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EQUITY
Post Session: Quick Review
Jan-17-2019

Indian equity benchmarks ended volatile day of trade marginally in green on Thursday, on the back of buying by participants coupled with recovery in the rupee value against dollar. Key indices hovered in positive zone in morning trade, following positive cues from global markets. Traders took some comfort as a working group of the Commerce and Industry Ministry came out with a blueprint suggesting a host of long and short-term measures to increase the size of India's economy to $5 trillion by 2025. It added that India’s potential to achieve a $5 trillion GDP by 2024-25 is within the realm of possibility. Some optimism also came with report that in a bid to improve the ease of doing business, the Reserve Bank of India (RBI) announced a new framework for external commercial borrowings (ECB) and rupee denominated bonds. Indian borrowers can now raise funds from offshore markets for at least three years without any ceiling on the amount.

Volatility struck bourses in early afternoon trade as they reversed their entire gains and traded with marginal losses, as investors were cautious ahead of the third quarter result by Reliance Industries, to be announced later in the day. Street also remained disappointed after a US think tank claimed that H-1B workers are ‘vulnerable to abuse’ and frequently placed in ‘poor working conditions’, seeking reforms like a substantial increase in wages to those holding the visa, popular among Indian IT professionals. But, markets bounced back from their losses in late trade and managed to close the session in green, due to buying witnessed in Realty, Oil & Gas and IT stocks. Traders also found some solace with private report expecting India's growth to be the best in the Asian region in 2019. It is also positive on the market with a Nifty target of 12,170 for the year end which is a fourteen percent upside from current levels.

On the global front, Asian markets ended mostly in red on Thursday, while European markets were trading in red amid heightened political uncertainty in the U.K. and ongoing concerns over China's cooling economy. Back home, banking stocks were in focus as a report stated that the government decided to recapitalize state-owned Exim Bank to the tune of Rs 6,000 crore and double its authorised capital to Rs 20,000 crore. The equity will be infused in two tranches -- Rs 4,500 crore in 2018-19 and Rs 1,500 crore in 2019-20.

The BSE Sensex ended at 36353.79, up by 32.50 points or 0.09% after trading in a range of 36170.80 and 36468.42. There were 15 stocks advancing against 16 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index fell 0.31%, while Small cap index was down by 0.36%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 1.20%, Oil & Gas up by 0.66%, IT up by 0.51%, TECK up by 0.31% and Consumer Durables up by 0.29%, while Healthcare down by 0.96%, Basic Materials down by 0.37%, Metal down by 0.28%, Industrials down by 0.25% and PSU down by 0.22% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Axis Bank up by 2.00%, HCL Tech. up by 1.69%, HDFC up by 1.61%, TCS up by 1.38% and Power Grid up by 1.22%. (Provisional)

On the flip side, Sun Pharma down by 6.42%, Yes Bank down by 3.48%, SBI down by 1.90%, Bajaj Finance down by 1.47% and Hindustan Unilever down by 1.03% were the top losers. (Provisional)

Meanwhile, with an aim to further improve the ease of doing business in India, the Reserve Bank of India (RBI) has come out with a new policy for overseas borrowings, allowing all eligible entities to raise foreign funding under the automatic route and removing sectoral curbs. All eligible borrowers can now raise External Commercial Borowings (ECB) up to $750 million or equivalent per financial year under the automatic route replacing the existing sector wise limits.

The Central Bank said Tracks I and II under the existing framework are merged as 'Foreign Currency denominated ECB' and Track III and Rupee Denominated Bonds framework are combined as 'Rupee Denominated ECB' to replace the current four-tiered structure. The framework is instrument-neutral. Track I, II and III denotes amount and maturity of funds raised. Further, all-in cost ceiling per annum has been pegged at benchmark rate plus 450 bps spread.

As per the new norms, the minimum average maturity period (MAMP) has been kept at three years for all ECBs, irrespective of the amount of borrowing in lieu of various layers of MAMPs as at present, except the borrowers specifically permitted in the circular to borrow for a shorter period. However, the RBI said lending and borrowing under the ECB framework by Indian banks and their overseas branches/subsidiaries will be subject to prudential guidelines. Further, other entities raising ECB are required to follow the guidelines issued, if any, by the concerned sectoral or prudential regulator.

The list of eligible borrowers has been expanded to include all entities eligible to receive foreing direct investment (FDI). Additionally, port trusts, units in SEZ, SIDBI, EXIM Bank, registered entities engaged in micro-finance activities, registered societies/trusts/ cooperatives and non-government organisations can also borrow under the new framework. The negative list, for which the ECB proceeds cannot be utilised, would include real estate activities, investment in capital market, equity investment, working capital purposes except from foreign equity holder, repayment of Rupee loans except from foreign equity holder.

The CNX Nifty ended at 10897.90, up by 7.60 points or 0.07% after trading in a range of 10844.65 and 10930.65. There were 24 stocks advancing against 25 stocks declining on the index. (Provisional)

The top gainers on Nifty were GAIL India up by 2.12%, BPCL up by 2.07%, Axis Bank up by 1.82%, Bharti Infratel up by 1.79% and HCL Tech. up by 1.61%. (Provisional)

On the flip side, Sun Pharma down by 6.39%, Yes Bank down by 3.53%, Zee Entertainment down by 2.51%, SBI down by 1.91% and Eicher Motors down by 1.86% were the top losers. (Provisional)

European markets were trading in red; UK’s FTSE 100 decreased 33.76 points or 0.49% to 6,828.92, France’s CAC fell 17.01 points or 0.35% to 4,793.73 and Germany’s DAX was down by 68.30 points or 0.62% to 10,862.94.

Asian markets ended mixed on Thursday as a strong start to the US earnings season and hopes for progress on the Brexit front helped investors shrug off worries about US-China trade relations. The pound held steady after British Prime Minister Theresa May's government survived a vote of no confidence in parliament. Safe-haven assets such as gold and the yen rose after media reported that US federal prosecutors are investigating Chinese tech giant Huawei Technologies for allegedly stealing trade secrets from US companies. Chinese stocks ended lower as investors braced for GDP data release on January 21. Growth worries resurfaced after Premier Li Keqaing said the country is facing a challenging environment. Further, Japanese shares finished lower as automakers sagged on worries about US tariff hikes on imports.

Asian Indices

Last Trade           

Change in Points

Change in %

Shanghai Composite

2,559.64
-10.78
-0.42

Hang Seng

26,755.63
-146.47
-0.54

Jakarta Composite

6,423.78
10.42
0.16

KLSE Composite

1,682.97

9.89

0.59

Nikkei 225

20,402.27
-40.48
-0.20

Straits Times

3,214.44
-14.67
-0.45

KOSPI Composite

2,107.06
0.96
0.05

Taiwan Weighted

9,789.15
25.34
0.26
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