Post Session: Quick Review

Extending their northbound journey for yet another session, local equity markets scaled record high levels on Friday, which saw Sensex and Nifty ending above 26,400 and 7,900 levels respectively. Upbeat US data and positive annual report from Reserve Bank of India mainly fuelled the uptrend at Dalal Street. Investors took a heart from RBI’s annual report, which affirmed that economy was emerging from recession with signs of improvement in macroeconomic pointers like fiscal deficit and inflation, mining and manufacturing activity, external demand amidst stabilizing global commodity and reversal in the corporate investment cycle. In the spectacular session of trade, though benchmarks witnessed bit of selling pressure in afternoon deals, spurt in buying, which took place in later deals mainly pushed the benchmarks higher. However, broader indices just about managed to close into positive territory. For the week, both Sensex and Nifty accumulated gains of over 1.25%.

On the global front, most Asian stock markets pushed higher on Friday after a record day on Wall Street powered by upbeat data that added to evidence the world's biggest economy is gaining strength. However, European shares were reeling under pressure as investors awaited a meeting of central bankers that might shed light on the timing of U.S. interest rate hikes.

Closer home, majority of the sectoral indices on BSE concluded into positive territory, nevertheless, prominent gainers were the stocks from Information Technology, Banking and Technology counters. Shares of IT counter made on strong comeback, cheered by strong US economic data, which showed that home resales rose to a 10-month high in July, factory activity in the mid-Atlantic region hit its highest level since March 2011 in August, and a gauge of future economic activity grew solidly last month. Additionally, PSU bank stocks extended their previous day’s rally, after the finance minister Arun Jaitley underscored that government was taking steps to professionalize the management of PSU banks and help them strengthen their risk management system.

In stock-specific activity, Oil marketing companies too continued to hog limelight a day after Arvind Mayaram underscored that diesel prices would be market linked and the government would soon do away with diesel subsidy, while softening brent crude oil prices also sharpened the demand for these stocks. Additionally, sugar stocks rallied in trade today after government decided to increase import duty on the sweetener from 15%to 25% to provide some relief the industry, which owes Rs 15,000 crore to sugarcane growers and has been demanding an increase of 40%. Additionally, shares of gems and jewellery makers shone in trade on hopes of export orders from the US ahead of the festive season after recent data showed that the world's largest economy is showing signs of an uptick.

The market breadth on the BSE remained in the favour of decliners; advances and declining stocks were in a ratio of 1466:1550, while 112 scrips remained unchanged. (Provisional)

The BSE Sensex rose 59.44 points or 0.23% to settle at 26419.55. The index touched a high and a low of 26508.27 and 26383.16 respectively. 17 stocks gained against 13 declines on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.22%, while Small cap index up by 0.01%. (Provisional) 

On the BSE sectoral front, IT up by 1.63%, Bankex up by 1.03%, TECK up by 0.97%, Capital Goods up by 0.16% and Metal was up by 0.14% while, Realty down by 0.82%, Infrastructure down by 0.74%, FMCG down by 0.51%, Power down by 0.35% and PSU was down by 0.18% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Hindalco up by 2.36%, SBI up by 2.26%, HDFC Bank up by 1.80%, Infosys up by 1.65% and TCS was up by 1.22%. On the flip side, Coal India down by 2.04%, HDFC down by 1.91%, Bharti Airtel down by 1.63%, Hero MotoCorp down by 1.04% and BHEL was down by 0.81% were the top losers. (Provisional)

Meanwhile, according to the World Gold Council (WGC), gold demand in rural India is likely to be lower this year with weak monsoon affecting household savings. Gold demand in the country mainly comes from rural households, especially farmers and about 7-8 percent of rural household savings goes into gold buying in the country.

The WGC stated that poor monsoon will impact the crop production, which in turn impact the rural gold demand. However, long-term demand for gold remains intact in India despite government restrictions, it added.  The WGC estimated that India’s gold demand at 850-950 tonnes in 2014 as against 974 tonnes in the last year. Gold is the second largest import item for India after crude oil and is mainly utilised to meet the demand of jewellery industry. To curb gold shipments to check country’s widening current account deficit (CAD), the government had taken various measures like high customs duty of 10% and 80/20 rule under which 20% of all gold imports by importers has to be re-exported. Meanwhile, the government’s measures to contain the gold imports yielded results as gold and silver imports fell by 40.02% to $33.46 billion in FY14 due to these stern government’s norms.

However, the council stated that government curbs have encouraged smuggling of gold into the country and about 200 tonnes out of the total demand of 850-950 tonnes projected for 2014 calendar year would be served through grey market. The WCG further stated that as India’s gold demand would remain strong for India in the long term, there is need to find ways to mobilise and monetise 22,000 tonnes of gold stock worth $1 trillion held in private hands via formal financial sector.

India VIX, a gauge for markets short term expectation of volatility declined 0.81% at 13.62 from its previous close of 13.73 on Thursday. (Provisional)

The CNX Nifty ended higher by 22.10 points or 0.58% to settle at 7,913.20. The index touched high and low of 7,929.05 and 7,900.05 respectively. 30 stocks ended in the green against 20 stocks ending in red. (Provisional)

The top gainers on Nifty were Tech Mahindra up by 3.14%, Hindalco up by 2.59%, HCL Tech. up by 2.52%, SBI up by 2.32% and Bank of Baroda was up by 2.05%. On the flip side, BPCL down by 1.96%, Coal India down by 1.96%, HDFC down by 1.86%, Power Grid Corporation down by 1.69% and Bharti Airtel was down by 1.62% were the top losers. (Provisional)

European markets were trading in the red; France’s CAC 40 was down by 0.74%, UK’s FTSE 100 was down by 0.14% and Germany’s DAX was down by 0.48%.

Asian markets ended mostly in green on Friday, with the benchmark indices capping a two-week advance, after reports from US housing to manufacturing showed the world’s largest economy is strengthening. China’s manufacturing activity hit a three-month low in August, raising the case for fresh policy steps to keep growth on track, while a poll showed Japan’s economic recovery is likely to be modest despite a small acceleration in the factory sector. Bank Indonesia will not loosen its monetary policy until the current account deficit narrows to 2.5% of gross domestic product, a level unlikely to be reached until after next year. Bank Indonesia governor Agus Martowardojo stated that the main focus of the central bank next year would be to narrow the current account deficit, which reached 4.27% in the second quarter. In Hong Kong, overall consumer prices rose 4% year-on-year in July, up on June’s 3.6% increase. Netting out the effects of all Government one-off relief measures, the underlying inflation rate was 3.3%, compared to 3.4% in June. Year-on-year increases were recorded for electricity, gas and water, alcohol and tobacco, housing, meals bought away from home, food, transport, and clothing and footwear.