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EQUITY
Post Session: Quick Review
Oct-19-2018

Indian equity benchmarks ended sharply lower on Friday, extending their losses to a second session in a row, as Reliance Industries’ lower than expected earnings, ongoing cash crunch in NBFCs and H1-B visa issue dented investors’ sentiments. Markets opened with heavy losses, as traders were cautious with SBI’s research report - Ecowrap stating that the rupee depreciation has neither helped in improving exports nor in slowing imports, leading to an incremental trade deficit of $4 billion in the first half of the current fiscal. Investors’ sentiments were also pessimistic with private report stating that the impact of the current tightness in the credit market is unlikely to impact economic growth in any meaningful way beyond the next two quarters, notwithstanding the cautious view on the domestic equity market. Traders reacted negatively to a report which highlighted that even as India clocked a good growth of 6.7% in the financial year 2018-19, job creation by corporate India dropped to just 3.8%, which can be seen as confirming fears of jobless growth in the country.

Markets continued a downward trajectory in the last leg of trade, as sentiments on the street weakened further with the report showing that the Consumer Confidence Index plummeted 6.6 percentage points as consumers were worried about various factors such as personal finances for day to day running of the household, savings and investments. Adding pessimism among investors, a private report said that in 2018, in USD terms wealth in India grew a modest 2.6% to around $6 trillion and wealth per adult stayed flat at $7,020. Investors paid no heed to private study report stating that flexible working could contribute $376 billion annually to the Indian economy by 2030 as shared office space helps corporates to save cost and boost employee productivity.

On the global front, Asian markets ended mixed on Friday as weak Chinese data added to investors’ concerns over Italy's controversial budget, rising US interest rates and US-Saudi tensions. European markets were trading in red, as weak third-quarter corporate results weighed on sentiments. Back home, non-bank financial companies (NBFCs) stocks ended in red even as the Reserve Bank on Friday announced more measures to increase liquidity flows to the NBFCs. The RBI permitted banks to use government securities equal to their incremental outstanding credit to NBFCs, over and above their outstanding credit to them as on October 19, to be used to meet liquidity coverage ratio requirements.  Besides, majority of gems and jewellery stocks ended higher on report that the government is expected to come out with a comprehensive gold policy soon to promote the metal industry and the gems and jewellery sector, which is a major contributor to the export basket.

The BSE Sensex ended at 34355.44, down by 424.14 points or 1.22% after trading in a range of 34140.32 and 34563.29. There were 9 stocks advancing against 22 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell 0.96%, while Small cap index was down by 1.23%. (Provisional)

The only gaining sectoral indices on the BSE were FMCG up by 0.70% and Metal up by 0.13%, while Energy down by 2.76%, IT down by 2.55%, TECK down by 2.36%, Auto down by 1.44% and Consumer Disc down by 1.22% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Sun Pharma up by 2.62%, Kotak Mahindra Bank up by 2.12%, Vedanta up by 1.68%, Hindustan Unilever up by 1.21% and ITC up by 1.08%. (Provisional)

On the flip side, Yes Bank down by 5.95%, HDFC down by 4.39%, Reliance Industries down by 4.20%, Tata Motors - DVR down by 3.95% and Hero MotoCorp down by 3.73% were the top losers. (Provisional)

Meanwhile, with an aim to boost exports in India, the commerce ministry is working on a new World Trade Organisation (WTO)-compliant export incentive scheme for merchandise shipments to replace the existing Merchandise Exports from India Scheme (MEIS). Currently, exporters of goods avail incentives under the MEIS. In this, the government provides duty benefits depending on product and country. The new scheme could be named as rebate of levies.

The formulation of the new export incentive scheme also assumes significance as the US has dragged India to the WTO’s dispute settlement mechanism over export subsidies and said that these incentives were harming American companies. The US has challenged India’s export subsidy programmes such as MEIS in the WTO, asserting that these initiatives harm its companies by creating an uneven playing field. Other export benefit programmes including Export Oriented Units Scheme, Electronics Hardware Technology Parks Scheme; Special Economic Zones; Export Promotion Capital Goods Scheme; and duty free imports have been challenged by the US.

As per the Federation of Indian Export Organisations (FIEO), the new scheme should include refund of indirect taxes like on oil and power; state levies such as ‘mandi’ tax and embedded tax. FIEO President Ganesh Gupta said the new scheme would help boost the country’s exports. Besides, India’s exports entered the negative zone after five months, contracting 2.15% in September to $27.95 billion even though the trade deficit narrowed to a five-month low of about $14 billion.

The CNX Nifty ended at 10321.35, down by 131.70 points or 1.26% after trading in a range of 10249.60 and 10380.10. There were 18 stocks advancing against 30 stocks declining on the index, while 2 stocks remained unchanged. (Provisional)

The top gainers on Nifty were HPCL up by 4.12%, Sun Pharma up by 2.59%, Vedanta up by 2.36%, Kotak Mahindra Bank up by 1.87% and Bharti Infratel up by 1.58%. (Provisional)

On the flip side, Indiabulls Housing finance down by 16.24%, HCL Tech down by 6.57%, Yes Bank down by 5.41%, Reliance Industries down by 4.53% and HDFC down by 4.19% were the top losers. (Provisional)

European markets were trading in red; UK’s FTSE 100 decreased 5.52 points or 0.08% to 7,021.47, France’s CAC shed 55.42 points or 1.09% to 5,061.37 and Germany’s DAX fell 78.09 points or 0.68% to 11,511.12.

Asian markets ended mixed on Friday as weak Chinese data added to investor concerns over Italy's controversial budget, rising US interest rates and US-Saudi tensions. The euro hovered near a one-week low against the dollar after the European Commission said Italy's 2019 budget draft is in serious breach of EU budget rules. US President Donald Trump said on Thursday he presumes journalist Jamal Khashoggi had likely been killed and that the US response to Saudi Arabia will likely be ‘very severe’. Chinese shares closed sharply higher after central bank chief downplayed market fluctuations and the securities regulator said it would encourage funds to help resolve liquidity difficulties at listed companies. Data showed earlier in the day that China's GDP climbed an annual 6.5 percent in the third quarter of 2018- shy of estimates for 6.6 percent and down from 6.7 percent in the previous three months. Industrial production climbed 5.8 percent year-on-year in September, shy of forecasts for 6.0 percent and down from 6.1 percent in August. However, retail sales climbed an annual 9.2 percent and fixed asset investment gained 5.4 percent to beat forecasts. Meanwhile, Japanese shares ended lower after tracking broader overnight losses on Wall Street and Europe.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

2,550.47

64.05

2.51

Hang Seng

25,561.40

106.85

0.42

Jakarta Composite

5,837.29

-7.95

-0.14

KLSE Composite

1,732.14

-5.87

-0.34

Nikkei 225

22,532.08

-126.08

-0.56

Straits Times

3,062.51

-7.16

-0.23

KOSPI Composite

2,156.26

7.95

0.37

Taiwan Weighted

9,919.26

-34.47

-0.35
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