Post Session: Quick Review

Indian equity benchmarks traded mostly in green for most part of the day but ended in red with Nifty slipping below 10,250 mark. The brutal sell-off in last hour of trade dragged the markets lower with Sensex falling around 400 points and Nifty closing at fresh 2018 low. Indian equity benchmarks made an optimistic start and traded in fine fettle in early deals with frontline gauges recapturing their crucial levels. The sentiments were upbeat after credit ratings agency, Crisil Ratings in its latest report projected that India’s gross domestic product (GDP) growth will improve sharply to 7.5% in the next fiscal year 2018-19 (FY19) and added that the country’s GDP will grow at the rate of 6.5% in the current fiscal year (FY18). Some support also came with a report describing recent speculation on GST collection targets for the current and next fiscals as being ‘overtly aggressive’. The report estimated that the Goods and Services Tax collection for 2018-19 would grow at a rate of 14-16 per cent, bringing it closer to the decadal growth rate in indirect taxes of just under 14 per cent. The report added that the country’s gross tax revenue is expected to grow by 16.7 per cent in the next fiscal to Rs 19.1 lakh crore, which estimate is supported by a 10.2% growth in corporation tax and 20.4% rise in personal income tax. Investors took note that the Reserve Bank of India will inject Rs 1 lakh crore short term money into the banking system ahead of the financial year-end that normally sees cash crunch. The move is likely to keep short term rates under check benefiting borrowing companies.

However, heavy selling crept in last hour of trade amid report that Europe has expressed growing concerns about Trump’s protectionist stance on international trade. A report highlighted that the European Union intends to target 2.8 billion euro ($3.5 billion) of US goods ranging from T-shirts and whiskey to motorcycles and ladders should President Donald Trump go ahead with his plan to impose a 25 percent tariff on foreign steel. The EU aims to apply a tit-for-tat levy on a range of consumer, agricultural and steel goods imported from the US. Traders got concerned with a private report enlightening that India has signaled a larger fiscal deficit for the federal government for the year to March 2018 and while it has forecast a lower gap for next year, with a national election due in early 2019 many expect that target to be breached. Compounding those concerns are higher state government deficits, lower-than-expected revenues from the newly introduced goods and services tax, and farm loan waivers.

On the global front, Asian markets closed mostly in green. Japan’s cabinet approved a plan to improve the accuracy of the government’s initial estimate of gross domestic product by collecting more data from the private sector on capital expenditure. Japan’s central bank chief said that a future exit from ultra-easy monetary policy would need to be very gradual. The European markets were trading in green despite uncertainty following Italy’s parliamentary election on Sunday which produced a hung parliament.

Back home, banking stocks witnessed selling spree after CBI told the court that violation of norms for issuance of Letters of Undertaking (LoUs) to benefit billionaire jeweller Nirav Modi and his uncle Mehul Choksi had been going on since 2010. Separately, there were reports that Serious Fraud Investigation Office has summoned ICICI Bank CMD Chanda Kochhar and Axis Bank MD Shikha Sharma in the PNB fraud case. Also, Gitanjali Gems cracked after the Central Bureau of Investigation (CBI) detained Vipul Chitalia, Vice President (Banking Operations) of Gitanjali Group, in Mumbai in the Rs 12,700 crore Punjab National Bank fraud case.

The BSE Sensex ended at 33349.63, down by 397.15 points or 1.18% after trading in a range of 33319.04 and 34060.13. There were 4 stocks advancing against 27 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.94%, while Small cap index was down by 1.45%. (Provisional)

The only gaining sectoral index on the BSE was Consumer Durables up by 0.27%, while Realty down by 2.63%, Telecom down by 2.05%, Bankex down by 1.61%, Auto down by 1.48% and Industrials down by 1.45% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Coal India up by 0.97%, Tata Steel up by 0.73%, IndusInd Bank up by 0.49% and Infosys up by 0.02%. (Provisional)

On the flip side, Sun Pharma down by 3.04%, SBI down by 2.88%, Mahindra & Mahindra down by 2.70%, ICICI Bank down by 2.62% and Maruti Suzuki down by 2.11% were the top losers. (Provisional)

Meanwhile, with an aim to address additional demand for liquidity and to provide flexibility to banks in its liquidity management towards March-end, India’s central banking institution, the Reserve Bank of India (RBI) has said that it will infuse adequate additional liquidity of Rs 1 lakh crore in the banking system during March 2018, through longer term variable rate repo operations.

The apex banking institution will go for a combination of appropriate instruments for adequate additional liquidity infusion, while continuing with its normal Liquidity Adjustment Facility (LAF) operations.  The RBI has decided to conduct additional variable rate repo operations for longer tenors after reviewing the current and evolving liquidity conditions in the banking system.

The RBI will conduct 4 variable rate term repo auctions for Rs 25,000 crore each on every Tuesday of March 2018. The tenors of additional variable rate repo operations will be in the range of 24-31 days. These auctions will be conducted in addition to the regular 14 day variable rate term repo auctions.

The CNX Nifty ended at 10221.20, down by 137.65 points or 1.33% after trading in a range of 10215.90 and 10441.35. There were 9 stocks advancing against 41 stocks declining on the index. (Provisional)

The top gainers on Nifty were BPCL up by 2.52%, Ultratech Cement up by 1.33%, Zee Entertainment up by 1.18%, Coal India up by 1.18% and IndusInd Bank up by 1.00%. (Provisional)

On the flip side, Sun Pharma down by 3.30%, SBI down by 2.88%, ICICI Bank down by 2.74%, UPL down by 2.70% and Mahindra & Mahindra down by 2.66% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 63.9 points or 0.9% to 7,179.88, Germany’s DAX increased 129.61 points or 1.07% to 12,220.48 and France’s CAC increased 35 points or 0.68% to 5,202.23.

The Asian markets closed mostly in green on Tuesday amid receding worries about a trade war as US President Donald Trump faced mounting pressure from political allies to reconsider his decision to impose tariffs on steel and aluminum imports. US House of Representatives Speaker Paul Ryan urged Trump to rethink the planned tariffs on steel and aluminum as confusion persisted about the timing and extent of the planned tariffs. Trump indicated that the tariffs would be removed if the US negotiates a ‘new & fair’ NAFTA agreement. Chinese stocks posted strong gains after reports that China's securities regulator is considering giving Chinese investors access to offshore-listed tech companies via depositary receipts. Further, the Japanese index Nikkei rose after Wall Street shares rallied overnight, with the dollar’s bounce lifting exporter shares.