Benchmarks end marginally in red on late hour sell off

Friday turned out to be a disappointing day of trade for Indian equity benchmarks where key gauges ended the session marginally in red. Markets started the session on an optimistic note as traders took some encouragement with report highlighting that the direct tax collections jumped by nearly 20 per cent between April and February this fiscal as the Income-Tax Department races to meet its full year targets. The net direct tax receipts grew by a hefty 19.5 per cent in the first 11 months of the fiscal amounting to Rs 7.44 lakh crore. Net corporate income tax collections increased by 19.7 per cent in the period, while personal income tax receipts grew by 18.6 per cent. Some support also came with Economic Affairs Secretary Subhash Chandra Garg’s statement that the 7.2 per cent expansion in the economy during October-December quarter has put the country in one of the highest growth bracket in the world and recovery will continue to be sharp going ahead. The third quarter growth of 7.2 per cent was highest in five quarters. The previous high was recorded at 7.5 per cent in the July-September quarter of 2016-17.

But, sell off in last leg of trade played spoil sports for domestic markets and dragged the key gauges in red terrain, as anxiety spread among the investors with a private report stating that India Inc has nearly 1.8 lakh crore of cash trapped in their balance sheet as working capital situation worsens on account of increase in inventory levels. The report also found that the cash conversion cycle has deteriorated by 4percent from FY16, to 44 days in FY17. Traders also remained cautious with Indian Steel Authority’s report that US President Donald Trump’s move to hike import tariffs on steel will adversely hit India’s local markets. Traders took note of another private report that Indian retail inflation likely to eased to a four-month low in February on softening prices for vegetable and other perishable foods, but probably stayed above the Reserve Bank of India's target.

Pessimistic start in European counters too dampened sentiments as investors reacted to President Donald Trump's decision to impose global duties on metal imports. President Donald Trump implemented import tariffs of 25 percent on steel and 10 percent on aluminum Thursday. Asian markets ended mostly in green, as geopolitical tensions eased after North Korean leader Kim Jong Un had offered to halt nuclear and missile tests and expressed his desire to meet with US President Donald Trump through South Korean national security adviser Chung Eui-yong.

Back home, telecom related stocks edged lower despite Telecom Minister Manoj Sinha has asked India’s top carriers to focus on improving services instead of fighting among themselves, especially now that the government has cleared measures for immediate relief, which should drive investments. Select power companies edged lower on report that thermal power projects promoted by Adani, Essar, Jaypee and Lanco figure in the list of 34 stressed electricity projects with total capacity of over 40 GW. According to report on Stressed/Non-performing Assets in Electricity, tabled in Parliament by Standing Committee on Energy, the total outstanding debt in these stressed projects is of the tune of Rs 1.74 lakh crore as of June, 2017 based on the RBI data. Few cement companies remained under pressure on report that the government is considering action against cement companies for cartelisation. The Competition Commission of India had earlier imposed a fine on 10 cement companies and a trade body for price fixing in 2016.

Finally, the BSE Sensex shed 44.43 points or 0.13% to 33,307.14, while the CNX Nifty was down by 15.80 points or 0.15% to 10,226.85.

The BSE Sensex touched a high and a low of 33,519.49 and 33,256.42, respectively and there were 15 stocks on gaining side as against 16 stocks on losing side on the index.

The broader indices ended in red; the BSE Mid cap index declined 0.35%, while Small cap index was down by 0.30%.

The top gaining sectoral indices on the BSE were TECK up by 0.55%, IT up by 0.55%, Consumer Discretionary Goods & Services up by 0.19%, Capital Goods up by 0.16% and FMCG up by 0.14%, while Metal down by 1.94%, Basic Materials down by 1.09%, Bankex down by 0.77%, PSU down by 0.68%, Healthcare down by 0.61% were the top losing indices on BSE.

The top gainers on the Sensex were TCS up by 1.10%, HDFC up by 0.89%, Infosys up by 0.58%, Hindustan Unilever up by 0.56% and Larsen & Toubro up by 0.54%. On the flip side, Tata Steel down by 4.66%, Axis Bank down by 2.85%, Adani Ports & SEZ down by 2.21%, Sun Pharma down by 1.67% and ICICI Bank down by 1.43% were the top losers.

Meanwhile, Commerce secretary Rita Teaotia has expressed confidence that India’s engineering exports, which have been registering a strong growth, will reach a new high in the financial year 2017-18. She indicated that engineering exports registered a rise of 22 percent to $62 billion in the April-January period of 2017-18. Besides, she said that the exports to developed countries are growing at a rapid pace and noted that shipments to North America and Europe account for about 40 percent of the total exports from the sector.

Teaotia has stated that the share of engineering exports in India’s total shipments has rose to 23.6 percent in FY17 from 18.2 percent in FY10. She pointed out that ambitious government initiatives such as 'Make in India', 'Start Up India' and 'Digital India' would further boost the growth of industries in the country. Highlighting the importance of the growing services sector, she made a case for recalibrating the traditional model of manufacturing led development. She said that the services sector matters greatly for enhancing the manufacturing sector competitiveness and also accounts for a significant portion of value added to a product.

Commerce secretary further said that the boundaries between manufacturing and services are increasingly blurred, requiring them to recalibrate their traditional model of manufacturing led development. She also said that global mega trends such as Industry 4.0, changing dynamics of the global value chain, rise of shared economy are presenting both opportunities and challenges to the country. She mentioned that long term enablers that focus on job creation by harnessing these mega trends and business models at the intersection of services in manufacturing will be key to future development.

The CNX Nifty traded in a range of 10,296.70 and 10,211.90. There were 22 stocks in green as against 28 stocks in red on the index.

The top gainers on Nifty were Tech Mahindra up by 2.30%, Bajaj Finance up by 1.83%, TCS up by 1.03%, ZEE Entertainment up by 1.00% and Eicher Motors up by 1.00%. On the flip side, Tata Steel down by 3.65%, Axis Bank down by 2.60%, Adani Ports & SEZ down by 2.08%, Yes Bank down by 1.85% and Sun Pharma down by 1.59% were the top losers.

European markets were trading in red; Germany’s DAX declined 58.88 points or 0.48% to 12,296.69, France’s CAC slipped 4.99 points or 0.09% to 5,249.11 and UK’s FTSE 100 was down by 2.6 points or 0.04% to 7,200.64.

Asian markets closed mostly in green on Friday as geopolitical tensions eased and investors heaved a sigh of relief that US trade tariffs were less severe than traders had originally feared. Geopolitical tensions eased after North Korean leader Kim Jong Un had offered to halt nuclear and missile tests and expressed his desire to meet with US President Donald Trump through South Korean national security adviser Chung Eui-yong. Separately, the White House slapped import tariffs of 25 percent on steel and 10 percent for aluminum but exempted Canada and Mexico and offered the possibility of excluding other allies, backtracking from an earlier ‘no-exceptions’ stance. Chinese shares ended higher after official data showed China's inflation rose sharply to the highest level in more than four years in February, driven by a rebound in food prices. At the same time, producer price inflation slowed to a 15-month low. Consumer price inflation rose to 2.9 percent in February from 1.5 percent in January, the National Bureau of Statistics reported. This was the highest since November 2013. Producer price inflation weakened to 3.7 percent in February from 4.3 percent a month ago. Further, Japanese shares closed higher after the Bank of Japan kept rates unchanged and offered no clues on when it would wind down stimulus measures. Also, trade worries subsided and geopolitical tensions eased, helping buoy investors’ sentiments ahead of the US February jobs report due later in the day.