Post Session: Quick Review

Indian equity benchmarks traded below neutral line throughout the day and ended with cut of more than six tenth of a percent as traders remained on sidelines ahead of December quarter GDP data to be announced later in the day. Indian equity benchmarks made a pessimistic start in early deals as sentiments were dampened on report that the total revenue collection under GST for the month of January, till February 25, stood at Rs 86,318 crore compared to Rs 86,703 crore collected in December 2017. The average GST revenue collections seem to have settled around Rs 86,000 crore. About 30% taxpayers registered with GST are still not filing their returns. Separately, Care Ratings highlighted that the Punjab National Bank (PNB) scam could negatively impact around 10,000 people working in the gems and jewellery sector as business woes of Gitanjali Group and Nirav Modi firms continue. In addition, the banking sector’s non-performing assets (NPAs) in the gems and jewellery sector may surge to 30 percent from the current 11 percent of loans disbursed in the troubled segment.

Some anxiety also spread among investors after a monthly survey showed that India’s manufacturing sector growth eased slightly in February as factory output and new business orders rose at a slower pace. The Nikkei India Manufacturing Purchasing Managers Index (PMI) fell from 52.4 in January to 52.1 in February, indicating a modest improvement in operating conditions. Additionally, in niggling worry for the Centre, the fiscal deficit for the April-January period stood at Rs 6.77 lakh crore. That is 113.7% of FY18 target, which means Modi government may not do any extra spending in the remaining two months of the year. The government outlined a fiscal deficit target of 3.3 per cent of GDP in 2018-19 as against a revised estimate of 3.5 per cent in 2017-18, indicating some fiscal consolidation, albeit at a slower pace than that recommended under the Fiscal Responsibility and Budget Management (FRBM) framework.

The street shrugged off Moody’s Investors Service report which estimated that India will grow 7.6 per cent in calendar year 2018 and 7.5 per cent in 2019, amid signs of economic recovery from impact of demonetization and GST. The report added that the Budget for 2018-19 includes some measures that could stabilize the rural economy that was disproportionately hit by the demonetization policy and is yet to recover.  Separately, a private poll showed that India might have regained the status of the world’s fastest-growing major economy in the October-December quarter, driven by higher government spending and a pick-up in manufacturing and services.

On the global front, Asian markets closed in red. Japan’s factory output fell by the most in nearly seven years in January, badly missing forecasts. Retail sales also dropped more than expected. Even so, the economy’s export-driven growth trend remains intact. The European markets were trading in red as a batch of corporate results failed to change the negative trend set on Wall Street overnight. Euro zone consumer prices rose in February. The bloc’s statistics agency Eurostat said its consumer price inflation rose 1.2% in February from the same month a year earlier.

The BSE Sensex ended at 34125.05, down by 221.34 points or 0.64% after trading in a range of 34076.45 and 34302.74. 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 0.24%, while Small cap index was up by 0.28%. (Provisional)

The top gaining sectoral indices on the BSE were IT up by 0.63%, TECK up by 0.38%, Consumer Durables up by 0.31% and Realty up by 0.19%, while Metal down by 1.37%, Bankex down by 1.04%, Basic Materials down by 0.81%, FMCG down by 0.79% and Capital Goods down by 0.58% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Infosys up by 1.89%, Power Grid up by 0.30%, SBI up by 0.26%, Dr. Reddy’s Lab up by 0.23% and Reliance Industries up by 0.22%. (Provisional)

On the flip side, Sun Pharma down by 2.14%, Hindustan Unilever down by 2.00%, Axis Bank down by 2.00%, Mahindra & Mahindra down by 1.93% and ICICI Bank down by 1.92% were the top losers. (Provisional)

Meanwhile, falling to 4-month low, India’s manufacturing sector activity signaled a slightly slower growth in February month, as output and new orders increased at slower rates. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ Index (PMI) - a composite single-figure indicator of manufacturing performance - slowed down to 52.1 in February from 52.4 in January. However, the reading signaled an expansion for the seventh consecutive month, remained above the no-change mark of 50.0.

As per the survey report, total new orders grew for the fourth successive month but at the slower rate. Besides, the employment growth also increased at modest rate but slightly faster rate than at the start of 2018, as firms raised their staffing levels in line with greater production requirements. The firms also raised their purchasing activity, on the back of improved demand conditions but the rate of expansion eased to the weakest since October’s fall and was marginal.

On the price front, rising input costs continued to spark cost pressures on manufacturers and in order to pass on their cost burdens to clients, firms raised output charges thereby extending the period of inflation to seven months. The survey found that the input costs increased for the twenty-ninth month during February, with higher prices seen in the products such as steel, chemicals and fuel, while output price inflation was the sharpest since last February, although it’s modest.

The CNX Nifty ended at 10487.95, down by 66.35 points or 0.63% after trading in a range of 10461.55 and 10535.50. There were 20 stocks advancing against 30 stocks declining on the index. (Provisional)

The top gainers on Nifty were Infosys up by 1.71%, UPL up by 1.05%, Eicher Motors up by 0.98%, Cipla up by 0.77% and Coal India up by 0.76%. (Provisional)

On the flip side, Vedanta down by 3.08%, HPCL down by 2.81%, ICICI Bank down by 2.53%, Hindustan Unilever down by 2.40% and Indiabulls Housing down by 2.30% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 16.77 points or 0.23% to 7,265.68, Germany’s DAX decreased 18.54 points or 0.15% to 12,472.19 and France’s CAC decreased 10.37 points or 0.19% to 5,333.56.

The Asian markets closed in red on Wednesday after hawkish comments from Federal Reserve Chairman Jerome Powell triggered speculation that the Fed might hike rates four times this year instead of the expected three. Chinese shares ended lower as official data showed the manufacturing PMI for February hit a 19-month low. The manufacturing PMI came in at 50.3, missing forecasts for 51.1 and down from 51.3 in January. The non-manufacturing PMI slowed to 54.4 versus forecasts for 55.0 and down from 55.3 in the previous month. Further, Japanese shares fell as the Bank of Japan's decision to trim purchases of super long government bonds helped to lift the yen and a slew of data releases disappointed investors. Japan's industrial production fell at a faster rate than forecast in January and retail sales dropped 1.8 percent month-on-month, while housing starts logged a double-digit decline at the start of the year, separate reports showed. Meanwhile, the markets in Taiwan remained closed for Peace Memorial Day.