Post Session: Quick Review

Indian equity benchmarks traded on a weak note throughout the day and ended in red with Nifty giving up 11,050 mark, while Sensex managed to hold 36,000 mark. The market breadth was in favour of declines with one stock advancing against every three declining ones. The market participants remained on sidelines ahead of upcoming Union Budget 2018-19, to be announced on February 1, 2018. The equity benchmarks made a sluggish start and traded in red terrain in early deals as sentiments were dampened as the street took note of yesterday’s Economic Survey, while painting a bright picture for India’s short and medium term growth, pointed out some pitfalls. It enlightened that despite better-than-expected GST revenue growth, India is headed for some fiscal slippage and could miss the target of 3.2% of GDP. The survey also added that agriculture income may fall by up to 25% in the medium term because climate change will hit crop yields, making it imperative to replace power and fertilizer subsidies by direct income support and to drastically expand irrigation. Investors also took note of Chief Economic Adviser Arvind Subramanian’s statement that the scope for the Reserve Bank of India (RBI) to lower interest rate may be limited with growth picking up and inflation hardening. He added however that it would be inappropriate for him to comment on rate cut as it is the domain of the RBI. Separately, Subramanian added that elevated stock prices are a matter of concern and could correct sharply if they are not backed by growth, requiring ‘heightened vigilance’.

Some anxiety spread among the investors with NITI Aayog Vice Chairman Rajiv Kumar’s statement that the government may settle for slightly higher fiscal deficit in 2018-19 as well. The government aims to restrain the fiscal deficit for 2017-18 to 3.2 per cent of the GDP and 3 per cent in 2018-19. Oil marketing companies Indian Oil Corporation (IOC), Hindustan Petroleum Corporation (HPCL) and Bharat Petroleum Corporation (BPCL) closed in green after strong numbers from IOC. IOC’s Q3 earnings beat expectations and the company announced the bonus issue in the ratio of 1:1. The Gross Refining Margin (GRM) for the quarter ended December 2017 stood at $12.30 a barrel, which was far ahead of street expectation of $8.20 a barrel.

On the global front, Asian markets closed in red.  Labor demand in Japan rose in December to its highest in more than 40 years, which could help workers pressing for bigger pay increases at annual wage negotiations and push stubbornly slow consumer price growth towards policymakers’ inflation target. The European markets were trading in red as global markets took a risk-averse turn, with cyclical sectors including mining and financials suffering the sharpest losses. Gross Domestic Product (GDP) in the euro zone rose as expected in the fourth quarter. The GDP rose a seasonally adjusted 0.6% in the final three months of 2017.

Back home, aviation companies InterGlobe Aviation (IndiGo), SpiceJet and Jet Airways closed in green after CAPA report enlightened that backed by record capacity expansion, airlines will fly more than 150 million domestic passengers in FY19. The capacity addition will be led by IndiGo. The country’s largest airline by market share will add 60-62 planes, taking its total fleet to 230. Other big additions will be seen in the fleets of GoAir (17 aircraft), SpiceJet (16) and Jet Airways, which will add 7-8 new aircraft.

The BSE Sensex ended at 36063.55, down by 219.70 points or 0.61% after trading in a range of 35993.41 and 36291.82. There were 8 stocks advancing against 23 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.57%, while Small cap index was down by 1.32%. (Provisional)

The few gaining sectoral indices on the BSE were Oil & Gas up by 1.15%, PSU up by 0.61% and Energy up by 0.08%, while Consumer Durables down by 1.62%, Basic Materials down by 1.17%, IT down by 1.05%, Consumer Disc down by 1.01% and TECK down by 0.96% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Coal India up by 2.06%, Hero MotoCorp up by 1.45%, Sun Pharma up by 0.97%, SBI up by 0.51% and Power Grid up by 0.23%. (Provisional)

On the flip side, Kotak Mahindra Bank down by 2.29%, Asian Paints down by 2.06%, Dr. Reddy’s Lab down by 1.90%, Axis Bank down by 1.89% and Adani Ports & Special Economic Zone down by 1.56% were the top losers. (Provisional)

Meanwhile, endorsing the optimistic GDP growth outlook highlighted in the economic survey, Bibek Debroy chairman of the Economic Advisory Council to the Prime Minister (EAC-PM) has said that the survey is a reflection of government's commitment to growth and development. He also praised the government’s emphasis on women's empowerment, terming it as a ‘welcome step’.

As per the economic survey estimates, FY18 GDP growth will be at 6.75% and FY19 GDP growth will be between 7 and 7.5%, but Debroy expects that the real GDP growth will be close to 7.5% in FY19 rather than 7%. Besides, he said that the government is committed to fiscal consolidation and prudent public expenditure and suggested that public expenditure can also financed through off-Budget instruments. He noted that it is rightly mentioned that growth drivers will have to fundamentally emerge through exports, private investments and consumption.

He further said that the survey is also optimistic in its tone, due to government's commitment to carry forward structural reforms like Goods and Services Tax (GST), deregulation measures, bank re-capitalization and resolution through the Insolvency and Bankruptcy Code (IBC) process. He also said the survey has highlighted that demonetisation was only a blip that did not last beyond mid-2017.

The CNX Nifty ended at 11048.75, down by 81.65 points or 0.73% after trading in a range of 11033.90 and 11121.10. There were 14 stocks advancing against 36 stocks declining on the index. (Provisional)

The top gainers on Nifty were HPCL up by 4.49%, Indian Oil Corporation up by 4.09%, BPCL up by 2.36%, Hero MotoCorp up by 1.12% and Coal India up by 1.03%. (Provisional)

On the flip side, Eicher Motors down by 2.84%, Kotak Mahindra Bank down by 2.63%, Bharti Infratel down by 2.38%, Bosch down by 2.24% and Bajaj Finance down by 2.23% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 25.35 points or 0.33% to 7,646.18, Germany’s DAX decreased 15.52 points or 0.12% to 13,308.96 and France’s CAC decreased 4.24 points or 0.08% to 5,517.35.

Asian equity markets ended in red on Tuesday as oil extended declines and US bond yields rose to their highest levels in nearly four years on concerns over higher inflation and a rise in real interest rates. Japanese shares closed lower, with a softer lead from Wall Street, a stronger yen and mixed data releases weighing on markets. Japanese household spending eased 0.1 percent in December from a year earlier and the unemployment rate rose slightly, while retail sales rose strongly in the month on increased spending on cars and clothes, separate reports showed. Further, Chinese shares extended losses, led by real estate and banking firms, as investors’ pocketed gains after a selloff in Apple shares knocked Wall Street.