Post Session: Quick Review

Indian equity benchmarks ended the choppy day of trade marginally in red on Thursday, amid weakness in Asian peers, after the US central bank dashed investor hopes for a more dovish policy outlook. That marked an end to a rally in the markets that lasted for seven sessions in a row. Key bourses started on a weaker note, as traders remained concerned with the US think-tank National Bureau of Economic Research’s (NBER) report that the November 2016 demonetisation impacted economic activity in the country in the immediate aftermath, affecting the Gross Domestic Product (GDP) numbers for that fiscal, while the measure's impact had dissipated by the summer of the following year. Some cautiousness also came with the World Bank’s latest report stating that India lost a staggering $86.1 billion, equivalent to over 4% of its GDP, owing to distortions in the power sector in 2016. It added that although India has achieved 100 per cent village electrification earlier this year, 178 million Indians still remain unconnected to the grid as per figures for 2017.

However, key indices have recovered sharply from their low points, due to some buying witnessed in Capital Goods and Auto stocks. Traders took support with the Lok Sabha passing the Consumer Protection Bill, 2018. The bill calls for strict punishment, including jail terms and hefty fines for misleading advertisements and food adulteration. Meanwhile, Investors took a note of the government sought Parliament's approval for additional gross expenditure of Rs 85,948.86 crore, about half of which is for capital infusion in public sector banks through recapitalisation bonds, during the current fiscal ending March 2019. 

On the global front, Asian markets ended mostly in green on Thursday, while European markets were trading in red, mirroring big losses on Wall Street after the Fed defied unprecedented pressure from Donald Trump and raised interest rates, sparking fears the move could choke economic growth. Back home, textile sector were buzzing with private report indicating that India’s textile and apparel exports growth moderated to 14 percent in November due to a sharp volatility in the rupee against the dollar. Insurance sector stocks too remained in focus with Moody’s Investors Service’s statement that the new regulations for re-insurance in India are credit-positive. It said they will improve Indian insurers’ access to a broader reinsurance base, which will support their management of underwriting risk and performance

The BSE Sensex ended at 36434.93, down by 49.40 points or 0.14% after trading in a range of 36202.90 and 36465.66. There were 15 stocks advancing against 16 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.05%, while Small cap index up by 0.12%. (Provisional)

The top gaining sectoral indices on the BSE were Capital Goods up by 0.51%, Auto up by 0.42%, Industrials up by 0.39%, Oil & Gas up by 0.28% and Consumer Disc up by 0.26%, while Telecom down by 1.16%, Metal down by 1.09%, Basic Materials down by 0.64%, FMCG down by 0.61% and Power down by 0.49% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Yes Bank up by 3.79%, Hero MotoCorp up by 2.26%, Mahindra & Mahindra up by 1.85%, Asian Paints up by 1.76% and Tata Motors up by 1.32%. (Provisional)

On the flip side, Wipro down by 2.32%, Bharti Airtel down by 2.02%, Vedanta down by 1.96%, SBI down by 1.88% and Maruti Suzuki down by 1.34% were the top losers. (Provisional)

Meanwhile, in order to meet global capital risk norms called Basel III, Economic Affairs Secretary Subhash Chandra Garg has said that the government is considering additional capital infusion in public sector banks (PSBs). The infusion will be over and above Rs 1.35 lakh crore capital infusion announced by the government for the PSBs in October 2017.

This additional capital infusion would be done through recapitalisation bonds as has been the practice since October 2017. This does not have any impact on the fiscal position of the government as recap bonds are part of below the line items. The government is considering additional capital infusion of up to Rs 30,000-40,000 crore in PSBs as they have been unable to raise required funds from the markets. As part of the capital infusion plan announced by the Finance Ministry, the government envisaged that PSBs would raise Rs 58,000 crore from the stock markets by March 2019 to meet Basel III norms. However, banks have been unable to raise enough funds from the markets so far, due to subdued market conditions.

The government had decided to take a massive step to capitalise PSBs to the tune of about Rs 2,11,000 crore over the next two years - through budgetary provisions of Rs 18,139 crore, recapitalisation bonds of Rs 1,35,000 crore, and the balance through raising of capital by banks from the market while diluting government equity estimated at Rs 58,000 crore. As per this plan, the remaining capital infusion is about Rs 42,000 crore. Earlier this year, the government pumped in Rs 11,336 crore into five PSBs - PNB, Allahabad Bank, Indian Overseas Bank, Andhra Bank and Corporation Bank - to improve their financial health.

The CNX Nifty ended at 10953.15, down by 14.15 points or 0.13% after trading in a range of 10880.05 and 10961.65. There were 21 stocks advancing against 29 stocks declining on the index. (Provisional)

The top gainers on Nifty were Yes Bank up by 3.82%, HPCL up by 3.26%, BPCL up by 2.64%, UPL up by 2.21% and Asian Paints up by 2.04%. (Provisional)

On the flip side, Grasim Industries down by 3.28%, Wipro down by 2.30%, SBI down by 2.14%, Vedanta down by 2.03% and Bharti Airtel down by 2.00% were the top losers. (Provisional)

European markets were trading in red; UK’s FTSE 100 decreased 51.86 points or 0.77% to 6,714.08, France’s CAC shed 63.85 points or 1.34% to 4,713.60 and Germany’s DAX was down by 106.08 points or 0.99% to 10,660.13.

Asian markets ended in red on Thursday, as global growth worries persisted and markets were surprised by the Fed's commitment to tighten monetary policy, despite rising risks to growth. Chinese shares closed lower despite the country's central bank rolling out a new lending tool to support lending to small and private firms. Further, Japanese shares ended down as the Fed sounded less dovish and the Bank of Japan maintained its ultra-loose monetary policy, and reaffirmed its view on the economy, citing stagnant inflation and a looming consumption tax hike next year.