Benchmarks end expiry session with marginal losses; Nifty slips below 10,500 mark

Indian equity markets truly depicted the choppiness of F&O expiry session and ended the session slightly in red on Thursday. However, both Sensex & Nifty were up by over 2% during the December F&O series. Key gauges traded lackluster throughout the session and volatility which emerged in dying hour of trade mainly dragged the bourses lower on lingering concerns over government borrowing exceeding target. Cautiousness persisted in the markets throughout the session with the government decision to make additional borrowing of Rs 50,000 crore this fiscal through dated securities, a move that may put burden on the fiscal deficit target of 3.2 percent of GDP. At the same time, the government lowered its borrowing through short-term treasury bills by Rs 61,203 crore. This has made the task of exactly calculating the fiscal deficit a bit tedious exercise. However, losses remained capped, as traders took some solace with report that the capital markets regulator, Securities and Exchange Board of India (SEBI) is likely to ease entry norms for FPIs willing to invest in the Indian markets. It may ease some rules, including expanding the eligible jurisdictions for registration by including countries with diplomatic tie-ups with India.

Market participants also get some comfort with EEPC India new chairman, Ravi P Sehgal’s statement that the year 2018 is expected to be a good year for exports on back of global trade boom. The chairman added that as the IMF has outlined, that the global trade has grown at a faster clip than the overall world output growth, as the US, Euro zone, Japan and China are witnessing a resurgence in economic activity. Investors also get some relief with credit rating agency, ICRA’s latest report stating that the retail credit growth for non-banking financial companies is likely to be moderate at 16-18 percent in the current fiscal, helped by some asset classes, such as SME credit.

On the global front, European markets were trading in red in early deals amid a light holiday-week of trade seen across markets worldwide. Asian markets ended mostly in green, as strong economic data from the region and in the US boosted confidence.

Back home, banking stocks remained under pressure, as the global rating agency Standard & Poor's (S&P) on the basis of the economy and industry risk criteria has classified the Indian banking sector under 'Group 5' along with countries such as Italy, Spain, Ireland, the UAE and South Africa and has said that Banks’ asset quality is weak and has been deteriorating in the past four years. Auto stocks too edged lower, as the Lok Sabha approved a bill to hike cess on luxury vehicles from 15 to 25 per cent with a view to enhance funds to compensate states for revenue loss following the rollout of GST.

Finally, the BSE Sensex declined 63.78 points or 0.19% to 33,848.03, while the CNX Nifty was down by 12.85 points or 0.12% to 10,477.90.

The BSE Sensex touched a high and a low of 34,023.65 and 33,752.03, respectively and there were 1 stocks on gaining side as against 20 stocks on losing side on the BSE.

The broader indices ended in green; the BSE Mid cap index gained 0.10%, while Small cap index was up by 0.32%.

The top gaining sectoral indices on the BSE were Realty up by 2.97%, Metal up by 2.04%, Basic Materials up by 1.01%, Consumer Discretionary Goods & Services up by 0.12% and IT was up by 0.11%, while PSU down by 0.77%, Oil & Gas down by 0.46%, Auto down by 0.35%, Bankex down by 0.27% and Healthcare was down by 0.26% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 1.78%, Dr. Reddy’s Lab up by 1.30%, HDFC Bank up by 0.82%, Wipro up by 0.72% and ICICI Bank up by 0.51%. On the flip side, SBI down by 1.86%, Hero MotoCorp down by 1.74%, Sun Pharma down by 1.70%, Adani Ports & SEZ down by 1.35% and Axis Bank down by 1.29% were the top losers.

Meanwhile, the government has slashed the interest rate on small savings schemes such as National Savings Certificate (NSC), Sukanya Samriddhi Account, Kisan Vikas Patra (KVP) and Public Provident Fund (PPF), by 20 basis points or 0.2 percentage point, for Q4 FY18 (January-March) in comparison to the previous quarter. The move is expected to see banks lowering their deposit rates in line with the small savings rate offered by the government. Since April 2016, interest rates on all small savings schemes have been recalibrated on a quarterly basis.

However, interest rates in the five-year Senior Citizens Savings Scheme have been retained at 8.3 percent. The interest rate on the senior citizens’ scheme is paid quarterly. As per the finance ministry notification, investments in the PPF scheme will now fetch a rate of 7.6%, marginally lower than the rate of 7.8% in the October to December quarter. The five-year NSC will fetch a lower annual rate of 7.6 percent, while KVP investments will yield 7.3 per cent and mature in 11 months.

Besides, the girl child savings scheme Sukanya Samriddhi Account will offer 8.1% from existing 8.3% annually. Term deposits of 1-5 years will fetch a lower interest rate of 6.6-7.4%, to be paid quarterly, while the five-year recurring deposit is pegged at 6.9%. The finance ministry has said that rates of small savings schemes would be linked to government bond yields.

The CNX Nifty traded in a range of 10,534.55 and 10,460.45. There were 18 stocks in green as against 32 stocks in red on the index.

The top gainers on Nifty were Hindalco up by 3.42%, UPL up by 3.27%, Vedanta up by 2.10%, Dr. Reddy’s Lab up by 1.57% and Tata Steel up by 1.54%. On the flip side, Indian Oil Corporation down by 2.59%, SBI down by 2.08%, BPCL down by 1.99%, Bajaj Auto down by 1.68% and Hero MotoCorp down by 1.63% were the top losers.

The European markets were trading in red; Germany’s DAX shed 10.74 points or 0.08% to 13,059.28, UK’s FTSE 100 decreased 2.78 points or 0.04% to 7,617.90 and France’s CAC was down by 1.12 points or 0.02% to 5,367.72.

Asian equity markets ended mostly in green on Thursday in a quiet post-Christmas holiday trading, as strong economic data from the region and in the US boosted confidence. Buying interest was a bit subdued in most of the markets in the region. Almost all the markets in the region started off on a firm note, but failed to sustain at higher levels. Volume of business was thin as investors chose to stay on the sidelines ahead of the weekend and New Year Day holiday. Despite some fairly encouraging economic data, the Japanese market ended lower, with machinery, banking and warehouses stocks registering notable losses. A stronger yen and lack of positive catalysts dragged stock prices down.