Benchmarks resume northward journey; end with modest gains

Resuming their northward journey after a day of halt, Indian equity benchmarks ended the session slightly in the green on Thursday. Markets, which giving away all their early gains, entered into negative territory in noon trade, recovered in last leg of trade on the back of rally in shares of public sector banks and oil marketing companies (OMCs). Sentiments remained up-beat on report that foreign portfolio investors (FPIs) bought shares worth a net Rs 251.36 crore on August 20, as per provisional data from the stock exchanges. Meanwhile, some respite came in on long pending GST, as the state Finance Ministers resolved to lower the threshold limit for imposing Goods and Service Tax (GST) from Rs 25 lakh to Rs 10 lakh, and asked the Centre to include the provision for GST compensation in the Constitutional Amendment Bill.

However, gains remained capped on concern from the rainfall front, although monsoon revived significantly in the middle of last month, bouncing back from an alarming 43% seasonal deficit to barely 16% after a few weeks of heavy showers, deficit has again widened to 18% for the entire country with rainfall dipping in the past two weeks.

Recovery in European counters, after a sluggish opening, too supported the sentiments with CAC, DAX and FTSE were trading with a gain of around half a percent in early deals as some reassuring data from Germany eased pressure on the struggling euro on Thursday after speculation of an earlier rate rise from the Federal Reserve has pushed the dollar to an 11-month high. However, Asian markets ended mostly lower as a survey indicating weak growth in China’s manufacturing sector fanned worries of a slowdown in the world's second largest economy.

Back home, rally in auto shares supported the sentiments. Stocks like Bajaj Auto, M&M, Hero MotoCorp, Maruti Suzuki and Tata Motors all edged higher on hopes that sales growth in the forthcoming months ahead of the season are likely to be encouraging. Apart from upbeat first quarter results, better-than-expected bookings for new models launched also helped boost sentiment. Stocks related to banking sector too remained on the buyers’ radar after Finance Minister Arun Jaitley said that the government was working towards bringing in more professionalism in the functioning of banks and improving risk management, amid the backdrop of the recent scams in some public sector banks.

Meanwhile, public sector OMCs edged higher after Finance secretary, Arvind Mayaram underscored that government soon would be able to exit diesel subsidy as diesel prices will be market driven. Additionally, shares of shipping companies rallied after the Baltic Dry Index hit four-month high on Wednesday. The Baltic Dry Index touched 1,061, its highest level since April 9 2014, has rallied 47% from its recent low of 723 touched on July 22. On the flip side, shares of metal companies ended lower after the Union Cabinet decided to raise the mining royalty rates. This should lead to an increase in input prices for all mineral-based industry.

The NSE’s 50-share broadly followed index Nifty rose by over fifteen points and ended near the psychological 7,900 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex rose by around fifty points to finish above the psychological 26,350 mark. Broader markets traded with traction and ended the session with a gain around half a percent. The market breadth remained in favour of advances, as there were 1685 shares on the gaining side against 1337 shares on the losing side while 98 shares remain unchanged.

Finally, the BSE Sensex gained 45.82 points or 0.17%, to 26360.11, while the CNX Nifty added 15.80 points or 0.20% to 7,891.10.

The BSE Sensex touched a high and a low of 26464.80 and 26262.52, respectively. The BSE Mid cap index was up by 0.48%, while the Small cap index gained 0.34%.

The top gainers on the Sensex were Bajaj-Auto up by 3.15%, SBIN up by 2.27%, HDFC Bank up by 1.35%, M&M up by 1.34% and Sun Pharma up by 1.28%. While NTPC down by 1.86%, SSLT down by 1.73%, Tata Steel down by 1.62%, Dr Reddy down by 1.52% and Hindalco down by 1.36% were the top losers in the index.

On the BSE Sectoral front, Consumer Durables up by 3.78%, Bankex up by 1.18%, Auto up by 0.79%, PSU up by 0.68% and Capital Goods up by 0.65% were the top gainers, while Realty down by 1.91%, Metal down by 1.35%, Power down by 0.99%, Teck down by 0.18% and IT down by 0.13% were the top losers in the space.

Meanwhile, With a view to make finance cheaper for weaker sections of the society, the government will soon announce new scheme interest subsidy scheme under which eligibility cap for the 5 percent interest subvention scheme will be enhanced to Rs 5 lakh from the present Rs 1 lakh. 

Under the interest subvention scheme, the government shares the interest burden on a loan for the particular target segment and such schemes presently exist for a slew of sectors including agriculture and sugar.

The move is likely to benefit poor to purchase house as over 58 percent of people from the economically weaker sections and over 39 percent from the low-income groups do not have access to housing. 

Financial Services Secretary G S Sandhu stated that banks cannot go below their cost of funds and to make credit cheaper, the government has to give the interest subsidy. Sandhu also asserted that the government will soon announce affordable housing policy. Banks' ability to finance the housing requirement is constrained by a slew of factors and there is a need to look at alternatives like pension money, insurance companies etc., participating in the sector. He further added that the move to liberalise the taxation regime for the real estate investment trusts (REITs) would be a game changer helping smaller, retail investors to participate in the sector.

The CNX Nifty touched a high and low of 7,919.65 and 7,855.95 respectively.

The top gainers of the Nifty were PNB up by 4.40%, Bajaj Auto up by 3.28%, BPCL up by 2.95%, Bank of Baroda up by 2.58% and State Bank of India up by 2.33%. On the other hand, United Spirits down by 2.79%, DLF down by 2.53%, NTPC down by 2.20%, Jindal Steel & Power down by 2.10% and SSLT down by 1.73% were the top losers.

The European markets were trading in green, France's CAC 40 was up by 0.62%, Germany's DAX was up by 0.43% and United Kingdom's FTSE 100 was up by 0.30%.

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.