Benchmarks end February F&O expiry session with marginal cut

Indian equity markets truly depicted the choppiness of F&O expiry session and settled with marginal cut on Thursday. Markets started the session on pessimistic note as sentiments remained downbeat on report that 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. 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. Traders also remained concerned 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. 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.

Sentiments also remained dampened on a private report stating that goods and services tax (GST) mop up has dropped yet again for the month of January. GST collection stands at around Rs 82,000 crore so far. That is a sharp decline from the December revenue figure of over Rs 86,000 crore. However, recovery in last leg of trade helped markets to pare most of their early losses to end with meager cut as traders took some solace with a 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. Meanwhile, foreign direct investment (FDI) in the country grew by a meagre 0.27 per cent to $35.94 billion during the first 9 months of the current fiscal. The FDI inflows were $35.84 billion during the April-December period of last fiscal, 2016-17.

On the global front, European markets were trading in red terrain 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. Asian markets ended mostly in red, as investors worried surging bond yields after the Fed’s latest comments on the economy will test equity valuations.

Back home, NITI Aayog CEO Amitabh Kant said that the Aayog has already recommended 40 sick PSUs for strategic disinvestment and is making an additional list of sick PSUs that can be privatised. The government expects to raise Rs 80,000 crore from PSU disinvestment in the next fiscal, lesser than Rs 1 trillion raised this year. On the sectoral front, most of the fertilizers stocks remained under pressure on ICRA’s report that Direct Benefit Transfer (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 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.

Finally, the BSE Sensex slipped 25.36 points or 0.07% to 33,819.50, while the CNX Nifty was down by 14.75 points or 0.14% to 10,382.70.

The BSE Sensex touched a high and a low of 33,868.74 and 33,691.42, respectively and there were 10 stocks on gaining side as against 21 stocks on losing side on the index.

The broader indices ended in red; the BSE Mid cap index declined 0.54%, while Small cap index was down by 0.43%.

The top gaining sectoral indices on the BSE were Realty up by 0.70%, IT up by 0.59%, Healthcare up by 0.37%, TECK up by 0.23% and Bankex was up by 0.13%, while Oil & Gas down by 1.46%, Power down by 1.11%, PSU down by 1.00%, Energy down by 0.98% and Telecom was down by 0.95% were the top losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 3.32%, Adani Ports & SEZ up by 2.16%, Kotak Mahindra Bank up by 2.01%, Indusind Bank up by 1.86% and Mahindra & Mahindra up by 1.76%. On the flip side, Dr. Reddy’s Lab down by 2.19%, ONGC down by 2.05%, Power Grid Corporation down by 1.88%, Tata Motors down by 1.59% and Maruti Suzuki down by 1.47% were the top losers.

Meanwhile, NITI Aayog’s CEO Amitabh Kant has said that the Aayog is working on a new list of sick and loss-making public sector undertakings (PSUs) that could be privatized. He said that they have already sent four lists of sick PSUs and are working on the fifth list, and added that they will also prepare sixth and seventh list of sick PSUs.

Kant has stated that the Prime Minister’s Office (PMO) had asked the government think-tank to look into the viability of sick state-run companies. He also pointed out that the Aayog has already recommended 40 sick PSUs for strategic disinvestment. He noted that Department of Investment and Public Asset Management (DIPAM) is working on it and the process is on advanced stage.

During the financial year 2017-18, the government raised around Rs 1 lakh crore from PSU disinvestment and set a target of Rs 80,000 crore for FY19. In the Union Budget presented on February 1 last year, Finance Minister Arun Jaitley had set the target of disinvestment in public sector units at Rs 72,500 crore. This included Rs 46,500 crore as disinvestment of CPSEs, Rs 15,000 crore from strategic disinvestment and Rs 11,000 crore from listing of insurance companies. 

The CNX Nifty traded in a range of 10,397.55 and 10,340.65. There were 16 stocks in green as against 34 stocks in red on the index.

The top gainers on Nifty were Sun Pharma up by 2.99%, Aurobindo Pharma up by 2.78%, Adani Ports & SEZ up by 2.12%, Indusind Bank up by 1.91% and Mahindra & Mahindra up by 1.88%. On the flip side, ONGC down by 4.49%, Eicher Motoer down by 2.13%, Dr. Reddy’s Lab down by 1.96%, Maruti Suzuki down by 1.91% and Power Grid Corporation down by 1.86% were the top losers.

European markets were trading in red; Germany’s DAX declined 94.58 points or 0.76% to 12,375.91, UK’s FTSE 100 decreased 67.68 points or 0.93% to 7,213.89 and France’s CAC was down by 19.35 points or 0.36% to 5,282.82.

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.