Post Session: Quick Review

After taking a breather in previous session of trade, local equity markets resumed their northbound journey as recovery which crept in the second half of the session mainly took bourses higher for seventh out of eight sessions of trade. Markets, which giving away all their early gains, slipped into negative territory in afternoon deals, recovered for better part of session tailing positive start of European counterparts and on the back of smart rally of PSU banking shares post Finance Minister Arun Jaitley's statement, though describing incidents of unfair practices in public sector banks as ‘disturbing’, expressed hope that such cases were not large in number. Late hour surge of local equity markets also were led by Oil marketing companies’ stocks, which shot up in trade after Finance secretary, Arvind Mayaram underscored that government soon would be able to exit diesel subsidy as diesel prices will be market driven.

Earlier part of the session, reports which suggested that states agreed on GST threshold, but failed to get much further from thereon as consensus on the contentious issues continued to be elusive along with those which suggested of monsoon weakening again, delivering scanty showers for three days, kept the  trade dull at Dalal Street. However, buying which picked up momentum in second half of trade, hinted off the steam left in the equity markets. By close of trade, while Sensex settled above the psychological 26,350 level, Nifty ended little short of crucial 7,900 mark, with slender gains of over one tenth of a percent. Meanwhile, broader indices too outperforming larger peers, went home with gains of over three tenths of a percent.

On the global front, Asian shares came under pressure on Thursday as a disappointing survey on Chinese manufacturing overshadowed better news from Japan. On the macro-front, the HSBC/Markit Flash China Manufacturing Purchasing Managers' Index (PMI) fell to 50.3 in August from July's 18-month high of 51.7, however Japanese stocks managed to buck the trend aided by a survey showing manufacturing activity accelerated in August as export and domestic demand increased. On the flip side, some reassuring data from Germany eased pressure seen on speculation of an earlier rate rise from the Federal Reserve tone in policy discussion. Germany's private sector which grew for a 16th month running in August, suggested Europe's largest economy could see a solid rebound in the third quarter after its surprise contraction in the second, though the optimism was again tempered by further signs of stagnation in neighbor France.

Closer home, majority of the sectoral indices on BSE settled in the favour of green, nevertheless the prominent gainers were stocks from Consumer Durables, banking and Auto counters. Auto shares extended gains on hopes that sales growth in the forthcoming months ahead of the season is likely to be encouraging. Apart from upbeat first quarter results, better-than-expected bookings for new models launched also helped boost sentiment. On the flip side, stocks from Realty, Metal and Power counters were the top losers of the session. Metal stocks took a hit after government approved increasing royalty rates on minerals including iron ore and bauxite, in a long-awaited move that will significantly increase the annual revenue of states.  Meanwhile, NBFC stocks hogged much of limelight during the session after Reserve Bank of India, waking up to the problem of ‘unofficial margin trading’ in the stock market, called for more disclosures from NBFCs which give loans against shares. In a circular issued today, the RBI said that henceforth NBFCs cannot lend more than 50 percent of the value of shares pledged. Also, NBFCs can accept only Group 1 securities as collateral. The market breadth on the BSE remained in the favour of advances; advances and declining stocks were in a ratio of 1685:1336, while 99 scrips remained unchanged. (Provisional)

The BSE Sensex rose 45.82 points or 0.17% to settle at 26360.11. The index touched a high and a low of 26464.80 and 26262.52 respectively. 15 stocks gained against 15 declines on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.48%, while Small cap index up by 0.34%. (Provisional) 

On the BSE sectoral front, Consumer Durables was up 3.78%, Bankex was up 1.18%, Auto was up 0.79%, PSU was up 0.68%, Capital Goods was up by 0.65% while, Realty was down 1.91%, Metal was down 1.35%, Power was down 0.99%, TECK was down 0.18% and Infrastructure was down by 0.13% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Bajaj Auto up by 3.32%, SBI up by 2.27%, Sun Pharma Industries up by 1.75%, Mahindra & Mahindra up by 1.44% and HDFC Bank was up by 1.35%. On the flip side, NTPC down by 2.20%, Sesa Sterlite down by 1.73%, Tata Steel down by 1.62%, Dr. Reddys Lab down by 1.52% and Hindalco was down by 1.28% were the top losers. (Provisional)

Meanwhile, concerned over the delay in the completion of several defence projects, Prime Minister Narendra Modi has asked the Defence Research and Development Organisation (DRDO) to speed up and complete its programmes on time.

Several DRDO projects in the country such as Nag missile, Long-Range Surface-to-Air Missile project, Light Combat Aircraft Tejas, Airborne Early Warning and Control System projects have been delayed by many years and seen several cost overruns.

The Prime Minister has said that the technology in defence sector is changing fast and DRDO should take initiatives to complete projects before time which would help in easing the lives of the armed forces personnel.  By adding further, Narendra Modi has said that the DRDO should develop a mechanism where it should take ideas for developing products from the armed forces personnel as they are the ultimate users of these systems.

Emphasizing the need to give more opportunities to youth, the Prime Minister urged the DRDO to make provisions that in 5 out of its 52 labs, people with only less than 35 years of age are employed and the power of ultimate decision-making is also vested in them.

Meanwhile, in order to expand the domestic industrial base in defence sector, the cabinet hiked FDI ceiling to 49 percent ensuring control in Indian hands, for boosting country’s defence sector which imports up to 70 percent of its military hardware.

India VIX, a gauge for markets short term expectation of volatility rose 0.53% at 13.73 from its previous close of 13.66 on Wednesday. (Provisional)

The CNX Nifty ended higher by 15.80 points or 0.20% to settle at 7891.10. The index touched high and low of 7919.65 and 7855.95 respectively. 24 stocks ended in the green against 26 stocks ending in red. (Provisional)

The top gainers on Nifty were PNB up by 3.85%, Bajaj Auto up by 3.15%, BPCL up by 2.76%, Bank Of Baroda up by 2.40% and SBI was up by 2.19%. On the flip side, DLF down by 2.29%, United Spirits down by 2.18%, NTPC down by 1.93%, Sesa Sterlite down by 1.75% and Tata Steel was down by 1.64% were the top losers. (Provisional)

European markets were trading in the green; France’s CAC 40 was up by 0.57%, UK’s FTSE 100 was up by 0.31% and Germany’s DAX was up by 0.37%.

Asian markets ended mostly in the red on Thursday on the back of a lower-than-expected preliminary reading of Chinese manufacturing activity. Growth in China’s vast manufacturing industry weakened in August, suggesting that the recovery in the world No. 2 economy is losing momentum and Beijing may need to spoon out more stimulus. The preliminary version of HSBC’s manufacturing index fell to a three-month low of 50.3 from 51.7 in July, indicating that manufacturing businesses are barely growing. However, Japanese Nikkei gained by around a percent on the prospect of a stronger dollar after Fed minutes showed policymakers are leaning toward their first rate hike since the 2008 financial crisis. On economic front, the Markit/JMMA flash Japan PMI jumped to a seasonally adjusted 52.4, up from 50.5 in July and the highest reading since March just before a hike in taxes sent demand cratering.