Markets bid adieu to the year 2018 on quiet note

Indian equity benchmarks failed to celebrate year-end party on Monday, as both the larger peers, Sensex and Nifty signed off 2018 on flat note. The start of the day was cheerful, aided by the Confederation of Indian Industry’s (CII) statement that the country is expected to witness strong economic growth in 2019, after it has emerged as the fastest growing major world economy this year despite growing global vulnerabilities. It added that better demand conditions, settled GST implementation, capacity expansion from growing investments in infrastructure, continuing positive effects of reform policies and improved credit offtake especially in the services sector at 24% will sustain the robust GDP growth of 7.5% in 2019. Sentiments were also upbeat with a private report that states have logged 15% growth in their average expenditure annually since 2011. As per the report, the overall expenditure of all states had soared from Rs 12.47 trillion in 2011-12 to Rs 33.18 trillion in 2018-19. Some support also came in with the government’s statement that the net direct tax collection till December 20 this fiscal amounted to Rs 7.36 lakh crore, a growth of 14% over the same period a year ago. This is 64% of the Budget estimate for direct tax collection in the current fiscal.

However, the markets turned volatile during noon deals to end the last day of 2018 on sluggish note, as trade got hit with a private report stating that restrictions on foreign e-commerce companies would have a long-term negative impact on the foreign direct investment as well as consumers in India. The market participants got cautious with the government’s report showing that names of more than 1 lakh companies have been struck off the official records in the current fiscal for not carrying business activities for a long time. Domestic sentiments turned pessimistic also with a report that inflation seems to have become a double-edged sword for policy makers with political opponents attacking the government over farmers getting hit due to low prices for agricultural produce, even as the rate of price rise in 2018 has mostly been contained within the targeted comfort zone. The street paid no heed towards Niti Aayog vice chairman Rajiv Kumar’s statement that Niti Aayog plans to focus in the New Year on steps required to push economic growth, promote e-mobility and ensure expeditious implementation of the Modi government’s reform measures. Investors even overlooked a private report stating that India has pipped its neighbour in 2018 for the first time in the last 20 years in terms of attracting foreign direct investment (FDI). With 253 inbound deals amounting to $39.515 billion, India’s annual FDI was higher than that of China’s so far this calendar year.

On the global front, European markets were trading in green, as Germany's consumer price inflation slowed sharply in December to its lowest level in eight months. As per figures from the Federal Statistical Office, the consumer price index rose 1.7% year-on-year following a 2.3% increase in November. The street had forecast an inflation rate of 1.9%. Asian markets ended mixed, as weak manufacturing data from China offset signs of progress in trade talks between the United States and China. US President Donald Trump said that trade negotiations with China were moving along very well toward a comprehensive deal. Meanwhile, China's manufacturing sector fell into contraction in December. The latest survey from the National Bureau of Statistics showed that a PMI scored 49.4, down from the no-change mark 50.0 in November. The non-manufacturing PMI climbed to 53.8 from 53.4 in the previous month. Several regional bourses remained closed for New Year's Eve, including Japan, South Korea, China, Indonesia and Thailand.

Back home, jewellery companies shares ended mostly in red, despite Icra’s report indicating that gold jewellery demand is likely to grow 6-7% over the medium to long-term aided by evolving lifestyle, growing disposable income and the increasing penetration of organised sector, while stocks related to the NBFCs remained in focus, with Reserve Bank of India’s (RBI) latest report that the consolidated balance sheet of NBFCs expanded in 2017-18 and during the first half of 2018-19. It further noted that the profitability of NBFCs improved on the back of fund-based income, relatively lower NPA levels and strong capital position. Further, banking sector stocks ended higher with the RBI’s data showing that banks have seen a significant improvement in recovery of stressed assets helped by the Insolvency and Bankruptcy Code (IBC) and amendments in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interests (SARFAESI) Act, during FY18. In the fiscal ended March 2018, banks recovered Rs 404 billion worth of bad loans as against Rs 385 billion recovered in FY17.

Finally, the BSE Sensex lost 8.39 points or 0.02% to 36,068.33, while the CNX Nifty was up by 2.65 points or 0.02% to 10,862.55.

The BSE Sensex touched a high and a low of 36,285.46 and 36,033.95, respectively and there were 15 stocks advancing against 16 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index gained 0.51%, while Small cap index was up by 0.69%.

The top gaining sectoral indices on the BSE were Metal up by 1.43%, Basic Materials up by 0.92%, Consumer Durables up by 0.69%, Healthcare up by 0.67% and Power up by 0.39%, while Telecom down by 0.76%, Energy down by 0.39%, Realty down by 0.29%, Oil & Gas down by 0.24% and FMCG down by 0.06% were the top losing indices on BSE.

The top gainers on the Sensex were Tata Steel up by 1.59%, Vedanta up by 1.48%, Tata Motors - DVR up by 1.47%, Sun Pharma up by 1.42% and Tata Motors up by 1.05%. On the flip side, Bharti Airtel down by 1.04%, Axis Bank down by 0.87%, Hero MotoCorp down by 0.78%, NTPC down by 0.77% and Coal India down by 0.66% were the top losers.

Meanwhile, the government has detected Goods and Services Tax (GST) evasion worth Rs 38,896 crore in 6,585 cases during the first seven months of 2018-19. Minister of State for Finance Shiv Pratap Shukla has said that while central excise evasion of Rs 3,028.58 crore in 398 cases was unearthed during the April-October period, service tax evasion of Rs 26,108.43 crore was detected in 3,922 cases.

Shukla has noted that customs evasion was detected in 12,711 cases involving Rs 6,966.04 crore. He also indicated that the total amount of evasion in indirect taxes (GST, service tax, excise and customs) during April-October adds up to about Rs 75,000 crore.

According to Minister, during the seven-month period, the Central Board of Indirect Taxes and Customs (CBIC) recovered evasion worth Rs 9,480 crore in GST, Rs 3,188 crore in service tax, Rs 1,600.84 crore in customs and Rs 383.5 crore in central excise.

The CNX Nifty traded in a range of 10,923.55 and 10,853.20. There were 27 stocks advancing against 23 stocks declining on the index.

The top gainers on Nifty were JSW Steel up by 3.15%, Tata Steel up by 1.59%, Vedanta up by 1.38%, Tata Motors up by 1.29% and Sun Pharma up by 1.16%. On the flip side, Bharti Infratel down by 1.56%, Bharti Airtel down by 1.34%, HPCL down by 1.09%, Hero MotoCorp down by 1.04% and Axis Bank down by 0.82% were the top losers.

European markets were trading in green; UK’s FTSE 100 rose 9.16 points or 0.14% to 6,743.13 and France’s CAC was up by 34.66 points or 0.74% to 4,713.40.

Asian markets ended mixed on Monday in subdued New Year's Eve trading. Cautiousness persisted during the trade, as weak manufacturing data from China offset signs of progress in trade talks between the United States and China. China's manufacturing sector fell into contraction in December, the latest survey from the National Bureau of Statistics showed with a PMI score of 49.4, down from the no-change mark 50.0 in November. The bureau also said its non-manufacturing PMI climbed to 53.8 from 53.4 in the previous month. Hong Kong's shares ended higher after US President Donald Trump on Saturday said that he had a ‘long and very good call’ with Chinese President Xi Jinping and that a comprehensive trade deal between the United States and China is moving along very well, raising hopes for a breakthrough in the trade dispute. Separately, Chinese state media cited President Xi Jinping as saying he believed both sides wanted ‘stable progress.’ Meanwhile, several regional bourses were closed for New Year's Eve, including Japan, South Korea, China, Indonesia and Taiwan.