Post Session: Quick Review

Extending previous session’s southward journey, Indian equity benchmarks ended the lackluster day of trade marginally in red on Thursday. Domestic indices made a slightly positive start but soon erased gains as traders took note of a recent ASSOCHAM-Ashvin Parekh Advisory Services LLP (APAS) joint study stating that a developed corporate bond market is the need of the hour for India as an 8% economic growth cannot be achieved without a robust corporate capex cycle, more so as sole reliance on bank loans is not warranted, particularly when bank lending has been squeezed. However, some buying crept in as traders found some solace with report that the government has initiated as many as 214 anti-dumping investigations up to December last year against China, with which India has a huge trade deficit. The trade deficit (difference between imports and exports) with China has increased to $63.12 billion in 2017-18 from $51 billion in the previous fiscal. Market participants got some respite with RBI data showing that banks’ credit grew by 12.78% to Rs 86,60,069 crore in the fortnight ended July 6. The data also showed that banks’ deposits rose by 8.33% to Rs 114,85,768 crore from Rs 106,01,663 crore in the previous fortnight.

But, markets once again slipped into negative territory in second half of the day, as anxiety remained amongst the traders with a new World Bank’s study report stating that the government’s demonetisation during the third quarter of 2016-17 took away up to 7.3 percentage points of growth in the country’s Gross Domestic Product (GDP) for that period only, in districts dominated by informal activities. Traders overlooked the Asian Development Bank’s (ADB) latest report stating that Indian economy is on track to meet fiscal year 2018 projected growth of 7.3% and will further accelerate to 7.6% in 2019.

On the global front, Asian markets ended mostly in red, as investors awaited further moves in global trade disputes.  European markets were trading in mostly in red in early deals on Thursday, as investors digested further corporate results and political events. Back home, PSU bank stocks ended higher, buoyed by the reports of capital infusion. The finance ministry has finalised capital infusion of Rs 11,336 crore in five PSBs to help them meet their interest payment commitments without impacting their regulatory capital requirements. However, Stocks related to airline space ended lower with ICRA’s latest report that the domestic airline industry is expected to post losses to the tune of Rs 3,600 crore in the current fiscal on rise in crude oil prices and falling rupee.

The BSE Sensex ended at 36370.56, down by 2.88 points or 0.01% after trading in a range of 36279.33 and 36515.58. There were 18 stocks advancing against 13 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell by 0.57%, while Small cap index was down by 0.95%. (Provisional)

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.09%, Energy up by 0.95%, FMCG up by 0.53% and Oil & Gas up by 0.32%, while Capital Goods down by 1.41%, Healthcare down by 1.28%, Industrials down by 0.98%, IT down by 0.77% and TECK down by 0.58% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Bharti Airtel up by 2.48%, Vedanta up by 2.28%, Yes Bank up by 2.05%, ITC up by 1.70% and Reliance Industries up by 1.67%. (Provisional)

On the flip side, Kotak Mahindra Bank down by 3.64%, Larsen & Toubro down by 2.02%, HDFC down by 1.20%, Tata Steel down by 1.03% and Sun Pharma down by 0.91% were the top losers. (Provisional)

Meanwhile, amid import duty hike by the US, the Minister of State for Commerce and Industry C R Chaudhary has said that India is engaged with the US for an amicable solution on the issue of imposing retaliatory customs duties against America’s move to hike tariffs on certain steel and aluminium products. The country has notified imposition of retaliatory tariffs on 29 commodities which would come into effect from August 4. He also said the US had unilaterally hiked import duties on Indian steel and aluminium imports.

The minister further said India has already filed a request for consultations with the US on the imposition of additional duties of 25% on imports of steel and 10% on aluminium, at World Trade Organisation (WTO). Besides, seeking consultation is the first step of dispute settlement process. If the two nations are not able to reach a mutually agreed solution through consultation, India may request for a WTO dispute settlement panel to review the matter.

In 2017-18, India exported steel and steel products worth $1.98 billion to the US out of which exports of $0.62 billion fall under the tariff lines on which America has imposed customs duties of 25%. Chaudhary said that as per the report of the investigation conducted by US Department of Commerce, out of 35,927,141 tonnes of steel products imported by the US in 2017, imports from India were only 854,026 tonnes, around 2.4% of total US imports.

Separately, the minister said that the WTO had set up a panel to check India's compliance with last year's ruling on solar power programme. He added that this was set up on India's request to prove that India has fully complied with the recommendations and rulings of the WTO Dispute Settlement Body. The US has filed a retaliation request stating that India has not complied fully with the recommendations and panel rulings of the dispute settlement body of the WTO.

The CNX Nifty ended at 10964.55, down by 15.90 points or 0.14% after trading in a range of 10935.45 and 11006.50. There were 21 stocks advancing against 29 stocks declining on the index.(Provisional)

The top gainers on Nifty were Titan Co up by 2.87%, Bharti Airtel up by 2.43%, Yes Bank up by 2.40%, Vedanta up by 2.36% and ITC up by 1.82%. (Provisional)

On the flip side, Hindalco down by 5.98%, Bharti Infratel down by 4.75%, Kotak Mahindra Bank down by 3.53%, Cipla down by 2.69% and Larsen & Toubro down by 2.22% were the top losers.(Provisional)

European markets were trading mostly in red; France’s CAC shed 18.70 points or 0.34% to 5,428.74 and Germany’s DAX decreased 43.21 points or 0.34% to 12,722.73, while UK’s FTSE 100 was up by 14.53 points or 0.19% to 7,690.81.

Asian equity markets ended mostly lower on Thursday as renewed concerns about the impact of tariffs offset earnings optimism and upbeat comments from US Federal Reserve Chairman Jerome Powell during his two days of testimony. Chinese shares ended lower, despite moves by the central bank to encourage more bank lending, as persistent yuan weakness hit airline stocks. Further, Japanese shares ended a choppy session lower as the yen strengthened against all major currencies after the Bank of Japan (BoJ) lowered purchases of longer-dated bonds for the first time since January. Japan posted a merchandise trade surplus of 721.408 billion yen in June, the Ministry of Finance said today. That exceeded expectations for a surplus of 531.2 billion yen following the 578.3 billion yen deficit in May. Exports advanced an annual 6.7 percent to 7.052 trillion yen while imports were up just 2.5 percent from a year earlier.