Indian equity benchmarks extended
southward journey for seventh straight session and settled with a cut of around
quarter a percent, as Reserve bank of Indian (RBI) kept repo rate unchanged.
Markets started the session on optimistic note amid firm global cues. Traders
took some encouragement with report that as many as 67 foreign direct
investment proposals (FDI) worth Rs 117 billion were approved during the first
nine months of the ongoing financial year. Some support also came with report
that Indian firms mobilized Rs 21,000 crore by issuing shares to institutional
investors during the December quarter of the current fiscal, resulting into an
over 13-fold rise from the year-ago period. The firms had mopped up Rs 1,576
crore in the same period of the previous fiscal. The funds have been mobilized
for business expansion, refinancing of debt, working capital requirements and
other general corporate purposes. Meanwhile, Finance Secretary Hasmukh Adhia
said that the import duty hike in 45 items announced in the Budget will earn
about Rs 7,000 crore revenues to the government and is mainly intended to give
a push to the MSMEs for domestic manufacturing. However, markets turned choppy
after RBI kept the key policy rate unchanged at 6% for the third consecutive
time in view of firming inflation. Reverse Repo rate was also maintained at
5.75%. The Monetary Policy Committee (MPC), headed by RBI Governor Urjit Patel
had last reduced the benchmark lending rate by 0.25 percentage points to 6%
last August, bringing it to a 6-year low. Sentiments also remained dampened
with RBI cutting its FY18 GVA growth to 6.6%. The policy added that retail
inflation, measured by the year-on-year change in the Consumer Price Index
(CPI), increased for the sixth consecutive month in December on account of a
strong unfavourable base effect. Traders also remained concerned on report that
India's fiscal deficit is expected to come in at 3.5% of GDP in financial year
2018-2019, as policymakers seek to promote economic growth by reducing the pace
of fiscal consolidation. According to the report by BMI Research, a unit of
Fitch Group, there is room for fiscal slippage as the government seeks to
achieve its 7.5% growth target. Finally, the BSE Sensex declined 113.23 points
or 0.33% to 34,082.71, while the CNX Nifty was down by 21.55 points or 0.21% to
10,476.70.
The US markets closed lower on
Wednesday, after failing to defend intraday gains as investors struggled to
adjust to an investment environment marked by both rising bond yields and signs
of inflation. The market's move south coincided with a spike in the 10-year
Treasury yield in the wake of the news of a two-year budget deal announced by
top senators that would significantly raise fiscal spending. Congressional
leaders reached an agreement on a two-year budget pact that would increase
fiscal spending by $300 billion on the back of a big increase in military
spending. The deal, which still needs to be approved by the Congress, is at
least likely to put to rest fears of another government shutdown. On the
economy front, consumer borrowing remained strong in December although slower
than the torrid pace seen in the prior month. Total consumer credit increased
$18.4 billion in December to a record seasonally adjusted $3.84 trillion,
posting an annual growth rate of 5.8%. This was down from a revised $31 billion
rate in the prior month. The prior two months were revised higher by $5.5
billion. Revolving credit, like credit cards, rose 6% in December, less than
half the 13% pace seen in November. Revolving credit is $1.03 trillion, the
highest on record. Non-revolving credit, typically auto and student loans, rose
5.7% in December after an 8.6% rise in the prior month. In the fourth quarter,
consumer credit rose at a 7.7% annual rate, the strongest quarter of the year. The
Dow Jones Industrial Average slipped 19.42 points or 0.08 percent to 24,893.35,
the Nasdaq dropped 63.898 points or 0.90 percent to 7,051.98, the S&P 500
edged lower by 13.48 points or 0.50 percent to 2,681.66.
Extending their recent slump, Crude
oil futures declined sharply to one month low on Wednesday after data showed
U.S. oil inventories dropped for a second week in a row. The U.S. commercial
crude oil inventories (excluding those in the Strategic Petroleum Reserve)
increased by 1.9 million barrels from the previous week. Total motor gasoline
inventories increased by 3.4 million barrels last week, and are in the middle
of the average range. A stronger dollar and demand concerns also weighed on oil
prices. Rising interest rates may cool off the economy, resulting in diminished
demand for energy products. Benchmark crude oil futures declined $1.60 or 2.5
percent, at $61.79 a barrel on the New York Mercantile Exchange. Brent crude
lost $1.35, or 2 percent, to $65.51 a barrel on London's Intercontinental
Exchange.
