Post Session: Quick Review

Indian equity benchmarks traded below the neutral line throughout the day and ended in negative territory on F&O expiry day. Markets recovered in last hour of trade but failed to maintain the recovery. The market breadth was in favour of declines with one stock advancing against every two declining ones. Indian equity benchmarks started the trade on a pessimistic note as foreign institutional investors increased their bearish bets on Indian equities amid rising uncertainty over macro-economic indicators and worries over depleting credit quality of banks. Sentiments remained under pressure on report that minutes from the Reserve Bank of India’s meeting this month showed monetary policy committee members expressing concerns about accelerating inflation, although that was also tempered by uncertainty about the strength of an economic recovery.

Separately, the country’s investment climate during April-December period of this fiscal looks subdued with declining figures in announcements of new projects and the number of projects under execution. According to data by the Centre for Monitoring Indian Economy (CMIE), the value of investment in new projects during April-December was Rs 4.43 trillion, less than half of Rs 9.21 trillion in the comparable period of last fiscal. Moreover, the value of projects completed at Rs 2.83 trillion was down by 35.3 per cent from Rs 4.38 trillion in the year ago period.

Meanwhile, some concerns also came with US Department of Agriculture (USDA) Chief’s statement that the recently announced rise in minimum support price of agri commodities by the government is not the best way to increase farmers’ income. Separately, investors took note that Foreign Direct Investment (FDI) in India grew marginally by 0.27 percent to $35.94 billion during the first nine months of the current fiscal year 2017-18. According to data released by the Department of Industrial Policy and Promotion (DIPP), the country has received $35.84 billion FDI during April-December 2016-17. The street shrugged off report that India’s Gross Domestic Product (GDP) growth in the third quarter of the current fiscal is likely to be in the range of 6.5-7 per cent and may expand further in following three months. The country’s GDP grew by 6.3 per cent in July-September quarter of the fiscal, up from 5.7 per cent in the first quarter.

On the global front, Asian markets closed mostly in red. The dollar held onto most of its overnight gains courtesy of higher Treasury yields, though the sudden shift to safety spurred demand for the Japanese yen. The European markets were trading in red as a flurry of corporate results failed to lift sentiments. Britain’s economy grew more slowly than first thought during the three months to December, raising questions about the economy’s strength as the Bank of England prepares to raise interest rates. Gross domestic product (GDP) grew by 0.4 percent between October and December.

Back home, majority of fertilizers stocks traded under pressure in today’s trade on ICRA’s report that DBT will negatively impact fertilizer industry’s working capital cycle in the near term. The report highlighted that owing to the large subsidy backlog, inadequate subsidy provisioning in the Union Budget as well as shifting of subsidy realization from point of dispatch to point of retail sale, the implementation of DBT is likely to have a negative impact on the working capital cycle of the fertilizer industry in the near term. The Direct Benefit Transfer (DBT) was recently rolled out on a pan India basis from February 1, 2018 after completion of the pilot stage that was implemented across 19 districts.

The BSE Sensex ended at 33801.33, down by 43.53 points or 0.13% after trading in a range of 33691.42 and 33868.74. There were 9 stocks advancing against 22 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.65%, while Small cap index was down by 0.50%. (Provisional)

The top gaining sectoral indices on the BSE were Healthcare up by 0.56%, IT up by 0.55%, Realty up by 0.48%, TECK up by 0.19% and Bankex up by 0.11%, while Oil & Gas down by 1.51%, Energy down by 1.21%, Power down by 1.16%, Consumer Durables down by 1.10% and PSU down by 1.06% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Sun Pharma up by 4.21%, Adani Ports & Special Economic Zone up by 2.39%, Mahindra & Mahindra up by 2.18%, Kotak Mahindra Bank up by 1.63% and IndusInd Bank up by 1.55%. (Provisional)

On the flip side, ONGC down by 2.31%, Dr. Reddy’s Lab down by 2.11%, Maruti Suzuki down by 1.80%, Power Grid down by 1.72% and Tata Motors down by 1.51% were the top losers. (Provisional)

Meanwhile, in line with the general decline in interest rates, India’s retirement fund manager, the Employees’ Provident Fund Organization (EPFO) has slashed the interest rate on provident fund (PF) deposits to a five-year low of 8.55 per cent for 2017-18 from 8.65 per cent last fiscal, for its over 6 crore subscribers.

As per EPFO, the reduction in interest rate by 10 basis points will leave a surplus of Rs 586 crore as against Rs 695 crore surplus left in the last fiscal with interest rate of 8.65 per cent. The rate of interest decided at the Central Board of Trustees meeting will be vetted by the finance ministry and after approval, the rate of interest will be credited into subscribers’ account.

Labour Minister Santosh Gangwar has said that the EPFO received 8 per cent returns on its bond investments but it is able to pay 8.55 per cent rate because it has sold some of its investments in ETFs. He also explained that it is higher than 7.6 per cent provided to General Provident Fund and Public Provident Fund subscribers.

The CNX Nifty ended at 10376.25, down by 21.20 points or 0.20% after trading in a range of 10340.65 and 10397.55. There were 16 stocks advancing against 34 stocks declining on the index. (Provisional)

The top gainers on Nifty were Sun Pharma up by 3.84%, Aurobindo Pharma up by 3.11%, Adani Ports & Special Economic Zone up by 2.38%, IndusInd Bank up by 1.99% and Mahindra & Mahindra up by 1.86%. (Provisional)

On the flip side, BPCL down by 4.35%, ONGC down by 2.13%, Eicher Motors down by 2.07%, Dr. Reddy’s Lab down by 1.93% and Maruti Suzuki down by 1.81% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 75.4 points or 1.04% to 7,206.17, Germany’s DAX decreased 126.03 points or 1.01% to 12,344.46 and France’s CAC decreased 34.05 points or 0.64% to 5,268.12.

The Asian markets closed mostly in red on Thursday, bond yields hit a fresh four-year high and the dollar stood near a one-week high against a basket of major currencies after the minutes from the Federal Reserve's January meeting showed the central bank plans to raise interest rates three times in 2018. According to the Fed minutes, policymakers expressed rising confidence on inflation while agreeing that the strengthening in the near-term economic outlook increased the likelihood that a gradual upward trajectory of the federal funds rate would be appropriate. Japanese shares ended to near one-week low as US rate hike bets boosted demand for the yen. Though, Chinese shares ended higher as traders returned to their desks following the Lunar New Year holidays.