Post Session: Quick Review

Extending its northbound journey, Indian equity markets concluded in green for fourth consecutive session on Thursday, amassing gains of over three fourth of a percent, which took both Sensex and Nifty above the psychologically crucial 25,900 and 7,750 levels respectively. Gains of local equity markets, in line with other emerging markets came after a flood of soft economic data led investors to wager on a ceaseless fountain of stimulus from major central banks. An economic contraction in Japan, a shock fall in Chinese loans, a surprisingly dovish turn by the Bank of England and a sluggish reading on U.S. retail sales all combined to make any tightening in policy seem a very distant prospect. Back home, investors also drew heart from good macro-economic data after India's main inflation gauge, based on monthly WPI, softened to five months low of 5.19% for the month of July as compared to 5.43% in the previous month and 5.85% during the corresponding month of the previous year. Thus, rallying for four consecutive session, both Sensex and Nifty for the holiday truncated week, ended with gains around 3%. Meanwhile, broader indices while for the session rallied over 1.15% for the session, for the week, NSE Midcap index accumulated gains of around 1.50%. However, BSE Small-cap index following different trend, snapped the week with a cut of around 0.04%.

On the global front, Asian stocks ended mixed as downbeat data from China and Japan sparked renewed concerns for growth in the region’s two biggest economies. Meanwhile, European stocks were trading lower as disappointing economic output from the euro zone’s two largest economies cast shadows on market bets on an economic recovery in the currency bloc.

Closer home, most of the sectoral indices on BSE concluded in the positive terrain, with exception being stocks from Information Technology (IT) counter which was the only weak spell of trade. Rupee’s appreciation in today’s trading session mainly led to drubbing in IT stocks. On the flip side, stocks from Realty, Consumer Durables, Capital Goods counters were the prominent gainers of the session. Most realty stocks gained after the latest data showed inflation based on wholesale price index (WPI) eased in July as purchases of both residential and commercial property are largely driven by finance. Meanwhile, metal and mining stocks rose on speculation the Chinese government will take steps to support its 7.5% expansion target, after data released on Wednesday showed plunge in credit expansion in July and unexpected slowdown in investment spending.

The BSE Sensex ended at 26103.23, up by 184.28 points or 0.71% after trading in a range of 25945.35 and 26135.00. There were 22 stocks advancing against 8 stocks declining on the index. (Provisional)

The broader indices too ended higher; the BSE Mid cap index was up by 1.20%, while Small cap index up by 1.16%.(Provisional)

The gaining sectoral indices on the BSE were Consumer Durables up by 2.08%, Metal up by 1.94%, Capital Goods up by 1.78%, Realty up by 1.75%, Power up by 1.49% while, IT down by 0.08%, TECK down by 0.05% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were GAIL India up by 3.79%, Sesa Sterlite up by 2.80%, Tata Motors up by 2.53%, Tata Power up by 2.37% and ONGC up by 2.03%. On the flip side, Hero MotoCorp down by 2.69%, HDFC down by 1.44%, Hindalco down by 0.83%, Bharti Airtel down by 0.75% and Hindustan Unilever down by 0.61% were the top losers. (Provisional)

Meanwhile, extending its easing trend, India's main inflation gauge, based on monthly WPI, softened to five months low of 5.19% for the month of July as compared to 5.43% in the previous month and 5.85% during the corresponding month of the previous year. The figure was much in-line street expectations, which were expecting headline inflation to be in the range of 5.15%-5.19% for the month under review. Meanwhile, May inflation figures were revised upwards to 6.18% from 6.01% earlier.

The five-month low inflation data was mainly on account of moderation in fuel costs. Fuel & Power index, which occupies 14.91% weight in the overall index, rose by 1.1% to 214.7 (provisional) from 212.3 (provisional) for the previous month due to higher price of petrol and furnace oil (3% each), bitumen and high speed diesel (2% each) and aviation turbine fuel (1%). Meanwhile, the index of Manufactured Products, which occupies the majority 64.97% weight in WPI index, rose by 0.3% to 155.4 (provisional) from 154.9 (provisional) in June.

However, Primary Articles index, which occupies 20.12% weight in the overall headline index, also rose 2.7% to 256.6 (provisional) from 249.9 (provisional) for the previous month. Out of the index, 'Food Articles’ group rose by 3.6% to 258.6 (provisional) from 249.7 (provisional) for the previous month, while index for  ‘Non-Food Articles’  group rose by 0.8% to 218.1 (provisional) from 216.4  (provisional) for the previous month.

In an encouraging development, core inflation also softened to 3.32% v/s 3.49% in June. However on concern side, inflation in the overall food articles basket, stood at 8.43% as compared to 8.14 % in June. The Reserve Bank in its monetary policy review last week had cautioned that continued uncertainty over monsoon could stoke food inflation, but expressed the hope that government policies will improve supplies in the coming months.

The CNX Nifty ended higher at 7791.70, up by 52.15 points or 0.67% after trading in a range of 7739.10 and 7796.70. 38 stocks advanced against 12 stocks declining stocks on the index. (Provisional)

The top gainers on Nifty were Jindal Steel & Power up by 3.67%, GAIL India up by 3.38%, United Spirits up by 2.83%, Sesa Sterlite up by 2.82% and Ambuja Cement up by 2.53%. On the flip side, Hero MotoCorp down by 2.64%, HDFC down by 1.73%, HCL Technolgies down by 1.42%, Bharti Airtel down by 0.92% and Hindalco down by 0.81% were the top losers. (Provisional)

European markets edged mostly lower; with UK’s FTSE 100 up by 17.32 points or 0.26% to 6,674.00; Germany’s DAX down by 6.05 points or 0.07% to 9,192.83 and France’s CAC inching lower by 3.99 points or 0.10% to 4,190.80.

Asian equity indices ended mostly in red on Thursday, with China’s stocks drop, sending the benchmark index to its biggest drop in a week, on growing concern that government efforts to shore up economic growth will be insufficient. Bank Indonesia, the country’s central bank, kept its benchmark interest rate at 7.5%, citing it as necessary in the effort to narrow the current account deficit.  Indonesia’s central bank reported a larger than expected second quarter current account deficit, but kept its key policy rates unchanged and predicted improvement later this year. Bank Indonesia Governor stated that the benchmark rate - in place since November - is consistent with its 3.5% to 5.5% inflation target and with lowering the current account gap towards a healthier level. Japan’s Core Machinery Orders rose to 8.8%, from -19.5% in the preceding month. Korea’s benchmark interest rate fell in the last quarter. The Interest Rate Decision fell to a seasonally adjusted annual rate of 2.25%, from 2.50% in the preceding quarter.