Indian
rupee pared all of its gains and ended marginally weaker against dollar on
Wednesday, due to fresh demand for the American currency from banks and
importers. Investors were worried after Reserve Bank of India (RBI) kept repo
rate unchanged at 6% and Reverse Repo rate was also maintained at 5.75%.
Besides, the dollar's gains against some other currencies overseas coupled with
lackluster trade in the equity markets also weighed on the rupee sentiments. However,
losses were limited as some support came with domestic brokerage report which
highlighted that there will be minimal impact on inflation from the
government's decision to fix support prices for the upcoming Kharif crops like
paddy at least 50% higher than the cost of production. On the global front,
dollar lost half a percent against yen on Wednesday, handing back earlier
gains, as investors remained cautious after a heavy selloff in stock markets,
and with many viewing the Japanese currency as undervalued. Finally, the rupee
ended at 64.28, 3 paise weaker from its previous close of 64.25 on Tuesday.
The FIIs as per Wednesday data
were net sellers in equity segment, while they were net buyers in debt segment.
In equity segment, the gross buying was of Rs 6511.16 crore against gross
selling of Rs 8229.49 crore, while in the debt segment, the gross purchase was
of Rs 1937.58 crore with gross sales of 1468.00 crore. Besides, in the hybrid
segment, the gross buying was of Rs 0.31 crore against gross selling of Rs 0.11
core.
US markets ended the choppy trade
in red on Wednesday after a disappointing Treasury auction renewed concerns
about rising rates, spooking investors' sentiments. Asian markets were trading
mixed after European markets rebounded strongly overnight and U.S. equities
closed modestly lower overnight in the final hour of trading. The Japanese
stock market is rising on Thursday on the back of a weaker yen. Indian shares
closed lower for the seventh straight session on Wednesday, as global sentiment
turned pessimistic and the RBI warned of higher government spending feeding
into inflation after keeping interest rates unchanged. Today the start is
likely to be mildly in the green after RBI said inflation will moderate in the
second half of FY19 on the back of base effect. A sharp fall in oil prices may
also ease investor concerns surrounding inflation and rising twin deficits.
Traders will also get some support with ASSOCHAM chief's statement that the
RBI's decision to keep the policy rate unchanged is on the expected lines,
though the less than hawkish stance has come about as a relief for the industry
which had even feared a possible hike in the lending rates, following
inflationary concerns. Meanwhile, Moody's said that the global green bond
issuances are likely to surge by 60 per cent to a record $250 billion this
year, with India and China leading the emerging markets in this space. Stocks
related to public sector banks (PSBs) will be in focus after Economic Advisory
Council to the Prime Minister (EAC-PM) chairman Bibek Debroy said that
accretion of fresh non-performing assets (NPAs) of PSBs has virtually stopped.
However, according to recent Reserve Bank data, bad loans of Public sector
banks (PSBs) stood at Rs 7.34 lakh crore by the end of second quarter this
fiscal, a bulk of which came from corporate defaulters. There will be lots of
important earnings announcements too, to keep the markets buzzing.
Support and
Resistance: NSE (Nifty) and BSE (Sensex)
Index
|
Previous close
|
Support
|
Resistance
|
NSE Nifty
|
10,476.70
|
10,410.73
|
10,578.33
|
BSE Sensex
|
34,082.71
|
33,838.64
|
34,496.55
|
Nifty Top volumes
Stock
|
Volume
|
Previous close (Rs)
|
Support (Rs)
|
Resistance (Rs)
|
(in Lacs)
|
SBI
|
214.64
|
292.80
|
289.23
|
297.13
|
Vedanta
|
167.98
|
315.70
|
308.53
|
326.93
|
Hindalco Industries
|
137.07
|
246.00
|
242.40
|
251.30
|
ITC
|
129.56
|
275.15
|
273.18
|
277.93
|
Tata Motors
|
127.07
|
377.80
|
373.53
|
383.73
|
Yes Bank has successfully completed issuance of its maiden $600 million bond issue in the international debt markets.
Tata Motors' subsidiary -- Jaguar Land Rover has reported a rise of 3% in global sales to 49,066 units in January 2018.
Hero MotoCorp has unveiled an exciting new range of products at the Auto Expo - The Motor Show 2018.
Cipla has reported 4.82% rise in its consolidated net profit at Rs 403.45 crore for Q3FY18 as compared to Rs 384.91 crore for Q3FY17.