Post Session: Quick Review

Indian equity benchmarks traded on a volatile note and ended with minor cut post Budget. Finance Minister Arun Jaitley last full Budget sent the domestic equity market into a tailspin, while Nifty managed to hold 11,000 mark and Sensex managed to end just above 35,900 mark. The market breadth was mildly in favour of declines with one stock advancing against every one declining one. The equity benchmarks made an optimistic start and traded with gain as sentiments remained upbeat after the Central Statistics Office revised the Gross Domestic Product (GDP) growth rate for 2015-16 to 8.2% from the earlier estimates of 8% and kept the 2016-17 growth unchanged at 7.1%. The real GDP or GDP at constant (2011-12) prices for the years 2016-17 and 2015-16 stands at Rs 121.96 lakh crore and Rs 113.86 lakh crore respectively, showing growth of 7.1% during 2016-17 and 8.2% during 2015-16.

However, selling crept in and slipped below neutral line after finance minister Arun Jaitley revised the fiscal deficit for FY18 to 3.5 per cent from 3.2 per cent targeted earlier. The FM also announced a 10 per cent levy on capital gains of over Rs 1 lakh without the benefit of indexing with immediate effect, while it left the personal income-tax structure unchanged. Investors were also concerned with report that India’s core sector output grew at a slower pace of 4.0% in December 2017, from 7.4% in November 2017, on the back of declining coal and crude oil output. According to the data released by the ministry of Commerce and Industry showed the combined Index of eight core industries stood at 129.1 in December, 2017, which was 4.0% higher compared to the index of December, 2016. Separately, consumers are continuing to hold back on discretionary spending with categories such as television, home appliances, fashion, lifestyle and apparel posting poor sales in the October-December quarter, with no recovery in sight in January as well, despite almost all brands and retailers running end-of-season and Republic Day sales. 

On the global front, Asian markets closed mixed. Growth in China’s manufacturing sector remained elevated in January, as new business led factories to raise output at the start of the year. The European markets were trading in green following three days of losses, supported by a flurry of mostly positive results and gains by banks. The euro zone’s booming manufacturing industry raced into 2018, churning out goods last month at one of the fastest paces in over 20 years, a survey showed, suggesting the economic recovery still has momentum.

Back home, railway stocks showed mixed reactions as Finance Minister Arun Jaitley’s proposal to increase railway capex failed to enthuse investors. The minister proposed to increase railway capex to Rs 1.48 lakh crore in FY19, up 13 per cent over Rs 1.31 lakh crore for FY18. Textile companies too failed to draw solace with FM Arun Jaitley’s quantum of fund allocation to the textile sector in the Union Budget speech 2018-19. The finance minister announced that the government will allocate Rs 7,148 crore for the sector.

The BSE Sensex ended at 35923.03, down by 41.99 points or 0.12% after trading in a range of 35501.74 and 36256.83. There were 13 stocks advancing against 18 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.49%, while Small cap index was down by 0.04%. (Provisional)

The top gaining sectoral indices on the BSE were Capital Goods up by 1.75%, Auto up by 0.65%, FMCG up by 0.63%, Industrials up by 0.62% and Basic Materials up by 0.48%, while Consumer Durables down by 1.58%, Energy down by 1.35%, Healthcare down by 1.34%, PSU down by 1.21% and Oil & Gas down by 1.11% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Mahindra & Mahindra up by 4.66%, Larsen & Toubro up by 2.92%, Bajaj Auto up by 2.13%, Asian Paints up by 2.05% and ITC up by 1.62%. (Provisional)

On the flip side, Sun Pharma down by 4.22%, ONGC down by 4.11%, Dr. Reddy’s Lab down by 2.94%, SBI down by 2.54% and ICICI Bank down by 1.71% were the top losers. (Provisional)

Meanwhile, amid slower expansion in output and new orders, India’s manufacturing sector growth lost its momentum in the month of January, after hitting 5 year high in the previous month. As per the survey report, the seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ Index (PMI)-a composite single-figure indicator of manufacturing performance- slowed down to 52.4 in January from 54.7 in December. However, the reading signaled an expansion for the sixth consecutive month, remaining above the no-change mark of 50.0.

As per the survey report, thought the output rose to continue expansion rally to six months, rate of expansion was the weakest since October and was below the series average, in the month of January. Following the same trend, new order book volumes too increased for the third consecutive month but it also increased at slowest pace. Besides, job creation increased, owing to improved demand conditions but also at a modest pace, which was the weakest since last October. The report further said that outstanding business continued to rise during January, amid reports of delayed payments but the rate of backlog accumulation eased to a marginal pace.

On the price front, input cost inflation remained marked and broadly similar to December’s eight-month high. However, the report found that intensive competitive conditions restricted the firms to fully pass on higher cost burdens to customers, resulting in marginal output charge inflation. Further, firms increased their purchasing activity in the reported month, on the back of greater output requirements.

The CNX Nifty ended at 11020.55, down by 7.15 points or 0.06% after trading in a range of 10878.80 and 11117.35. There were 27 stocks advancing against 23 stocks declining on the index. (Provisional)

The top gainers on Nifty were Mahindra & Mahindra up by 4.97%, Eicher Motors up by 4.40%, Bajaj Finance up by 3.88%, Larsen & Toubro up by 2.90% and Bajaj Auto up by 2.41%. (Provisional)

On the flip side, Sun Pharma down by 4.22%, ONGC down by 3.96%, Dr. Reddy’s Lab down by 2.94%, Aurobindo Pharma down by 2.91% and Lupin down by 2.60% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 11.48 points or 0.15% to 7,545.03, Germany’s DAX increased 64.83 points or 0.49% to 13,254.31 and France’s CAC increased 31.05 points or 0.57% to 5,512.98.

Asian equity markets ended mixed on Thursday after the US Federal Reserve left its key rate unchanged, as widely expected, but set the stage for a rate hike at its next meeting in March. Japanese shares snapped a six-day losing streak as the yen weakened against the dollar and a survey showed Japan's manufacturing sector expanded at a faster rate in January. Chinese shares fell as investors dumped firms which are expected to report weak 2017 earnings and took profits ahead of the upcoming long Lunar New Year holidays. China Caixin manufacturing data matched expectations, helping limit losses across the region. The manufacturing sector in China continued to expand in January, and at a steady pace, the latest survey from Caixin showed with a PMI score of 51.5. That was in line with expectations and unchanged from the December reading. Meanwhile, the Malaysian market was closed for the Federal Territory Day.