Markets extend southward journey for fifth straight session

Bears tightened their grip on Dalal Street as key gauges extended southward journey for fifth straight day, settling with a cut of around half a percent. Markets started the session on cautious note as traders remain concerned with report that volatile crude oil prices, a strong dollar and rising US bond yields has resulted in foreign institutional investors (FIIs) turning big sellers in the Indian market. Out of the 425 companies on the BSE-500 index, for the quarter ending December (Q3), there has been a decline in FII holdings in 256 companies, while only 169 companies saw net buying by FIIs. Cautiousness also crept in with the Reserve Bank of India’s (RBI) data showing that both bank credit as well as deposits growth marginally declined on a fortnightly basis, clipping at 14.5 percent at Rs 94.29 lakh crore deposits grew at a tepid 9.63 percent to Rs 121.22 lakh crore for the fortnight ending February 1.

Markets continued their lackluster trade till end, as traders ignored ease in wholesale price index (WPI) inflation data.  Wholesale prices in India eased to 2.76 percent in January, as compared to 3.80 percent in December, due to cheaper food and fuel prices. Wholesale inflation, measured by the Wholesale Price Index (WPI), grew 3.02 percent in January 2018. Trader remained pessimistic even after the Cabinet Committee on Economic Affairs approved the Credit Linked Capital Subsidy and Technology Up-gradation Scheme (CLCS-TUS) with a total outlay of Rs 2900 crore. The scheme will facilitate technology up-gradation to MSEs, improvement in Quality of products by MSMEs, enhancement in productivity, reduction in waste and shall promote a culture of continuous improvement. Traders failed to get any sense of relief with report that the cabinet is expected to soon consider a proposal of FDI-linked relaxation for mandatory 30 per cent local sourcing norms for foreign single brand retailers by allowing them more time to comply with regulations.

On the global front, European markets made a positive start amid a flurry of earnings results, while market participants anxiously wait on any signs of progress in the latest round of US-China trade talks. Asian markets ended mixed on Thursday, as investors looked for progress in the US-China trade talks currently underway in Beijing.

Back home, textile sector edged higher with private report that the Centre will soon announce measures to boost exports of apparels and textiles which will be compliant with the World Trade Organization norms and help exporters meet competition from countries such as Bangladesh and Vietnam. Public sector banks (PSBs) remained in focus with report that the Reserve Bank of India (RBI) on February 13 imposed penalties of Rs 5 crore on four PSBs including State Bank of India (SBI) and Corporation Bank for violation of various banking norms. Agri stocks remained buzzing after the Union Cabinet, chaired by the Prime Minister Narendra Modi approved the proposal for leasing out 1.61 acres of land bearing khasara No.91/15 located at Alipur Delhi, owned by Delhi Milk Scheme to Small Farmers Agribusiness Consortium (SFAC) for setting up of Kisan Mandi.

Finally, the BSE Sensex fell 157.89 points or 0.44% to 35,876.22, while the CNX Nifty was down by 47.60 points or 0.44% to 10,746.05.

The BSE Sensex touched a high and a low of 36,109.10 and 35,799.42, respectively and there were 12 stocks advancing against 19 stocks declining on the index.

The broader indices ended in green; the BSE Mid cap index gained by 0.52%, while Small cap index was up by 0.17%.

The top gaining sectoral indices on the BSE were Industrials up by 0.84%, Bankex up by 0.78%, Healthcare up by 0.49%, Realty up by 0.47% and Auto was up by 0.44%, while Oil & Gas down by 2.11%, Telecom down by 1.95%, Energy down by 1.74%, IT down by 1.28% and TECK down by 1.14% were the top losing indices on BSE.

The top gainers on the Sensex were Yes Bank up by 30.73%, Tata Motors - DVR up by 4.55%, Tata Motors up by 3.17%, Sun Pharma up by 2.20% and Indusind Bank up by 1.27%. On the flip side, Bharti Airtel down by 3.09%, Infosys down by 2.01%, Asian Paints down by 1.66%, Reliance Industries down by 1.52% and Coal India down by 1.50% were the top losers.

Meanwhile, with a view to attract a larger number of global players in the single-brand retail sector, the Cabinet is expected to soon consider a proposal of a relaxation in mandatory 30% local sourcing norm for foreign direct investment (FDI) in single-brand retail by allowing them more time to comply with regulations. The commerce and industry ministry has already circulated a draft cabinet note seeking views of different ministries including the department of economic affairs on the proposal. After receiving the comments, the ministry will soon approach the cabinet for its consideration.

As per the proposal, single-brand retail firms may be allowed to open online stores before setting up brick-and-mortar shops if they invest more than $200 million FDI. But such firms would have to set up brick-and-mortar shops within two years of starting online sales. Presently, online sale by a single-brand retail player is allowed only after opening of physical outlet. Retail traders may also be allowed to adjust the incremental sourcing of goods from India for global operations during the initial 6-10 years, from the current five years (beginning April 1 of the year of the opening of first store), against the mandatory sourcing requirement of 30 percent of purchases from India.

These relaxations too will be subject to quantum of FDI one brings in India. Under the proposal, retailers that invest up to $100 million in the sector will get six years’ time to meet the norm. Those who bring in $200 million foreign inflows in the sector will get eight years, while those putting in over $300 million will have 10 years’ time.

The CNX Nifty traded in a range of 10,792.70 and 10,718.75. There were 21 stocks advancing against 29 stocks declining on the index.

The top gainers on Nifty were Yes Bank up by 31.37%, Indiabulls Housing Finance up by 6.65%, Zee Entertainment up by 6.57%, JSW Steel up by 3.65% and Tata Motors up by 2.87%. On the flip side, Indian Oil Corporation down by 3.85%, BPCL down by 3.61%, Hindalco down by 3.10%, Bharti Airtel down by 2.80% and GAIL India down by 2.35% were the top losers.

All European markets were trading in green; UK’s FTSE 100 gained 15.25 points or 0.21% to 7,206.09, France’s CAC added 25.05 points or 0.49% to 5,099.32 and Germany’s DAX was up by 18.84 points or 0.17% to 11,186.06.

Asian markets ended mixed on Thursday, as investors looked for progress in the US-China trade talks currently underway in Beijing. There were reports that US President Donald Trump may be considering whether to extend the deadline for a trade deal with China. Japanese shares ended on a flat note after data showed Japan's economy grew at an annualized rate of 1.4 percent in the October to December period last year. Chinese exports and imports data for January easily topped expectations, helping limit losses across the region. Data showed Chinese exports grew 9.1 percent in January from a year earlier, while imports declined 1.5 percent.