Post Session: Quick Review

Indian equity benchmarks traded with pessimism throughout the day and ended with a cut of around two tenth of a percent, as the final countdown to the Budget 2018 has begun. The market recovered from day low during last hour of trade but failed to break in green. Nifty managed to hold 11,000 mark, while Sensex slipped below 36,000 mark. The market breadth was in favour of declines with one stock advancing against every two declining ones. The equity benchmarks made a weak start and traded slightly in red in early deals, as traders remained cautious with Chief economic adviser Arvind Subramanian urging watchfulness over the rising stock markets, which have been scaling records all through this month, saying the government would be forced to intervene in the event of a slump. Subramanian added that the situation was similar to the US in 2006 and he cannot prevent the run-up but can control the cleanup. So, if something happens, he can lower interest rates and inject money into the economy. Subramanian said the macro environment had turned adverse with oil prices having risen above $60 a barrel and staying there, the interest rate cycle changing globally and elevated asset prices in India and across the world.

Meanwhile, investors took note that the country’s largest bank, State Bank of India has raised interest rates offered on bulk deposits by 50 to 140 basis points, signaling a turn in the interest rates cycle. The bank has sharply raised rates for 46 days to 210 days by 140 basis points from 4.85% from 6.25%. The hike in deposit rates comes a couple of days before the finance minister is set to announce the union budget for 2018-19 and a week before the Reserve Bank of India is set to announce its monetary policy. Separately, rating agency ICRA enlightened that with banks credit outpacing deposits in the last few months, pushing up the credit-deposit ratio, lenders are likely raise deposit rates in the near-term.  Besides, ahead of the February 1 Budget, a debate has been brewing about the exemption of long-term capital gains tax on stocks.

The street shrugged off Moody’s statement that recently introduced Goods and Services Tax (GST) mechanism is still a work in progress that will ultimately result in formalization of economy. The report added that it was a necessary step to help banks and such reforms should continue. Market participants also overlooked a private report enlightened that India has been ranked sixth in the list of wealthiest countries with total wealth of $8,230 billion, while the United States topped the chart. Additionally, latest data from the regulator showed that as many as 1,235 fresh foreign portfolio investors (FPIs) were registered with SEBI in April-December of the current fiscal, mainly due to their continued interest in the Indian capital markets.

On the global front, Asian markets closed mixed. Growth in China’s manufacturing sector slowed more than expected in January to an 8-month low in the face of a cooling property market and tighter pollution rules that have curtailed factory output. South Korea’s industrial production unexpectedly fell in December, failing to recover after barely expanding in November as car output contracted sharply. The European markets were trading mostly in green as investors surveyed a mixed back of results from some of the region's biggest industrial names. Consumer price inflation (CPI) in the euro zone eased slightly in January, diminishing pressure on the European Central Bank to move forward with further removal of monetary accommodation.

The BSE Sensex ended at 35957.55, down by 76.18 points or 0.21% after trading in a range of 35818.41 and 36050.69. There were 13 stocks advancing against 18 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index declined 1.27%, while Small cap index was down by 0.78%. (Provisional)

The few gaining sectoral indices on the BSE were Energy up by 0.63%, Oil & Gas up by 0.44%, Bankex up by 0.33% and Telecom was up by 0.03%, while Healthcare down by 1.58%, FMCG down by 1.41%, IT down by 1.13%, Metal down by 1.13% and Consumer Disc down by 1.06% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Kotak Mahindra Bank up by 1.53%, HDFC up by 1.32%, Reliance Industries up by 1.29%, Tata Motors up by 0.77% and IndusInd Bank up by 0.61%. (Provisional)

On the flip side, Tata Steel down by 4.46%, Dr. Reddy’s Lab down by 3.85%, Hindustan Unilever down by 2.51%, Coal India down by 2.14% and Sun Pharma down by 2.00% were the top losers. (Provisional)

Meanwhile, expressing optimism over the governments’ significant move of Goods and Services tax (GST)  implementation in the country, global credit rating agency, Moody's Investors Service’s Vice-President (Sovereign Risk Group) William Foster has said that recently introduced new tax regime is still a work in progress and expected to stabilise in the next few quarters. Foster noted that this move will help in formalisation of Indian economy.

Moody's Vice-President also praised the Centre’s move to recapitalise public sector banks and expressed need of more such reforms in the country. He further noted that recapitalization was a necessary step to help banks and the government has provided necessary capital to the public sector banks to take the write down. On the upcoming union budget, he said that the government’s focus on spending towards capital formation will help strengthen the credit growth in economy.

Besides, the ratings agency is eyeing government’s intended use of funds and expecting that the borrowing will pay off if funds are allocated to the infrastructure spending. William Foster, however, pointed that targeting expenses on anticipated revenue is difficult. Besides, the rating agency said that oil prices will hover in range of $40-60 bbl in medium term as high oil production in US will put down prices.

The CNX Nifty ended at 11029.90, down by 19.75 points or 0.18% after trading in a range of 10979.30 and 11058.50. There were 23 stocks advancing against 27 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bharti Infratel up by 2.19%, Kotak Mahindra Bank up by 1.93%, Tech Mahindra up by 1.34%, Reliance Industries up by 1.22% and HDFC up by 1.11%. (Provisional)

On the flip side, Tata Steel down by 4.49%, Dr. Reddy’s Lab down by 3.56%, UPL down by 2.51%, Hindustan Unilever down by 2.50% and Cipla down by 2.34% were the top losers. (Provisional)

The European markets were trading mostly in green; Germany’s DAX increased 35.31 points or 0.27% to 13,233.02, France’s CAC increased 7.56 points or 0.14% to 5,481.34, while UK’s FTSE 100 decreased 0.79 points or 0.01% to 7,587.19.

Asian equity markets ended mixed on Wednesday, as investors digested a slew of regional data and looked ahead to cues from the US Federal Reserve meeting for any indications on interest rates. Underlying sentiment remained cautious somewhat in the wake of falling oil prices, rising bond yields and US President Donald Trump’s tough rhetoric on immigration and North Korea during his first State of the Union address. Chinese shares ended lower after a government report showed activity in China’s vast manufacturing sector expanded at a slower pace in January. The official PMI slipped to 51.3 from December’s 51.6. Growth in the services sector picked up pace, with the corresponding PMI rising to 55.3 from 55 in December. Further, Japanese shares fell for the sixth straight session, as the yen rose against the dollar on concerns over political wrangling on US immigration policy. Investors largely ignored positive readings on the country's industrial production and consumer confidence. Meanwhile, the Malaysian market was closed for Thaipusam.