Post Session: Quick Review

Indian equity markets oscillated between positive and negative terrain and ended in red. Heavy selling in last hour of trade pulled the markets down with Nifty closing below 10,450 mark and Sensex losing over 250 points. The market breadth was in favour of advances with four stocks advancing against every three declining ones. The equity benchmarks made a cautious start and managed to keep their head above neutral line on first trading day of 2018. The sentiments were upbeat on report that in the near term, most money managers believe the stock markets will remain positive in 2018, with 53% estimating the Sensex will stay in the range of 34,000-35,000 by the time the Union Budget is presented. An increase to 35,000 would mean a gain of 2.8%. The Budget, which will be the government’s last full-fledged one before its term ends in May 2019, will likely be presented on February 1. Traders also took some support with report that the government has extended by 10 days the last date for filing of final sales return GSTR-1 till January 10 under the Goods and Services Tax. Businesses with turnover of up to Rs 1.5 crore will have to file GSTR-1 for July-September by January 10, 2018, as against December 31, 2017 earlier. Some support also came with Commerce Minister Suresh Prabhu’s assurance to formulate a national policy for retail trade to bring all verticals, including small business, big retail, e- commerce and direct selling under it.

However, selling crept in as traders were concerned with Finance Minister Arun Jaitley admitting that the Indian economy slowed down in 2016-17, with the gross domestic product declining drastically from 8 percent in 2015-16 to 7.1 percent the next year. The investors’ sentiments got hit with report that India’s fiscal deficit breached FY18 target at Nov-end by standing at 112% of Budget Estimates. The country’s fiscal deficit, the difference between government expenditure and revenue, stood at Rs 6.12 lakh crore for the period April-November 2017-18. Investors took note that India Inc has commended the Modi government’s overall stewardship of the economy but criticized slow progress in reducing stress in key sectors such as exports and agriculture in a nationwide poll on New Year’s Eve. About 55% of participants in the private poll believe that growth will hover at 6.5-7% in 2018-19, a clear sign that the headwinds which battered the economy in 2015-17 will take a much longer time to abate.

Meanwhile, overseas investors have pulled out close to Rs 5,900 crore from domestic equities in December, with widening fiscal deficit and higher crude prices making market participants cautious on macro-economic front. The outflow comes following an eight month high inflow of Rs 19,728 crore in November, mainly on account of the Government’s plan to recapitalize PSU banks and surge in India's ranking in the World Bank's ease of doing business. Market experts, however, believe FPIs may not be able to repeat this showing in 2018 as withdrawal of liquidity and rate hikes in developed economies pick up. Shares of Anil Ambani led Reliance Group (ADAG) companies continued their upward journey and rallied on back of heavy volumes in an otherwise subdued market. Reliance Power, Reliance Nippon Life Asset Management, Reliance Naval and Engineering, Reliance Home Finance and Reliance Capital closed in green.

Separately, Bank of India, IDBI Bank, UCO Bank, Bank of Maharashtra, Dena Bank and Central Bank of India closed in green on report that the government has provided over Rs 7,500 crore of fresh equity to six stressed state-run banks in order to help them meet the prescribed regulatory capital requirement and its commitment to keep banks well-funded. Shares of select auto companies remained in focus as auto companies started declaring monthly sales numbers for December 2017. Many auto makers had offered huge year-end discounts during the month, the impact of which is to be seen on sales data later in the day.

The BSE Sensex ended at 33791.42, down by 265.41 points or 0.78% after trading in a range of 33766.15 and 34101.13. There were 6 stocks advancing against 25 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.09%, while Small cap index was up by 0.27%. (Provisional)

The top gaining sectoral indices on the BSE were Power up by 0.92%, Utilities up by 0.87%, Capital Goods up by 0.36%, Realty up by 0.29% and Healthcare up by 0.14%, while Bankex down by 0.92%, Auto down by 0.78%, Metal down by 0.70%, Telecom down by 0.66% and Basic Materials down by 0.65% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Coal India up by 1.44%, Wipro up by 0.83%, Axis Bank up by 0.66%, Larsen & Toubro up by 0.40% and Sun Pharma up by 0.39%. (Provisional)

On the flip side, IndusInd Bank down by 1.64%, Hindustan Unilever down by 1.60%, TCS down by 1.46%, HDFC down by 1.32% and Tata Steel down by 1.32% were the top losers. (Provisional)

Meanwhile, rising crude oil prices due to geo-political tensions and production cuts by OPEC countries are likely to put more pressure on the government which is already facing tough fiscal situation. Credit ratings agency, ICRA in its latest report has said that higher crude prices could force the Government of India to reduce the excise duty on auto fuels, in order to soften the impact on consumers.

The ratings agency further noted that there will also be pressure on the government to increase subsidy allocation for the petroleum products, with increase in under-recoveries in ensuing years. ICRA also expects negative impact of crude oil spike on macro economy and oil marketing firm’s profitability. It said that rising crude prices would put pressure on the oil companies to increase their working capital and short-term debt levels and this will impact their profitability. It further noted that the oil marketing companies could face pressure on their marketing margins, due to rising prices of petroleum products and escalating competition from the private fuel retailers.

Besides, ICRA said that rising crude oil prices would also test the Government's resolve to keep prices of auto-fuels at market-determined levels, which would have material implications for private marketers. On the prices front, the rating agency said that petroleum product prices are rising following spike in crude oil and this would have marginal impact on petroleum products demand growth.

The CNX Nifty ended at 10434.80, down by 95.90 points or 0.91% after trading in a range of 10423.10 and 10537.85. There were 11 stocks advancing against 39 stocks declining on the index. (Provisional)

The top gainers on Nifty were Indiabulls Housing up by 1.58%, Coal India up by 1.43%, Cipla up by 1.28%, Sun Pharma up by 0.59% and Wipro up by 0.56%. (Provisional)

On the flip side, Bharti Infratel down by 2.32%, TCS down by 2.08%, IndusInd Bank down by 1.79%, Tata Motors down by 1.70% and Bosch down by 1.64% were the top losers. (Provisional)

The markets in Asia and Europe are closed on account of National holiday.