Post Session: Quick Review

Indian equity benchmarks traded in a narrow range for most part of the day and ended with cut of more than seven tenth of a percent. Last hour of selling dragged the markets lower with Nifty drifting below 10,500 mark. The market breadth was in favour of declines with one stock advancing against each declining one. The equity benchmarks traded slightly in green in early deals as sentiments were upbeat after a survey by economic think tank NCAER enlightened that the Business Confidence Index rose 9.1% in December quarter 2017 over the previous three months as overall sentiment remained buoyant. The NCAER Business Confidence Index (N-BCI) had declined 12.9% in the September quarter as the economy was still adjusting to the implementation of GST, affecting business sentiments. Some support also came from a foreign brokerage report stating that inflation is peaking off and the Reserve Bank of India (RBI) is expected to cut rates by 25 bps in August if monsoon is normal. It added that inflation risks are overdone. January inflation stood at 5.1%, a shade below December’s 5.2%, and it is tracking February inflation at 4.7% with tomato/onion prices slipping.

Meanwhile, investors took note of a report enlightening that after hitting a 17-month high of 5.21% in the month of December 2017, India’s retail inflation cooled down to 5.07% in January 2018, due to easing prices of vegetables, fruits and fuel components. The consumer price index (CPI) number for January was in line with the RBI’s revised inflation projection of 5.1% for the quarter ended March, up from its previous forecast of 4.3-4.7%. Separately, India’s industrial output registered a growth of 7.1% in the month of December 2017, as compared to 2.4% in December 2016, led by robust performance by manufacturing as well as higher off-take of capital goods and non-durable consumer goods.

However, markets pared all their gains in last leg of trade. Traders remained concerned with CARE Ratings in its report highlighting that revenue growth of India Inc nearly halved to 9.3 per cent in the third quarter from 17.7 per cent a year-ago, due to a combination of factors, including the ongoing restocking process and adjustment to GST at the SME level. Similarly, net profit too clipped lower at 24.6 per cent for the three months to December 2017 from 25.3 per cent a year-ago.

On the global front, Asian markets closed mostly in green. Japan’s economy posted its longest continuous expansion since the 1980s boom as fourth quarter growth was boosted by consumer spending, and moved Prime Minister Shinzo Abe’s revival plan another step closer to vanquishing decades of stagnation. The European markets were trading in green lifted by strong results and German economic data. Strong exports drove robust growth in Germany at the end of last year while inflation stayed subdued in January, suggesting Europe’s biggest economy is on track to extend its upswing well into 2018.

Back home, banking stocks were under pressure on report that more than Rs 2 lakh crore worth of stressed loans may be headed to bankruptcy court after the Reserve Bank dumped various restructuring schemes and pronounced such courts as the final arbiter of a defaulting company’s future. These loans are mostly from infrastructure sectors such as power, telecom, roads and ports and are in different stages of restructuring under plans such as strategic debt restructuring (SDR) or the so-called sustainable structuring of stressed assets (S4A). Separately, a report by India Ratings highlighted that persistent rise in bond yields is likely to shave Rs 30,500 crore from the banks’ balance-sheets in the current financial year, with state-run lenders being the worst hit. 

The BSE Sensex ended at 34050.02, down by 250.45 points or 0.73% after trading in a range of 34050.02 and 34473.43. There were 12 stocks advancing against 19 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.05%, while Small cap index was down by 0.02%. (Provisional)

The top only gaining sectoral indices on the BSE were Energy up by 0.54%, Telecom up by 0.24%, Industrials up by 0.15% and Realty up by 0.10%, while PSU down by 1.99%, Bankex down by 1.97%, Healthcare down by 0.86%, Power down by 0.82% and TECK down by 0.68% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Adani Ports & Special Economic Zone up by 1.98%, Coal India up by 1.98%, Reliance Industries up by 1.68%, Bharti Airtel up by 1.59% and Tata Motors - DVR up by 1.56%. (Provisional)

On the flip side, Yes Bank down by 4.75%, SBI down by 4.21%, Axis Bank down by 3.67%, Sun Pharma down by 2.95% and ONGC down by 2.80% were the top losers. (Provisional)

Meanwhile, credit rating agency, Care Ratings in its latest report ‘Corporate Performance: Q3-FY18’ has said that India Inc witnessed much lower revenue growth in the third quarter of the current fiscal at 9.3% as against 17.7% in the previous year, on the back of factors like ongoing restocking process, adjustment to goods and services tax (GST) especially at the SME level, limited pick-up in demand and high base effect.

As per the report, on year-on-year basis, net profit growth of the companies was also lower at 24.6% in Q3 FY18 as against 25.3% in Q3 FY17. However, the rating agency noted that overall net profit margin improved to 8.3% from 7.3% during reported period. Besides, other income also reported impressive growth in Q3, but it contributed less than 3% in total income.

Care Ratings further said that overall performance of India Inc in Q3 is on recovery path and consolidated picture is lower in terms of profit, which means that Q3 has been able to overwhelm the lower performance in the first two quarters. The rating agency estimated that if such performance continued to recover or improved in Q4, the corporates would join upward trajectory next year.

The report is based on the profitability numbers of a sample of 1,567 companies over the last two years and it excluded banks as they have extreme performance due to the non-performing asset (NPA) issue and also finance companies due to the high interest cost component.

The CNX Nifty ended at 10460.60, down by 79.15 points or 0.75% after trading in a range of 10456.65 and 10590.55. There were 14 stocks advancing against 36 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tech Mahindra up by 3.07%, Indiabulls Housing up by 1.99%, Adani Ports & Special Economic Zone up by 1.80%, Bharti Airtel up by 1.67% and Reliance Industries up by 1.47%. (Provisional)

On the flip side, Yes Bank down by 4.76%, SBI down by 4.59%, Axis Bank down by 3.85%, ONGC down by 3.38% and Bharti Infratel down by 3.07% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 45.86 points or 0.64% to 7,213.87, Germany’s DAX increased 76.28 points or 0.63% to 12,272.78 and France’s CAC increased 28.7 points or 0.56% to 5,137.94.

Asian stocks closed mostly in green on Wednesday after slightly firmer lead from Wall Street, which recorded a third consecutive day of gains. Meanwhile, investors awaited the release of US inflation data due later in the day, which may provide further clues on interest-rate changes in the world's largest economy. It is feared that a spike in inflation on the back of a tightening labor market and increased government spending may push Treasury yields higher once again and send equities spiraling lower. Chinese stocks eked out modest gains in thin trade as many traders had already left for the week-long Lunar New Year holiday that starts on Thursday. Though, Japanese shares hit a four-month low as the dollar slid to a 15-month low against the yen and data showed the country's GDP grew at a slower than expected 0.5 percent annual pace in the fourth quarter, marking the eighth straight quarter of expansion.