Post Session: Quick Review

Indian equity benchmarks traded in green for most part of the day but ended almost flat amid volatility. The market breadth was in favour of advances with two stocks advancing against each declining one. Indian equity benchmarks traded marginally in green in early deals as the sentiments were upbeat after India’s industrial production grew at a robust pace for the third straight month, at 7.5% in January, while retail inflation slowed for the second consecutive month to 4.4% in February, signaling that the economy may be set on a strong recovery path. The data released by the Central Statistics Office showed that the factory output growth was led by a robust growth in the manufacturing sector which showed a growth of 8.7%. The index expanded in the month of January compared to a 7.1% growth in December and 8.8% in November. Meanwhile, retail inflation cooled to 4.44% in February compared to 5.07% in January. Traders also took some encouragement with a report enlightening that employment in eight key sectors, including manufacturing, IT and transport, rose by 1.36 lakh on net basis in July-September this fiscal compared to the previous quarter. Construction sector was the only segment that reported job losses of 22,000 in the second quarter of FY2017-18. Manufacturing sector added 89,000 jobs, education sector added 21,000 jobs while transport sector saw addition of 20,000 jobs. Trade (14,000), health (11,000), accommodation & restaurant (2,000) and IT/BPO sector (1,000) also reported job additions. Some support also came with a Union Minister stating that foreign direct investment has increased steadily in the country with total capital inflows reaching $208.99 billion during April 2014 to December 2017 period. The main sectors that received maximum foreign inflows include services, computer software and hardware, telecommunications, construction, trading and automobile.

However, selling crept in on a private report which raised concerns that even as the economy has largely recovered from the shocks of demonetization and GST implementation, micro enterprises with borrowings of under Rs 10 lakh are yet to fully recover. The report reiterated that the situation has improved in all segments except those with borrowings less than Rs 50 lakh, where the systemic exposure has not caught up with pre-demonetization levels. Separately, a report showed that India’s monsoon rains are expected to be slightly below normal this year, while parts of Australia’s eastern grain belt could be drier as an El Nino weather pattern may develop in the second half of 2018. Some concerns came with a foreign brokerage report showed that CPI inflation is expected to rise over the next few months and average close to 4.7 per cent in 2018-19, driving Reserve Bank to keep key policy rates on hold in the coming financial year. It said that the headline CPI inflation may average close to 4.7 per cent in 2018-19 (as against 3.6 per cent estimated in 2017-18). But markets recouped some of the losses and settled almost flat.

On the global front, Asian markets closed mostly in green. China is merging its banking and insurance regulators and creating a slew of ministries including a new agricultural and rural affairs ministry as part of the biggest government shake-up in years. The European markets were trading in green as investors awaited the latest inflation figures from the United States. The DIHK Chambers of Industry and Commerce said that labor shortages in Germany are threatening the whole economy as companies struggle to fill around 1.6 million job vacancies.

Back home, select stocks related to realty sector were buzzing in today’s trade with ICRA’s report which enlightened that in what can be seen as a possible recovery in the housing market, sales improved by 29.3% year-on-year during the April to December period last year, while the time taken to clear the inventory went down to 12 quarters. The report added that real estate companies sold 17.26 million sq ft during the nine months, against 13.35 million sq ft in the year-ago period.

The BSE Sensex ended at 33857.15, down by 60.79 points or 0.18% after trading in a range of 33722.96 and 34077.32. There were 16 stocks advancing against 15 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 1.01%, while Small cap index was up by 1.18%. (Provisional)

The top gaining sectoral indices on the BSE were Telecom up by 1.94%, Oil & Gas up by 1.65%, Realty up by 1.58%, PSU up by 1.38% and Consumer Durables up by 1.27%, while IT down by 1.52% and TECK down by 1.01% were the only losing indices on BSE. (Provisional)

The top gainers on the Sensex were Sun Pharma up by 2.20%, Axis Bank up by 1.96%, Wipro up by 1.89%, Bharti Airtel up by 1.63% and Dr. Reddy’s Lab up by 1.54%. (Provisional)

On the flip side, TCS down by 5.34%, Kotak Mahindra Bank down by 1.61%, Coal India down by 1.07%, NTPC down by 0.96% and Maruti Suzuki down by 0.63% were the top losers. (Provisional)

Meanwhile, highlighting need to look at the deeper issue of governance at the banks, the International Monetary Fund’s (IMF) deputy managing director Tao Zhang has said that banking reforms like insolvency code and recapitalisation are not enough for a lasting impact and they should be accompanied by governance reforms particularly for public sector banks (PSBs).

IMF official also expressed need to improve the internal controls, as it is crucial not only for improving banks but also financial stability. He also suggested banks to improve their balance sheets on a priority basis, stressing that the asset quality situation of the domestic banks has deteriorated compared to their peers elsewhere.

Tao Zhang further noted that Indian financial regulators should focus on monitoring and regulating services instead of only institutions and added that the country should focus on rapidly developing the sector so that efficiencies get enhanced but also safeguard against risks and also fight misconduct. He said the things like big data, artificial intelligence, cloud computing, smart contracts and blockchain can help the sector to improve its efficiency.

The CNX Nifty ended at 10424.95, up by 3.55 points or 0.03% after trading in a range of 10377.85 and 10478.60. There were 31 stocks advancing against 19 stocks declining on the index. (Provisional)

The top gainers on Nifty were BPCL up by 4.36%, HPCL up by 4.32%, Bharti Infratel up by 2.61%, GAIL India up by 2.59% and Sun Pharma up by 2.31%. (Provisional)

On the flip side, TCS down by 5.44%, Kotak Mahindra Bank down by 1.79%, NTPC down by 1.26%, Hindalco down by 0.99% and Coal India down by 0.99% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 0.21 points or 0% to 7,214.97, Germany’s DAX increased 21.9 points or 0.18% to 12,440.29 and France’s CAC increased 25.98 points or 0.49% to 5,302.69.

Asian markets closed mostly in green on Tuesday. But investors moved cautiously as the recent global rally lost steam, while trade tensions returned and markets look ahead to the release of crucial US inflation data. A strong jobs report on Friday and Donald Trump's decision to meet Kim Jong-un helped fuel a surge in global equities at the end of last week, overshadowing US tariffs and fears of a trade war. But concerns returned following comments from a European trade commissioner that the EU would ‘stand up to bullies’ while Trump said he will look into cutting levies the bloc imposes on US goods. Attention is now on the inflation release later in the day, which will be pored over for an idea about the Federal Reserve's timetable for hiking interest rates. A strong reading could hit markets worried about the impact of higher borrowing costs on the investment environment. Japanese shares ended higher as a softer yen helped lift exporters, offsetting weakness in steelmakers and automakers. Though, Chinese shares ended lower to snap a three-day winning streak after the country unveiled a massive cabinet reshuffle plan, including the merger of its banking and insurance regulators to better handle financial risks.