Markets pare gains to end marginally in green

Paring most of their early gains, Indian equity benchmarks ended the Wednesday’s trade with marginal gains as investors digested macro-economic data and looked ahead to the Fed and ECB meetings for direction. Markets started the session on an optimistic note boosted by good industrial production data for April. India’s industrial production grew 4.9 percent in April, as compared with 4.4 percent in March. The factory output index growth rate moderated in March after consistently being above 7 percent between November and February. It expanded 6 percent a year ago. Some support came with markets regulator Sebi’s proposal to allow direct listing of Indian companies on overseas bourses and of foreign firms on Indian exchanges, while setting up an expert panel to look into the details. Currently, Indian companies can list their shares through depository receipts abroad, while foreign companies need to go through the Indian Depository Receipt route for listing of equities. Some support also came with a report that the Central Board of Indirect Taxes and Customs (CBIC) has extended the refund fortnight for fast track clearance of pending dues to exporters by two days till June 16.

However, market participants pared most of their early gains in last leg of trade to end slightly higher ahead of the wholesale price index (WPI) inflation data will be announced on June 14, 2018. Traders also remained on sidelines ahead of the outcome of US Federal Reserve’s two-day policy meeting concludes on June 13 and the European Central Bank (ECB) policy meeting to be held on June 14, 2018. Anxiety also spread among the investors, as industry body CII warned that rate hike by the Reserve Bank will increase the cost of doing business and impact capital expenditure by India Inc. Sentiments also weighed down on report that that India’s retail inflation hit a four-month high after jumping to 4.87 percent in May from April’s 4.58 percent driven by costlier food and fuel. Retail inflation, measured by Consumer Price Index (CPI), had fallen to 2.18 percent in May 2017.

On the global front, European markets are trading in green ahead of outcome of central bank meetings. The Federal Reserve is expected to raise its benchmark rate by 25 basis points when it ends a two-day policy meeting later in the day. Asian markets ended mostly in red, as investors braced for a Federal Reserve policy decision later in the day and any clues it might give on future rate hikes that could alter the course of global economic growth and corporate earnings.

Back home, shares of top telecoms operators edged lower after Reliance Jio introduced an offer of giving more data to users. The firm is offering 1.5 GB additional data per day to customers on all pre-paid plans priced in the range of Rs 149 to Rs 799. However, select stocks from shipping space remained in limelight with the Ministry of Shipping’s statement that a total of 224 projects -- entailing an investment to the tune of Rs 1.85 lakh crore have been awarded by March 2018 under Sagarmala programme. Stocks related to banking sector remained in focus as Moody’s Investors Service gave counterparty risk ratings (CRR) to 15 lenders in the country, including Punjab National Bank (PNB) and country's largest lender SBI. The agency also upgraded the counterparty risk assessments of four banks, including PNB, ICICI Bank, Bank of Baroda and Axis Bank.

Finally, the BSE Sensex gained 46.64 points or 0.13% to 35,739.16, while the CNX Nifty was up by 13.85 points or 0.13% to 10,856.70.

The BSE Sensex touched a high and a low of 35,877.41 and 35,715.96, respectively and there were 16 stocks on gaining side as against 15 stocks on losing side on the index.

The broader indices ended in red; the BSE Mid cap index lost 0.46%, while Small cap index was down by 0.21%.

The top gaining sectoral indices on the BSE were IT up by 1.29%, TECK up by 0.94%, Healthcare up by 0.58%, Consumer Durables up by 0.57% and Energy up by 0.35%, while Telecom down by 1.26%, Capital Goods down by 0.66%, FMCG down by 0.42%, Industrials down by 0.42% and Metal down by 0.38% were the top losing indices on BSE.

The top gainers on the Sensex were Dr. Reddys Lab up by 2.82%, TCS up by 2.43%, SBI up by 1.70%, Power Grid Corporation up by 1.43% and Infosys up by 1.41%. On the flip side, Tata Steel down by 2.12%, Adani Ports down by 1.48%, Hindustan Unilever down by 1.31%, Bharti Airtel down by 1.30% and ONGC down by 0.79% were the top losers.

Meanwhile, in order to examine the possibility of allowing unlisted Indian companies to directly list equity overseas while also allowing foreign companies to list directly on the Indian bourses, the Securities and Exchange Board of India (SEBI) has constituted an expert committee. At present, Indian firms can only use the depository receipts route - American Depository Receipts (ADR) or Global Depository Receipts (GDR) - to list on the overseas exchanges. Similarly, companies incorporated outside India can access the Indian capital markets only through the International Depository Receipt (IDR) route.

However, Indian firms can list their debt securities directly on international exchanges as what is known as 'Masala Bonds'. Considering the evolution and internationalisation of the capital markets, SEBI said that it would be worthwhile to consider facilitating companies incorporated in India to directly list their equity share capital abroad and vice versa.

The committee will examine in detail the economic case for permitting direct listing of Indian companies overseas and vice versa. It would also examine various legal, operational and regulatory constraints in facilitating companies incorporated in India to directly list their equity share capital abroad and vice versa. The committee will also make recommendations for a suitable framework in which to facilitate such direct listing. 

The CNX Nifty traded in a range of 10,893.25 and 10,842.65. There were 28 stocks in green as against 22 stocks in red on the index.

The top gainers on Nifty were Dr. Reddys Lab up by 2.89%, Cipla up by 2.62%, TCS up by 2.41%, Lupin up by 2.14% and Hindalco up by 1.81%. On the flip side, Tata Steel down by 2.14%, Zee Entertainment down by 1.30%, Bajaj Finance down by 1.24%, Bharti Airtel down by 1.22% and Adani Ports down by 1.21% were the top losers.

The European markets were trading in green; France’s CAC increased 15.09 points or 0.28% to 5,468.46, Germany’s DAX gained 21.46 points or 0.17% to 12,863.76 and UK’s FTSE 100 was up by 28.58 points or 0.37% to 7,732.39.

Asian equity markets ended mostly lower on Wednesday as initial optimism faded over the Trump-Kim summit and investors shifted their focus to upcoming central bank meetings in the US, Europe and Japan. The US Federal Reserve is widely expected to raise interest rates by 25 basis points when it ends its two-day policy meeting later today. On Thursday, the European Central Bank may outline plans for ending its bond purchasing program. The Bank of Japan's policy decision is due on Friday, with no change to policy expected. Chinese shares ended lower, dragged down by telecom shares after ZTE Corp agreed to pay up to $1.4 billion in penalties to the US government. However, Japanese shares closed higher as the yen extended losses ahead of the Fed, ECB and BoJ policy meetings. Meanwhile, markets in South Korea and Indonesia were closed for holidays.