Post Session: Quick Review

Indian equity benchmarks traded on a weak note throughout the day and ended with cut of more than one percent as bears took full control over Dalal street. The benchmarks reversed their previous day’s gains with Nifty closing below 10,500 mark. The equity benchmarks made a gap-down opening as global equity markets continued to tumble on worries about rising inflation and higher interest rates. Traders took note that foreign portfolio investors (FPIs) have turned wary on Indian shares again owing to the recent global market sell-off triggered by rising bond yields in developed markets including in the US and the euro zone. FPIs have sold shares worth Rs 3,665.6 crore in the domestic stock market (including provisional data of Wednesday and Thursday) in February after pumping close to Rs 13,000 crore into Indian equities in January. Separately, Former Reserve Bank of India (RBI) governor Duvvuri Subbarao said that Finance Minister Arun Jaitley’s decision to relax on fiscal consolidation to give himself more room to spend is a questionable, and by far the most disappointing decision of the budget. He added that the finance minister inherited a fiscal deficit of 4.2% of GDP and he brought it down to 3.5%. But this was at a time when oil price was low and food prices were soft because of good monsoons.

Investors took note that banks have started raising interest rates even though the RBI is leaving rates unchanged, as risks such as surging bond yields and more provisioning requirements erode their profit. The raising of rates by major banks are likely to follow suit, raising concerns of de facto rate increases in an economy that is growing at its slowest pace in three years and needs private investment.

Meanwhile, sugar stocks were buzzing in today’s trade. The central government has put a ceiling on the amount of sugar mills can sell by imposing significant minimum stocks for the next two months to check falling prices. Millers have welcomed the decision, saying it will help further improve sugar prices, which have already jumped 3.5% since the government doubled import duty on sugar to 100%. Banking stocks were under pressure after India Ratings and Research (Ind-Ra), a subsidiary of Fitch Ratings, in its latest report has stated that public sector banks (PSBs) may need more capital for higher growth. It has estimated that state-run banks may need capital of Rs 2.06 trillion for a credit growth of 8-9% in the financial year 2018-19. It added that the recapitalization amount from the government will go towards sustaining the banks.

On the global front, Asian markets closed in red, with Chinese shares slipping to multi-month lows after Wall Street shares dropped again in the face of rapidly-rising bond yields. In addition to pressure from the drop in global shares, Chinese equities were weighed by factors such as investors attempting to stay liquid ahead of the Lunar New Year holidays and pressure to meet rising margin calls. The European markets were trading in red. Output in the UK manufacturing sector grew 0.3% in December, according to figures published on Friday by the Office for National Statistics (ONS). The 0.4% rise in November was revised down to a gain of 0.2%.

Back home, airline companies stocks Interglobe Aviation, Jet Airways (India) and SpiceJet closed in green amid report that the country is likely to have 855 million air travellers in 2030-31, indicating a three-fold increase in the number of air travellers which was 265 million in 2016-2017. As per the data shared by the government, the growth in air traffic over a period of around 15 years will also be more than double the existing passenger handling capacity of airports in the country, which is at 334 million.

The BSE Sensex ended at 34011.79, down by 401.37 points or 1.17% after trading in a range of 33849.65 and 34070.73. There were 6 stocks advancing against 25 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index was down by 0.09%, while Small cap index was up by 0.23%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 1.29%, Realty up by 0.57%, Power up by 0.42%, Basic Materials up by 0.35% and Utilities up by 0.35%, while Bankex down by 1.70%, Telecom down by 1.12%, Auto down by 0.95%, TECK down by 0.87% and IT down by 0.76% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Steel up by 1.91%, Asian Paints up by 1.18%, Dr. Reddy’s Lab up by 0.87%, Hindustan Unilever up by 0.25% and TCS up by 0.16%. (Provisional)

On the flip side, Yes Bank down by 2.97%, HDFC down by 2.09%, ICICI Bank down by 2.06%, Axis Bank down by 1.99% and Infosys down by 1.97% were the top losers. (Provisional)

Meanwhile, emphasizing the government’s decision to increase the target of providing free liquefied petroleum gas (LPG) connection to 8 crore from 5 crore, Minister of Petroleum and Natural Gas Dharmendra Pradhan has said that as many as 3 crore additional free cooking gas connections will be given to poor households at an extra expense of Rs 4,800 crore and added that the revised target of 8 crore will be achieved by March 2020.

Pradhan further noted that under Prime Minister’s Ujjwala Scheme to make poor women free from the smoke of wood, 5 crore connections were to be given by 2018-19 fiscal year end and total Budgetary allocation made was Rs 8,000 crore and now, the scheme has been extended by one year and the target of beneficiaries also enhanced by 3 crore more connections.

Besides, the Minister also highlighted the expansion in scope of the scheme to cover all the eligible beneficiaries across the country. Earlier, the Ujjwala beneficiaries were being chosen from the Socio Economic Caste Survey (SECC) 2011 list only, but now the list has been expanded to include providing free cooking gas connection to all SC/ST households, forest dwellers, most backward classes, inhabitants of islands, nomadic tribes, tea estates and beneficiaries of Pradhan Mantri Awas Yojana and Antyodaya Yojana.

The CNX Nifty ended at 10469.00, down by 107.85 points or 1.02% after trading in a range of 10398.20 and 10480.20. There were 10 stocks advancing against 40 stocks declining on the index. (Provisional)

The top gainers on Nifty were Cipla up by 2.02%, Tata Steel up by 2.01%, HCL Tech up by 1.88%, Lupin up by 1.16% and Asian Paints up by 0.89%. (Provisional)

On the flip side, Yes Bank down by 3.00%, Tech Mahindra down by 2.37%, Bharti Infratel down by 2.28%, Infosys down by 2.22% and HDFC down by 2.12% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 27.85 points or 0.39% to 7,142.84, Germany’s DAX decreased 31.49 points or 0.26% to 12,228.80 and France’s CAC decreased 19.16 points or 0.37% to 5,132.52.

Asian stocks ended in red on Friday on renewed worries about rising inflation and higher interest rates after the yield on the 10-year US Treasury note neared its highest levels in four years and the Bank of England hinted at somewhat earlier and deeper-than-expected rate hikes. Japan’s Nikkei share average declined after another torrid day for Wall Street, with oil-related stocks leading the broad declines as crude prices slumped. Chinese shares led regional losses as liquidity conditions tightened before the Chinese New Year break starting next week. Meanwhile, Hang Seng Index tumbled and capped its biggest weekly drop since the depths of the global financial crisis in 2008, as tumult on Wall Street rippled across Asia. Further, South Korea's Kospi average fell on worries about inflation and the possibility that the Federal Reserve will raise interest rates faster than expected.