Seven-day rally of markets fizzles out; Sensex closes below 36,500 mark

A seven-day rally on the equity Indian markets faded on Thursday, as the larger peers ended their trading session in red terrain, tracking weak global markets. The start of the day was weak, affected by 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. Domestic sentiments also got hit 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% village electrification earlier this year, 178 million Indians still remain unconnected to the grid as per figures for 2017. Some concerns also came after Crisil expressed concerns on an over 5% dip in sowing for winter crops, which account for the bulk 40% of the nation's annual agricultural output, amid reports of rising rural distress. Crisil also warned that unless the sowing improves from now on, there will be adverse impact on various aspects, including rural consumption.

The trade remained lackluster throughout the day, on the back of continuous selling done by the traders. The street was worried with the government think-tank NITI Aayog’s statement that lack of financial literacy, high cost of banking services and excessive regulatory requirements are the key constraints in the financial inclusion goal for India. Adding some concerns, markets regulator Sebi banned Kolkata-based stock broker Guiness Securities (GSL) and 35 entities from securities market till further directions in a case related to non-settlement of client funds and misappropriation of securities. These 35 entities also include GSL's present and former directors. Some concerns also came with a Cibil’s data report showing that banks see rising stress in retail books with the loans against property (LAP), mortgage loans, credit cards spoiling the party. However, traders shrugged off Finance Minister Arun Jaitley’s statement that it will be sound policy measures, which will help alleviate millions from poverty and fulfill the aspirations of the electorate. He said that sound policy will always put economy on track, bringing people out of poverty and give them better quality of life.

On the global front, European markets were trading in red, as Germany's business confidence slid to its lowest level in over two years. The Ifo Business Climate Index dropped to 101 from 102 in November. The street had expected a score of 101.7. Sentiments got hit after Germany's producer price inflation remained at its highest level in 19 months in November. The data from the Federal Statistical Office showed that producer prices rose 3.3 percent year-on-year in November, same as in October. Besides, Eurozone construction output dropped in October after rising in the previous month. As per figures from Eurostat showed that construction output fell 1.6 percent from September, when it grew 2.1 percent. Asian markets ended in red, after the US Federal Reserve reiterated its commitment to tighten monetary policy, despite rising risks to growth. The Fed raised interest rates by a quarter point, as widely expected, and indicated it still expects to hike rates twice in the first half of next year. Besides, 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.

On the sectoral front, shares related to tourism industry ended higher, with Government think-tank NITI Aayog stating that the focus of the ministry dealing with travel, tourism and hospitality should be to increase India's share in global international tourist arrivals from 1.18 per cent to 3 per cent in the next five years, while tyre stocks also gained, amid reports that the GST Council is likely to slash tax rates on automobile tyres to 18 per cent from 28 per cent currently in its next meeting Saturday. Further, insurance sector stocks 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, while banking stocks ended lower, despite Economic Affairs Secretary Subhash Chandra Garg’s statement that the government is likely to make additional capital infusion in the public sector banks. This will be over and above Rs 1.35 lakh crore capital infusion announced by the government for the public sector banks (PSBs) in October last year to meet global capital risk norms called Basel III.

Finally, the BSE Sensex lost 52.66 points or 0.14% to 36,431.67, while the CNX Nifty was down by 15.60 points or 0.14% to 10,951.70.

The BSE Sensex touched a high and a low of 36,475.52 and 36,202.90, respectively and there were 16 stocks advancing against 15 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index rose 0.07%, while Small cap index was up by 0.12%.

The top gaining sectoral indices on the BSE were Capital Goods up by 0.56%, Industrials up by 0.41%, Auto up by 0.32%, Oil & Gas up by 0.27% and Healthcare up by 0.19%, while Telecom down by 1.17%, Metal down by 1.10%, Basic Materials down by 0.65%, FMCG down by 0.64% and Power down by 0.48% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 3.93%, Hero MotoCorp up by 2.06%, Mahindra & Mahindra up by 1.90%, Asian Paints up by 1.78% and Tata Motors up by 1.32%. On the flip side, SBI down by 2.18%, Wipro down by 2.10%, Vedanta down by 2.05%, Bharti Airtel down by 1.89% and Maruti Suzuki down by 1.35% were the top losers.

Meanwhile, Minister of State for Micro, Small and Medium Enterprises (MSME), Giriraj Singh has said that his ministry will establish 20 additional technology centres in different parts of the country to support MSMEs. He noted that these centres will help MSMEs by giving them access to advanced manufacturing technologies, skilling manpower and providing technical and business advisory support. He added that presently, 10 such centres are operational in different states of the country.

The MSME minister further said that there were some challenges for the sector, but the government was working on all those areas, including providing timely credit. He also said that schemes like Prime Minister Employment Generation Programme (PMEGP) and credit guarantee fund trust for micro and small enterprises had helped in creating 19 lakh new entrepreneurs. He said 'I think these entrepreneurs have created jobs for about three crore people.'

MSMEs are contributing around 45 percent in the country's exports, 24.63 percent to the Gross Domestic Product (GDP) from service activities and 33.4 percent to the manufacturing output.

The CNX Nifty traded in a range of 10,962.55 and 10,880.05. There were 24 stocks advancing against 26 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 4.04%, HPCL up by 3.45%, BPCL up by 2.42%, UPL up by 2.16% and Hero MotoCorp up by 2.03%. On the flip side, Grasim Industries down by 3.09%, SBI down by 2.23%, Bharti Airtel down by 2.12%, Wipro down by 2.11% and Vedanta down by 1.81% were the top losers.

European markets were trading in red; UK’s FTSE 100 lost 51.86 points or 0.77% to 6,714.08, France’s CAC fell 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.