering, Reliance Home Finance and Reliance Nippon Life Asset Management closed on firm note on back of announcements related to debt reduction issues.

The BSE Sensex ended at 34044.30, up by 104.00 points or 0.31% after trading in a range of 33889.75 and 34054.63. There were 19 stocks advancing against 12 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.77%, while Small cap index was up by 0.62%. (Provisional)

The top gaining sectoral indices on the BSE were Telecom up by 2.57%, Realty up by 1.24%, Metal up by 1.21%, Energy up by 0.97% and Healthcare up by 0.96%, while PSU down by 0.11% and Power down by 0.03% were the only losing indices on BSE. (Provisional)

The top gainers on the Sensex were Bharti Airtel up by 3.00%, Sun Pharma up by 2.21%, Yes Bank up by 1.73%, Reliance Industries up by 1.62% and Wipro up by 1.44%. (Provisional)

On the flip side, NTPC down by 1.25%, SBI down by 0.97%, Coal India down by 0.77%, HDFC Bank down by 0.67% and Power Grid down by 0.49% were the top losers. (Provisional)

Meanwhile, bad loans problem of public sector banks (PSBs) has once again taken the centre stage, as according to the Reserve Bank of India (RBI) data, despite the governments’ various efforts NPAs of PSBs reached to Rs 7,33,974 crore as of September, 2017, mainly due to corporate defaulters.

As per the RBI data, though the bad loans of PSBs are rising high, the private sector banks reported a considerably lower NPA figure of Rs 1,02,808 crore. Public sector banks appeared more stressed than private banks, with country’s largest bank, State Bank of India (SBI) accounted for the largest share in the total NPAs at over Rs 1.86 lakh crore, followed by Punjab National Bank (Rs 57,630 crore), Bank of India (Rs 49,307 crore), Bank of Baroda (Rs 46,307 crore), Canara Bank (Rs 39,164 crore) and Union Bank of India (Rs 38,286 crore).

In the private sector, ICICI Bank accounted for the highest amount of NPAs at Rs 44,237 crore by the end of September, followed by Axis Bank (Rs 22,136 crore), HDFC Bank (Rs 7,644 crore) and Jammu and Kashmir Bank (Rs 5,983 crore). The government has restored various provisions for the recovery of the bad loans and has expanded the network of Debt Recovery Tribunals (DRTs). There are 39 DRTs now as compared to 33 in 2016-17 that will help reduce the pending cases as well as expedite disposal of cases.

The CNX Nifty ended at 10526.80, up by 33.80 points or 0.32% after trading in a range of 10477.95 and 10545.45. There were 32 stocks advancing against 18 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bharti Airtel up by 3.06%, Ambuja Cement up by 2.20%, Cipla up by 1.94%, Bosch up by 1.87% and Vedanta up by 1.72%. (Provisional)

On the flip side, Coal India down by 0.98%, SBI down by 0.89%, Indian Oil Corporation down by 0.79%, NTPC down by 0.75% and Mahindra & Mahindra down by 0.70% were the top losers. (Provisional)

Asian equity markets ended mostly in red on Tuesday after a session of light, holiday-week trading in most markets. Japanese shares ended lower, confined in a tight range amid a paucity of catalysts from other markets, while gains in Takashimaya on upbeat earnings lifted retailers. Meanwhile, Chinese shares ended firmer, led by financial and real estate firms, though trading was thin as year-end nears. The markets in Hong Kong and Indonesia continue to remain closed for Christmas holidays.