We had mentioned in Monday’s closing report that Nifty, Sensex were likely to remain range-bound. The major indices of the Indian stock markets suffered a correction on Tuesday and closed 0.70%-0.83% lower than Monday’s close. NSE trading volumes were on the higher side on Tuesday. The trends of the major indices in the course of Tuesday’s trading are given in the table below:
On the NSE, on Tuesday, there were 384 advances, 1,243 declines and 283 unchanged. On the BSE, there were 828 advances, 1,897 declines, 220 unchanged.
Caution ahead of the presentation of the Union Budget and negative global cues pulled the Indian equities markets lower on Tuesday. The Budget session started on Tuesday with President Pranab Mukherjee's address to a joint sitting of both houses of Parliament, along with Finance Minister Arun Jaitley tabling the Economic Survey for 2016-17. However, investors were worried about the political logjam over the recent demonetisation decision that could stall Parliament's proceedings. The key indices closed the day's trade in the red, as selling pressure was witnessed in stocks of IT (information technology), oil and gas, and healthcare stocks.
The Economic Survey 2016-17 has advocated fast remonetisation, a cut in tax rates and stamp duties and reining in over-zealous tax administration to make India the world's fastest growing major economy again. The survey, tabled in Parliament by Finance Minister Arun Jaitley, said demonetisation has had short-term costs but holds the potential for long-term benefits. But it would require follow-up actions to minimise the costs and maximise the benefits. "These actions would allow growth to return to trend in 2017-18, possibly making it the fastest-growing major economy in the world, following a temporary dip in 2016-17," the survey stated. The bulls are likely to gain from this approach, as macroeconomic growth and bullish market sentiments are interlinked.
Indian IT (information technology) stocks tumbled during the mid-afternoon trade session on Tuesday as the US government introduced a proposed visa reform bill in the US House of Representatives. The bill spooked investors, as it seeks to double the minimum wages offered by IT firms in the US. The bill proposes to raise the minimum salary of an H-1B visa holder to around $130,000 per annum from the present limit of $60,000 per year. The S&P BSE IT index plunged by 302.71 points or 3.06% (at 2.15 p.m.). IT majors such as Tata Consultancy Services (TCS), Infosys, HCL Technologies, Wipro and Tech Mahindra traded deep in the red. Every 10% hike in H-1B salaries can hurt earnings by nearly 10%-12% of IT companies, pointed out market analysts.
The Economic Survey 2016-17 tabled in Parliament on Tuesday by Finance Minister Arun Jaitley has mooted the formation of a centralised public sector asset rehabilitation agency (PARA). According to the survey, the country is grappling with a 'Twin Balance Sheet' (TBS) problem of over-leveraged companies and bad loan-encumbered banks, a legacy of the boom years around the global financial crisis. "So far, there has been limited success. The problem has consequently continued to fester: Non-performing assets (NPAs) of the banking system (and especially public sector banks) keep increasing, while credit and investment keep falling," the survey said. "Now it is time to consider a different approach -- a centralised PARA that could take charge of the largest, most difficult cases, and make politically-tough decisions to reduce debt." As per the survey, gross NPAs have climbed to almost 12% of gross advances for public sector banks at end-September 2016. This is likely to improve share prices of PSUs (public sector undertakings) listed in the Indian stock exchanges.
The government has taken several initiatives to provide healthcare to all, including an immunisation programme that helped 55 lakh children, President Pranab Mukherjee said on Tuesday. Mukherjee told a joint session of Parliament that the government aimed to make healthcare affordable for the poor. "Mission Indradhanush ... has so far helped 55 lakh children get immunised against several diseases. It commits to vaccinate every child everywhere against preventable diseases," he said. The President spoke about the Pradhan Mantri Jan Aushadhi Scheme that helped healthcare and medicines reach the poorest sections of the society. Pharmaceutical industry stocks are likely to benefit from the favourable government policy.
Dabur India Ltd. posted a drop of 7.5% in net profit for the October-December quarter. Net profit fell to Rs293.76 crore from Rs317.58 crore during the same quarter last year, the company said in a stock exchange filing. Revenue declined by 6% in the quarter, to Rs1,852.91 crore, compared to Rs1,972.03 crore on a year-on-year basis. Currency fluctuations and rising costs of key inputs led to a decline in revenue. Earnings before interest, tax, depreciation and amortisation (EBITDA) were down 11.6% to Rs333.88 crore, compared to Rs377.81 crore during the third quarter of FY16. EBITDA margin dropped to 18% as against 19.2% last year. The company’s shares closed at Rs276.00, down 1.39% on the NSE.
The top gainers and top losers of the major indices are given in the table below:
The closing values of the major Asian indices are given in the table below: