Indian benchmark indices snapped its 6-day winning streak on Monday as market participants remained cautious ahead of the US president Donald Trump's speech to a joint session of Congress on Tuesday night. On the domestic front, sentiments were undermined by the report that economic think tank National Council of Applied Economic Research (NCAER) has lowered the country's growth forecast to 6.9% for the current fiscal on account of demonetization. According to NCAER, the growth rate would rebound to 7.3% for 2017-18. Recently, IMF lowered GDP growth forecast to 6.6% due to the strains that have emerged in the economy as a result of ‘temporary disruptions’ caused by demonetisation. Furthermore, Investors turned jittery with a private survey stating that the full impact of the government's decision to demonetise high denomination currency in November is likely to show up in the December quarter's GDP growth number that comes out Tuesday. It expects the GDP growth for the quarter ended December 31, to be in the range of 5.5 to 6.5 percent. However, the downside remained capped by gains in index heavyweight Reliance Industries, which surged to eigth-year high on continued hopes about its telecom unit Reliance Jio. In past four trading sessions, the stock jumped 17% from Rs 1,074 on February 20, after Reliance Jio Infocomm (RJio), a subsidiary of RIL, announced that its tariff plans will become applicable from April 1, 2017. Some support also came with the report that Foreign Direct Investment (FDI) in India grew 18% during 2016 to touch $46 billion. The main sectors, which attracted the highest foreign inflows, include services, telecom, trading, computer hardware & software and automobile.
On the global front, Asian markets ended mostly lower on Monday as investors looked ahead to US President Donald Trump's speech to Congress this week for details of promised tax cuts and infrastructure spending. Also upcoming are public comments from various Fed officials in the coming weeks, and some significant economic data that could provide insights into the likelihood of an interest-rate increase in March. The February employment report - which usually comes out on the first Friday of the month - has been pushed back to March 10. Japan led the declines amid a rising yen, which has pushed to the high end of its six-week trading range with the dollar at ¥112. Meanwhile, most of the European market rose in early trading, tracking another set of record highs for Wall Street’s main equities gauges. US equity futures are pointing to further gains after a late rally on Friday pushed the S&P 500 up 0.2%, while the blue-chip Dow Jones Industrial Average gained 0.1%.
Back home, after getting cautious start, the local benchmarks slipped into lower level in late morning session, tracking weak trade in other regional markets. Thereafter, the indices traded in tight range for most part of the session, but witnessed sharp selling in frontline blue-chip stocks in final hour of trade. Eventually, the NSE’s 50-share broadly followed index Nifty, took a cut of around half a percent to settle below the crucial 8,900 support level, while Bombay Stock Exchange’s Sensitive Index, Sensex slipped by around hundred points and closed above the psychological 28,800 mark. Moreover, the broader markets managed to escape heavy losses and settled on a flat note, yet outperformed their larger peers.
The market breadth remained pessimistic, as there were 1262 shares on the gaining side against 1509 shares on the losing side, while 261 shares remained unchanged.
Finally, the BSE Sensex declined 80.09 points or 0.28% to 28812.88, while the CNX Nifty was down by 42.80 points or 0.48% to 8,896.70.
The BSE Sensex touched a high and a low of 28961.83 and 28791.19, respectively and there were 7 stocks on gainers side as against 23 stocks on the losers side on the index.
The broader indices made a positive closing; the BSE Mid cap index gained 0.01%, while Small cap index was up by 0.16%.
The top gaining sectoral indices on the BSE were Energy up by 1.85%, Oil & Gas up by 0.69%, Healthcare up by 0.27%, IT up by 0.22% and Consumer Durables up by 0.11%, while Telecom down by 2.80%, Bankex down by 1.39%, Auto down by 0.99%, Power down by 0.81% and Utilities down by 0.71% were the losing indices on BSE.
The top gainers on the Sensex were Reliance Industries up by 4.74%, Hindustan Unilever up by 0.95%, Wipro up by 0.75%, Lupin up by 0.72% and Coal India up by 0.46%. On the flip side, Axis Bank down by 3.56%, Power Grid down by 3.14%, Bharti Airtel down by 2.83%, ICICI Bank down by 1.97% and Maruti Suzuki down by 1.38% were the top losers.
Meanwhile, with an aim to give more freedom to states to use their allocated coal, the power ministry has finally framed new rules to get electricity supply from most efficient independent power producers (IPP) in lieu of dry fuel. The new rules will replace the earlier rigid practice of allocation of coal to individual state-owned plants.
According to the new rules finalized by the government, the energy generated under this arrangement will be treated as transfer of coal. It is provided that the landed cost of power from IPP generating station at the buyer's periphery should be lower than the variable cost of generation of the state generating station whose power is to be replaced by that of IPP. Further, the landed cost of power shall be inclusive of the transmission charges and losses.
Under this arrangement, the IPP will make its own assessment about the availability of transmission corridor for the quantum of power offered and the period of supply before submitting price bids during e-reverse bidding. Besides, the rules provide that any restriction imposed by regional/states load dispatch centres (RLDCs/SLDCs) on scheduling of power due to breakdown of transmission and grid constraints shall be treated as force majeure without any liability on either side. Also, during the force majeure, no coal transfer shall be made to the seller.
The CNX Nifty traded in a range of 8,951.80 and 8,888.65. There were 8 stocks in green as against 43 stocks in red on the index.
The top gainers on Nifty were Reliance Industries up by 4.63%, Aurobindo Pharma up by 2.03%, Wipro up by 1%, Coal India up by 0.73% and Lupin up by 0.69%. On the flip side, Idea Cellular down by 4.72%, Axis Bank down by 3.61%, Power Grid down by 3.46%, Bharti Infratel down by 3.07% and ZEEL down by 2.67% were the top losers.
The European markets were trading mostly in green; UK’s FTSE 100 increased 13.46 points or 0.19% to 7,257.16, Germany’s DAX increased 4.37 points or 0.04% to 11,808.40, while France’s CAC decreased 3.66 points or 0.08% to 4,841.58.
Asian equity markets ended lower on Monday as lower commodity prices weighed on resource stocks and caution crept in ahead of US President Donald Trump's speech to Congress on Tuesday night, with investors looking for details on his promises of tax reform, deregulation and infrastructure spending. Chinese shares ended lower after the securities regulator vowed stricter regulations to clamp down on speculation and pledged to speed up approvals of initial public offerings. Further, Japanese shares hit 2-1/2 week lows as the yen's strength hurt exporters and lower US yields sent financials broadly lower. Meanwhile, Taiwan markets were closed for a public holiday.
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