Bourses end flat despite hitting fresh record highs on Thursday

Indian equity bourses ended flat despite hitting fresh record highs on Thursday’s trading session. The start of the day was firm, aided with NITI Aayog vice chairman Rajiv Kumar’s statement that the government is likely to take more measures to deal with the problem of financial sector. But, in noon deals, key indices turned negative, as India's merchandise exports fell for the fifth straight month. The commerce and industry ministry data showed that exports contracted by 1.8% in December 2019 to $27.36 billion, as processed petroleum exports saw lower receipts and broad-based decline continued to plague all major foreign exchange earning sectors.

Despite some volatility, markets managed to come back in green in second half of the session, after the RBI introduced new rules, in a bid to improve user convenience & increase the security of card transactions. The RBI asked the issuers to provide a facility to switch on / off and set / modify transaction limits (within the overall card limit, if any, set by the issuer) for all types of transactions - domestic & international, at PoS / ATMs / online transactions / contactless transactions, etc. Some support also came with a report that the MSME Export Promotion Council is holding the first three-day summit for aspiring entrepreneurs in the North East from Friday to pave the way for development of entrepreneurship & businesses by women & youths of the region.

On the global front, European markets were trading in red, even after the Dutch jobless rate dropped in December after remaining steady in the previous month. The data from the Central Bureau of Statistics showed that the ILO jobless rate for the 15-75 year old age group declined to seasonally-adjusted 3.2 percent in December from 3.5 percent in November. Asian markets ended mostly higher, after China's house prices increased at a slower pace in December. The data from the National Bureau of Statistics showed that house prices in the first-tier cities, namely Beijing, Shenzhen, Shanghai and Guangzhou grew 0.2 percent versus 0.6 percent in November.

Back home, the Infrastructure sector stocks remained in focus, amid a report stating that the allocation for the highway sector is likely to be raised by Rs 8,000-10,000 crore in the upcoming Budget. Further, stocks related to the sugar industry also remained in watch, on account of a private report showing that the improvement in average sugar prices by close to Rs 2/kg to Rs 32.5-33.0/kg in 9M FY2020 y-o-y, along with the non-increase in the cane price for sugar season, SY2020 is expected to support the profitability of the sugar mills in the near term.

Finally, the BSE Sensex rose 59.83 points or 0.14% to 41,932.56, while the CNX Nifty was up by 12.20 points or 0.10% to 12,355.50.

The BSE Sensex touched high and low of 42,059.45 and 41,812.28, respectively and there were 12 stocks advancing against 18 stocks declining.

The broader indices ended in green; the BSE Mid cap index gained 0.77%, while Small cap index was up by 0.78%.

The top gaining sectoral indices on the BSE were Realty up by 0.97%, Consumer Durables up by 0.70%, Healthcare up by 0.64%, Telecom up by 0.63% and Consumer Disc up by 0.62%, while Metal down by 1.39%, PSU down by 0.58%, Oil & Gas down by 0.46% and Basic Materials down by 0.42% were the top losing indices on BSE.

The top gainers on the Sensex were Nestle up by 3.23%, Kotak Mahindra Bank up by 1.38%, Hindustan Unilever up by 1.36%, Bharti Airtel up by 1.34% and Reliance Industries up by 0.90%. On the flip side, NTPC down by 1.94%, Hero MotoCorp down by 1.70%, Tata Steel down by 1.54%, Tech Mahindra down by 1.48% and Axis Bank down by 1.19% were the top losers.

Meanwhile, worried over rise in imports in the 'others' category, Commerce and Industry Minister Piyush Goyal has requested those importers to seek HSN code (Harmonised System of Nomenclature) or tariff code within 30 days from the foreign trade office, failing which the government would impose strong restrictions on their inbound shipments. He noted that in trade parlance, each product is categorised under an HSN code and it helps in systematic classification of goods across the globe.

The minister has stated that of $500 billion value of imports in 2018-19, the others’ group accounted for more than $100 billion. He said importers will have to approach the ministry to take a special licence for that import without which they cannot import any product in the others category. He also said ‘we will start the process to create a separate HSN code if it is not fitting into any existing code or amend the existing code... Very soon, I shall be coming out with serious consequences. The consequences could be a higher duty on products which come under others category.’

Goyal also asked the Directorate General of Foreign Trade (DGFT) to bring a trade notice immediately and make it an absolute ultimatum either the import duty will be increased exorbitantly or a special duty imposed. He said this step will help the government assess what is being imported into the country. He pointed out that no imports will be allowed without the HSN code into the country, henceforth, there must be zero tolerance for substandard products and services from industry and consumers.

The CNX Nifty traded in a range of 12,389.05 and 12,315.80. There were 20 stocks advancing against 29 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Eicher Motors up by 4.29%, Nestle up by 3.42%, Zee Entertainment up by 2.79%, Kotak Mahindra Bank up by 1.64% and Bharti Airtel up by 1.29%. On the flip side, NTPC down by 2.30%, Bharti Infratel down by 2.04%, JSW Steel down by 2.04%, GAIL India down by 2.01% and Hindalco down by 1.90% were the top losers.

European markets were trading mostly in red; UK’s FTSE 100 decreased 23.63 points or 0.31% to 7,619.17 and Germany’s DAX fell 12.09 points or 0.09% to 13,420.21, while France’s CAC increased 2.64 points or 0.04% to 6,035.25.

Asian markets ended mostly higher on Thursday, although Chinese shares slipped and the yuan held steady as investors remained cautious about existing tariffs and unresolved issues after the United States and China signed a phase 1 trade deal. The deal reportedly includes Chinese purchase $200 billion worth of US goods and services over the next two years, including up to $50 billion worth of agricultural products. The deal also purportedly addresses issues such as intellectual property theft, forced technology transfers and currency manipulation by China. In exchange, the US will scrap a new round of tariffs and cut tariffs on approximately $120 billion worth of Chinese goods in half to 7.5%. Trump noted a 25% tariff on $250 billion worth of Chinese imports will remain in place in order to give the US leverage as the two countries enter into phase 2 negotiations. Japanese shares closed up after the release of upbeat core machinery orders data. Core machine orders in Japan jumped a seasonally adjusted 18% sequentially in November, the Cabinet Office said on Thursday coming in at 942.7 billion yen, following the 6.0% slide in October. On a yearly basis, core machine orders climbed 5.3 percent, following the 6.1 percent fall in the previous month.