Post Session: Quick Review

Selling activity which took place during late hour of trade mainly forced the markets to cut all of their gains and end Friday's session with steep losses. Sensex and Nifty gave up their crucial 36,100 and 10,800 levels respectively. Key indices begun day on positive note and traded with decent gains, tracking positive leads from Asian markets. Traders took encouragement with Minister of State for Agriculture Parshottam Rupala’s statement that the government will soon announce a package for farmers to boost their income, amid speculations that the Centre is considering various measures to address distress in the farm sector. Rally got extended with apex exporters’ body, Federation of Indian Export Organisations (FIEO) stating that the tariff war between the US and China is benefitting India as its exports to the neighbouring country have increased by about 32 per cent during the June-November 2018 period to $8.46 billion. Exports to China had stood at $6.37 billion in June-November 2017. Growth in exports to China is beneficial for India as it has huge trade deficit with the neighbouring country.

However, markets reversed all of their strong gains and entered into negative territory in the last leg of trade, as traders turned wary after Global rating agency Moody’s said that the government policies to support the incomes of small enterprises and low-income households ahead of Lok Sabha elections will make fiscal consolidation harder. It further said that the fiscal deficit may touch 3.4 per cent of gross domestic product (GDP) for year ending March 2019, breach the target of 3.3 per cent. Sentiments also got spooked with United Nations head Antonio Guterres’ statement that trade tensions impacting the world economy were essentially a ‘political problem’ and warned that a fragmented response to global challenges was a recipe for disaster. The street overlooked Vice President M Venkaiah Naidu’s statement that the country's Goods and Services Tax would usher in long term gains despite initial problems and claimed that the world would take a cue from the GST experiment.

On the global front, Asian markets ended higher on Friday, while European markets as investors look ahead to crucial trade talks between China and the United States at the end of the month. Back home, banking sector stocks were in focus with report that Piyush Goyal, who has been given an additional charge of the finance ministry in the absence of Arun Jaitley, is scheduled to meet chiefs of the state-owned banks on January 28 to review financial performance of the banks.

The BSE Sensex ended at 36027.89, down by 167.21 points or 0.46% after trading in a range of 35953.15 and 36474.48. There were 10 stocks advancing against 21 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell 1.18%, while Small cap index was down by 1.56%. (Provisional)

The top gaining sectoral indices on the BSE were Telecom up by 1.43%, IT up by 0.37%, Oil & Gas up by 0.30%, Energy up by 0.27% and Consumer Durables up by 0.07%, while Consumer Discretionary Goods & Services down by 3.25%, Realty down by 3.23%, Auto down by 3.18%, Basic Materials down by 1.90%, Industrials down by 1.22% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were HCL Tech up by 2.53%, Yes Bank up by 2.27%, Bharti Airtel up by 1.53%, TCS up by 1.22% and Vedanta up by 1.16%. (Provisional)

On the flip side, Maruti Suzuki down by 7.64%, Hero MotoCorp down by 4.25%, Tata Motors - DVR down by 2.53%, Asian Paints down by 1.98% and Mahindra & Mahindra down by 1.97% were the top losers. (Provisional)

Meanwhile, amid huge trade deficit with the neighbouring country, apex exporters body, Federation of Indian Export Organisations (FIEO) has stated that India’s exports to China jumped 32% to $8.46 billion in the June-November of 2018, as compared to $6.37 billion in June-November 2017. It added that the country was mainly benefited from the tariff war between the US and China.

FIEO President Ganesh Kumar Gupta said commodities that have exhibited high growth during the period to China include petroleum products, chemicals, cotton yarn, plastic raw material, and marine products. Growth in exports to China is beneficial for India as it has huge trade deficit with the neighbouring country. Trade deficit with China increased to $63.12 billion in 2017-18 from $51.11 billion in 2016-17.

Besides, India is taking several steps to promote shipments to China. Recently, it has managed to export agricultural goods such as non-basmati rice to China. Meanwhile, in June and September 2018, the US announced high customs duties on several Chinese goods. In retaliation, China also raised levies on American goods.

The CNX Nifty ended at 10781.35, down by 68.45 points or 0.63% after trading in a range of 10756.45 and 10931.70. There were 21 stocks advancing against 29 stocks declining on the index. (Provisional)

The top gainers on Nifty were Bharti Infratel up by 6.35%, HCL Tech. up by 2.99%, Bharti Airtel up by 1.96%, Cipla up by 1.54% and Yes Bank up by 1.42%. (Provisional)

On the flip side, Zee Entertainment down by 29.27%, Maruti Suzuki down by 7.59%, Ultratech Cement down by 7.08%, Hero MotoCorp down by 4.31% and Indiabulls Housing finance down by 3.36% were the top losers. (Provisional)

European markets were trading in green; UK’s FTSE 100 increased 16.66 points or 0.24% to 6,835.61, France’s CAC rose 33.23 points or 0.68% to 4,905.19 and Germany’s DAX added 135.74 points or 1.22% to 11,265.92.

Asian markets ended higher on Friday after US Treasury Secretary Steven Mnuchin said the United States and China were ‘making a lot of progress’ in talks and he looked forward to discussions with Chinese Vice Premier Liu He next week, with currency issues also on the agenda. Separately, US Commerce Secretary Wilbur Ross said that the US is ‘miles and miles’ from a trade deal with China but there is a fair chance they will get a deal. Japanese shares ended higher as chip-related firms tracked their US peers higher following well-received earnings out of the semiconductor sector. Further, Chinese shares closed higher, helped by strength in banking shares, after regulators unveiled measures to help lenders replenish capital, but lingering worries over Sino-US trade talks and economic health capped gains. China will allow insurance firms to invest in tier-2 capital bonds and perpetual bonds issued by banks, and set up a central bank bills swap to improve the liquidity of banks’ perpetual bonds. The move will make banking shares more attractive to investors.