Post Session: Quick Review

Indian equity benchmarks ended the lackluster day of trade in green terrain on Wednesday. The key gauges snapped their losing streak for three straight session on account of buying in last hour of trade. The market breath was in favour of declines with one stock advancing against every two declining ones. Markets pared all of their initial gains and turned flat in early deals as trouble mounted for PNB with the Central Bureau of Investigation (CBI) widening the probe into the Rs 11,400 crore fraud at the lender to include the top brass. Though, traders got some solace as rating agency India Ratings and Research revised the outlook on infrastructure sector to stable for the next fiscal on signs of improvement in projects. The agency added that the infrastructure sector is showing signs of stability, although pockets of stress still linger. The outlook for telecom has been revised to negative-to-stable from negative. The outlooks for thermal power, oil and gas, power, ports and airports remain unchanged. Separately, Information Technology (IT) stocks were buzzing in today’s trade on reacting positively to the rupee’s depreciation. Besides, the National Association of Software and Solutions Companies (NASSCOM) has forecasted India’s IT industry will grow at 7-9 percent in the next financial year 2018-19 as against 7.8 percent in 2017-18, despite of multiple global headwinds and uncertainties in the software services space.

Meanwhile, some buying also crept in on foreign brokerage report that India’s medium-term potential growth is likely to be above 7 per cent, backed by policy reforms, higher investments and stable global growth environment. The report added that India ranks higher in medium-term growth potential compared to other emerging markets like Brazil, Russia, Indonesia and China. Investors took note of Reserve Bank of India’s decision to constitute a five-member committee under the chairmanship of YH Malegam, a former RBI board member, in order to look into the reasons for high divergence observed in asset classification and provisioning in the credit portfolio of banks. Apart from this, the expert committee will check the factors leading to rising incidence of fraud in the banking system. The market may remain volatile this week as traders may roll over positions in the Futures & Options (F&O) segment from the near month i.e. February 2018 series to next month i.e. March 2018 series. The near month February 2018 derivatives contracts will expire on Thursday i.e. February 22, 2018.

On the global front, Asian markets closed mostly in green. The former BOJ board member Sayuri Shirai said that the new Bank of Japan leadership won’t be able to raise interest rates this year as the central bank missed the best opportunity to do so in 2017. Shirai added that stable markets, solid economic growth and a tightening job market would have allowed the BOJ to kick off the process of normalizing its crisis-mode stimulus last year. The European markets were trading in red. A survey showed that euro zone business growth has slowed more than expected this month but remains robust as higher prices and a stronger currency take a toll, yet firms are the most optimistic in at least 5-1/2 years.

Back home, mixed reactions were witnessed in sugar stocks on ICRA’s report that a raft of government measures earlier this month has come as a relief for sugar mills and sugarcane farmers alike. These include increase in import duty on raw and white sugar to 100%, and restriction on sugar sales by imposition of stockholding limits for February and March. The twin government moves are expected to prop up falling sales realizations, support the profitability of mills by enabling them to tide over the supply glut, and keep their credit profiles stable.

The BSE Sensex ended at 33838.80, up by 135.21 points or 0.40% after trading in a range of 33702.50 and 33911.36. There were 18 stocks advancing against 13 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index slipped 0.03%, while Small cap index was down by 0.20%. (Provisional)

The top gaining sectoral indices on the BSE were IT up by 2.12%, TECK up by 1.71%, FMCG up by 0.88%, Energy up by 0.73% and Oil & Gas up by 0.46%, while Healthcare down by 1.15%, Metal down by 1.04%, Basic Materials down by 0.82%, Realty down by 0.78% and Consumer Durables down by 0.70% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were TCS up by 3.50%, ITC up by 1.98%, ONGC up by 1.68%, SBI up by 1.35% and Yes Bank up by 1.31%. (Provisional)

On the flip side, Sun Pharma down by 6.09%, IndusInd Bank down by 1.96%, Tata Motors down by 1.22%, Bajaj Auto down by 1.14% and NTPC down by 1.04% were the top losers. (Provisional)

Meanwhile, amid signs of improvement in projects such as toll roads and wind, the credit rating agency, India Ratings and Research (Ind-Ra) in its latest report has revised the infrastructure sector outlook to stable for the next financial year (FY19) from negative in the current fiscal year (FY18). However, the report noted that the sector is showing signs of stability even though it is still in stress.

As per the report titled ‘FY19 Infrastructure Outlook: Light at the End of the Tunnel’, toll roads projects came out of pressure during FY17 and going further have showed visible improvements in 2018. Besides, the rating agency highlighted that though the wind sector remained under performance, protection from fixed capacity charges and built up of reserves provide stability to the ratings.

Apart from the infrastructure, Ind-Ra also revised the outlook of telecom sector to negative-to-stable from negative. However, it expects that the sector continues to exhibit significant pressure on its average revenue per user despite industry consolidation and added that FY19 to remain a challenging year for incumbent telecom operators as reflected in Negative Outlook on the ratings. Further, it kept outlooks for thermal power, oil and gas, power, ports and airports to unchanged.

The CNX Nifty ended at 10395.15, up by 34.75 points or 0.34% after trading in a range of 10349.60 and 10426.10. There were 28 stocks advancing against 22 stocks declining on the index. (Provisional)

The top gainers on Nifty were HCL Tech up by 4.16%, Tech Mahindra up by 3.60%, TCS up by 3.27%, ITC up by 1.82% and HPCL up by 1.72%. (Provisional)

On the flip side, Sun Pharma down by 6.36%, Hindalco down by 3.14%, Bajaj Finance down by 2.36%, IndusInd Bank down by 1.58% and Tata Motors down by 1.42% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 12.27 points or 0.17% to 7,234.50, Germany’s DAX decreased 67.59 points or 0.54% to 12,420.31 and France’s CAC decreased 18.52 points or 0.35% to 5,271.34.

The Asian markets closed mostly in green on Wednesday despite weak overnight cues from Wall Street. Underlying sentiment remained cautious somewhat after yields on US treasury debt hit a four-year high on Tuesday on expectations of a faster pace of interest rate increases from the Federal Reserve. The Federal Reserve will release minutes of its January 30-31 meeting later today, as investors look for further insight on inflation and interest rates. The dollar hit a one-week high versus a basket of major currencies, while oil prices fell ahead of the release of US inventory figures expected to show a rise in crude oil stockpiles in the week to February16. Japanese shares ended the choppy session slightly in green as a weaker yen helped offset flash data from IHS Markit showing the country’s manufacturing activity grew at a slightly slower pace in February. Mainland Chinese markets remained closed for Lunar New Year holiday.