Post Session: Quick Review

Continuing their bullish momentum for the third straight session, Indian equity benchmarks ended Tuesday’s trade on an optimistic note, with Nifty, Sensex ending record closing high levels. Domestic indices made a positive start and traded in fine fettle, tracking positive cues from Asian counterparts. Sentiments remained upbeat with report that the overall exports from India to BRICS saw an upswing of 7.5% in Q1 2018 Y-o-Y in terms of total volumes, while the country’s imports from BRICS nations is reduced by 3.5%. Traders also took some encouragement with report that the commerce ministry is working on an export promotion strategy to boost shipments of chemicals, plastics and allied products sector to push the growth of the country's overall exports. For the formulation of the strategy, the ministry has constituted a sub-group to deliberate upon the issues of the sector.

Adding to the optimism, Union Finance Minister Piyush Goyal, a couple of days after goods and services tax (GST) rates were cut on 100 items, said rising tax collections will further help reduce the tariffs. He said the Directorate General of Anti-Profiteering has been directed to keep a tab on manufacturers of sanitary napkins, so that benefits of the GST rate cut are passed on to consumers.  Some comfort also came in after the US Congress asked the Trump Administration to come up with a strategy that can reflect a measurable progress in its defence ties with India. However, further up-ward move got restricted as some anxiety remained among the traders with SEBI’s data report that the share of foreign portfolio investments (FPI) in domestic capital markets through participatory notes (P-notes) dropped to more than nine-year low of Rs 83,688 crore at June-end.

On the global front, Asian markets ended mostly in green, led by better-than-expected U.S. corporate earnings and a lack of bad news on trade tensions. European markets were trading in green deals on Tuesday, as gains for UBS Group AG and other banks helped push the market toward its first advance in four sessions.

Back home, select banking and gems and jewellery space stocks ended higher after the GST Council proposed that supply of warehouse goods to any person before clearance for home consumption will not be treated as supply and hence no GST is required to be paid on such transactions. The move will help banks, which used to pay GST on imports first and then used that credit later. Besides, Automobile sector were in focus with report that Automobile industry in India is opting for inorganic route to balance investments to support current growth cycles and prepare for future global disruptions.  

The BSE Sensex ended at 36843.84, up by 125.24 points or 0.34% after trading in a range of 36709.72 and 36902.06. There were 20 stocks advancing against 11 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 1.81%, while Small cap index was up by 2.24%. (Provisional)

The top gaining sectoral indices on the BSE were Basic Materials up by 3.71%, Metal up by 2.88%, Realty up by 2.60%, Capital Goods up by 2.55% and Industrials up by 2.33%, while Bankex down by 0.13% was the losing index on BSE. (Provisional)

The top gainers on the Sensex were Larsen & Toubro up by 3.36%, Asian Paints up by 2.74%, Vedanta up by 2.32%, Adani Ports &SEZ up by 2.11% and Tata Steel up by 1.98%. (Provisional)

On the flip side, Kotak Mahindra Bank down by 1.71%, Hero MotoCorp down by 1.55%, Bajaj Auto down by 1.38%, Wipro down by 0.98% and Hindustan Unilever down by 0.92% were the top losers. (Provisional)

Meanwhile, amid stringent norms put in place by the watchdog the Securities and Exchange Board of India (SEBI) to check misuse of these instruments, the share of foreign portfolio investments (FPI) in domestic capital markets through participatory notes (P-notes) dropped to more than nine-year low of Rs 83,688 crore at June-end. This is the lowest level since April 2009 when the cumulative value of such investments stood at Rs 72,314 crore. According to SEBI data, total value of P-Notes investments in Indian markets including equity, debt and derivatives, at April end fall to Rs 83,688 crore from Rs 93,497 crore in the end of May and Rs 1,00,245 crore in April.

Of the total investments made in June, P-note holdings in equities were at Rs 61,786 crore, while in debts and derivatives were at Rs 18,493 crore and Rs 3,409 crore respectively. Besides, the quantum of FPI investments via P-notes slipped to 2.6% during the period under review from 2.9% in the preceding month. P-note investments were on a decline since June last year and hit an over eight-year low in September. However, these investments rose slightly in October but fell again in November and the trend continued till June this year.

The decline could be attributed to several measures taken by the market watchdog to stop the misuse of the controversy-ridden participatory notes. In July 2017, SEBI had notified stricter norms stipulating a fee of $1,000 on each instrument to check any misuse for channelising black money. It had also prohibited FPIs from issuing such notes where the underlying asset is a derivative, except those which are used for hedging purposes. These measures were an outcome of a slew of other steps taken by the regulator in the recent past. In April last year, the SEBI had barred resident Indians, NRIs and entities owned by them from making investment through P-notes.

The CNX Nifty ended at 11137.85, up by 53.10 points or 0.48% after trading in a range of 11092.50 and 11143.40. There were 32 stocks advancing against 18 stocks declining on the index. (Provisional)

The top gainers on Nifty were Grasim Industries up by 8.06%, Hindalco up by 5.76%, Indiabulls Housing Finance up by 5.27%, Larsen & Toubro up by 3.62% and Ultratech Cement up by 3.06%. (Provisional)

On the flip side, Hero MotoCorp down by 1.79%, Kotak Mahindra Bank down by 1.79%, HCL Tech. down by 1.45%, Bajaj Auto down by 1.40% and Bajaj Finance down by 1.36% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 rose by 66.95 points or 0.87% to 7,722.74, France’s CAC surged 53.30 points or 0.98% to 5,431.55 and Germany’s DAX was up by 185.01 points or 1.45% to 12,733.58.

Asian equity markets ended mostly higher on Tuesday as investors put trade worries on the back burner and shifted focus to the earnings season. Chinese shares ended higher after the country's central bank injected record liquidity into the banking system via medium-term lending facility to alleviate funding pressure. Market sentiment also got a boost after the State Council, China's cabinet, said the country would adopt a more 'vigorous' fiscal policy to support the economy. In another development, Beijing said it has no intention to devalue the yuan to help exports. Further, Japanese shares ended higher as the yen rally lost steam and data showed the Japanese manufacturing sector continued to expand in July, but at a slower pace.