Benchmarks end lower on penultimate session of F&O expiry

Indian equity benchmarks ended the Wednesday’s trade in red terrain ahead of April month F&O expiry. Markets traded choppy throughout the session amid weak global cues. Traders remained watchful ahead of ongoing corporate earnings for the March 2018 quarter (Q4FY18) and global crude oil prices. Sentiments remained dampened on report that India is likely to face greater pressure to eliminate duties on 90% of goods it trades with China under the mega trade agreement among 16 Asia Pacific countries that is in the works. Markets pared almost all of their losses in noon deals as traders took some solace with Finance Ministry’s proposal of relaxing certain conditions for availing the concessional 10 percent long term capital gains tax. Listing out scenarios wherein individuals need not pay Securities Transaction Tax (STT) at the time of purchase to avail the concessional tax rate, the Finance Ministry invited stakeholder comments on the draft notification by April 30. Investors also get some solace with Union Commerce and Industry Minister Suresh Prabhu’s statement that the government has finalised a new industrial policy with a major focus on promoting setting up of industrial units in rural areas.

Meanwhile, NITI Aayog CEO Amitabh Kant has said that India’s eastern states have done remarkably well on ease of doing business index, but he stressed that they need to repeat their progress on the human development index as well. He, however, said several Indian states remain backward on human development indicators because of legacy issues. Selling in last leg of trade mainly played spoil sport for the domestic markets and dragged the key gauges lower as traders turned anxious as rise in global crude oil prices to around $75 per barrel lifted the domestic retail petrol to become dearer by 13 paise to Rs 74.63 per litre from Monday’s cost of Rs 74.50 per litre. Petrol prices climbed to new multi-year highs in other major metro cities -- Kolkata, Mumbai and Chennai -- at Rs 77.32, Rs 82.48 and Rs 77.43 per litre respectively on Tuesday. Diesel prices, too, touched record levels in Delhi, Kolkata, Mumbai and Chennai.

Weak opening in European markets too dampened sentiments, as the German government has lowered its economic growth forecast for this year to 2.3 percent from 2.4 percent previously. All the Asian markets ended lower tailing weak US markets. Japan’s central bank is not expected to change settings at its policy review this week, but the debut of a dovish new deputy could widen a rift between advocates of continued stimulus and those wary of the rising costs of prolonged easing.

Back home, stocks related to Information Technology (IT) counter ended in green as the rupee weakened to a fresh 13-month low against the American currency on bouts of month-end dollar demand from importers amid crude price volatility and rising US bond yields. The continued selling by FII in local equity and debt, and weak stock market also weighed on the rupee. Select logistics stocks remained in focus for second consecutive day. The GST collection trends for last month and this month are showing a lot of traction. Telecom stocks exhibited mixed trend after the telecom tribunal stayed a regulatory order that reset the threshold for predatory pricing and required operators to report all tariffs in the interests of transparency and non-discrimination, offering relief to India’s top telcos that said the revised norms benefitted only Reliance Jio Infocomm, their newest rival.

Finally, the BSE Sensex declined 115.37 points or 0.33% to 34,501.27, while the CNX Nifty was down by 43.80 points or 0.41% to 10,570.55.

The BSE Sensex touched a high and a low of 34,631.27 and 34,400.56, respectively and there were 13 stocks on gaining side as against 18 stocks on losing side on the index.

The broader indices ended in red; the BSE Mid cap index shed 0.52%, while Small cap index was down by 0.72%.

The few gaining sectoral indices on the BSE were IT up by 1.24%, TECK up by 1.03%, Telecom up by 0.70% and Realty was up by 0.30%, while Metal down by 1.43%, Oil & Gas down by 1.33%, Capital Goods down by 1.20%, Consumer Durables down by 1.20% and Basic Materials was down by 1.15% were the top losing indices on BSE.

The top gainers on the Sensex were Bharti Airtel up by 3.37%, TCS up by 2.43%, Mahindra & Mahindra up by 1.88%, Infosys up by 0.61% and Power Grid by 0.58%. On the flip side, Tata Steel down by 2.01%, ICICI Bank down by 1.86%, ONGC down by 1.67%, Tata Motors - DVR down by 1.65% and Dr. Reddys Lab down by 1.46% were the top losers.

Meanwhile, the NITI Aayog member V K Saraswat’s research note has said that at the time of signing free trade agreements (FTAs) with trading partners, India should keep two things in mind - mutually reciprocal terms and focusing on products and services with maximum export potential. It also said that before getting into any multilateral trade deal, India should review and assess its existing FTAs in terms of benefits to various stakeholders like industry and consumers, trade complementarities and changing trade patterns in the past decade.

Under a FTA, countries cut or eliminate duties on most number of goods traded between them besides liberalise norms to promote services trade and boost investments. India has so far implemented several such agreements including with Singapore, Japan, South Korea and Association of South East Asian Nations (ASEAN). The country is also negotiating similar pacts with nations including Chile, Australia, New Zealand and European Union.

The note also recommended negotiating bilateral FTAs with countries where trade complementarities and margin of preference is high. It said that proper safety and quality standards should be set to avoid dumping of lower quality hazardous goods into the domestic market. It added that circumvention of rules of origin should be strictly dealt with by the authorities.

The CNX Nifty traded in a range of 10,612.60 and 10,536.45. There were 13 stocks in green as against 37 stocks in red on the index.

The top gainers on Nifty were Bharti Airtel up by 2.90%, TCS up by 2.37%, Mahindra & Mahindra up by 1.72%, Power Grid up by 1.36% and HCL Tech up by 0.76%. On the flip side, GAIL India down by 3.09%, Vedanta down by 2.99%, HPCL down by 2.86%, Hindalco down by 2.32% and Grasim down by 1.81% were the top losers.

The European markets were trading in red; Germany’s DAX declined 192.93 points or 1.54% to 12,357.89, UK’s FTSE 100 dropped 46.14 points or 0.62% to 7,379.26 and France’s CAC was down by 39.11 points or 0.72% to 5,405.05.

All the Asian markets closed in red on Wednesday. China’s central bank said its prudent and neutral monetary policy will remain unchanged after it cuts the cash banks must hold as reserves on Wednesday, a move allowing lenders to pay back loans obtained via its medium-term lending facility. The People’s Bank of China said there will be no change in overall liquidity, and the cut in bank reserves will help improve the liquidity structure of the financial system. South Korea’s finance minister said that the government is closely watching currency markets as the won and other emerging currencies are weakening against the US dollar.