Post Session: Quick Review

Final session of August derivatives contracts turned out to be sanguine for local equity markets, which puffing up gains over quarter of a percent, settled above psychologically crucial 26,600 (Sensex) and 7,950 (Nifty) levels respectively.  Barometer gauges, surprisingly witnessed stable session of trade, contrary to the volatile trend witnessed during F&O expiry and went on adding ground till the wee hours of trade to shut shop at day’s high point. However, session turned out to be un-yielding for broader indices, which went home with losses in the range of 0.10%-0.30%. For the series, while both Sensex and Nifty have added gains of over 3% each, CNX Midcap index rallied over 2.5% and BSE Midcap settled with gains of over 2%.

Caution ahead of the release of key macro-economic data, disappointing report from global credit rating and pessimistic global set-up failed to deter the spirit of local equity markets, which for second consecutive session ended in positive territory. Earlier in the session, a report from Moody's suggested that India’s sovereign ratings are constrained by persistently high inflation which were weighing on an otherwise promising economic recovery. However, caution ahead of the release Q1FY15 GDP data and possibly Current Account Deficit (CAD) numbers, later in the week, kept the gains in check. Nevertheless, prevailing optimism over continued foreign inflows kept the mood upbeat at Dalal Street on last trading session of the week.

On the global front, Asian pacific shares settled mostly lower after data showed slowing China’s industrial output data. In mainland China, investors sold shares in banks and property developers, despite Beijing's efforts to pump up the economy. Additionally, European shares were reeling under pressure on account of prevailing uncertainty regarding the European Central Bank's possible move to ease policy to stimulate growth. Investors awaited a slew of data releases on both Thursday and Friday for hints about the market's direction in the near term. Speculation of a quantitative easing (QE) programme has grown since ECB President Mario Draghi struck a dovish tone at the Jackson Hole meeting last week.

Closer home, majority of the sectoral indices on BSE  went home with gains, nevertheless prominent gainers were the stocks from Capital Goods, Oil & Gas and Fast Moving Consumer Goods counter. On the flip side, much of the drubbing was witnessed by stocks from Realty, Metal and Information Technology counter which were the top losers of the session. In stock-specific activity, Railway-related stocks are trading higher by up to 12% after the government notified the liberalised foreign direct investment (FDI) norms for rail infrastructure, allowing 100% FDI through automatic route in the sector. Additionally, PSU OMCs gained after the government removed the restriction of one subsidized LPG cylinder per month for each consumer.

The BSE Sensex ended higher by 77.96 points or 0.29% at 26638.11 after trading in a range of 26573.69 and 26674.38. There were 18 stocks advancing against 12 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index was down by 0.30%, while Small cap index up by 0.10%. (Provisional)

On BSE sectoral front, Capital Goods up by 1.43%, Oil & Gas up by 1.06%, FMCG up by 0.74%, Infrastructure up by 0.45% and PSU was up by 0.32% while, Realty down by 1.91%, Metal down by 0.85%, IT down by 0.57%, TECK down by 0.34% and Consumer Durables was down by 0.20% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were BHEL up by 4.10%, ONGC up by 1.93%, GAIL India up by 1.80%, Wipro up by 1.65% and Dr. Reddys Lab was up by 1.57%. On the flip side, Tata Power down by 2.20%, Tata Steel down by 1.81%, SBI down by 1.72%, NTPC down by 1.33% and Infosys was down by 1.31% were the top losers. (Provisional)

Meanwhile, the Reserve Bank of India (RBI) has eased norms to refinance external commercial borrowings (ECB). Central bank delegated power to banks to approve even those cases where the average maturity period of the fresh ECB is exceeding the residual maturity of the existing ECB under the automatic route.

However, the RBI suggested the banks that both existing and fresh ECBs should be in compliance with the applicable guidelines, all-in-cost of fresh ECB should be less than that of the all-in-cost of existing ECB and refinancing is to be undertaken before the maturity of the existing ECB. In addition, borrower should not be in the default / caution list of RBI and should not be under the investigation of the Directorate of Enforcement.

The RBI’s notification further highlighted that foreign branches or subsidiaries of Indian banks will not be permitted to refinance an existing ECB this way. This facility will be available even when existing ECB was raised under the approval route, subject to the amount of new ECB being eligible to be raised under the automatic route.  The new norms will come into force with immediate effect. Apex banks noted that all other aspects of the ECB policy such as eligible borrower, recognised lender, amount of ECB, permitted end-use, all-in-cost, reporting arrangements and average maturity period would remain unchanged.

India VIX, a gauge for markets short term expectation of volatility rose 1.89% at 13.31 from its previous close of 13.06 on Wednesday. (Provisional)

The CNX Nifty concluded at 7954.35, up by 18.30 points or 0.23% after trading in a range of 7939.20 and 7967.80. There were 27 stocks advancing against 23 stocks declining on the index. (Provisional)

The top gainers on Nifty were BHEL up by 5.13%, BPCL up by 2.44%, IDFC up by 2.23%, GAIL India up by 1.77% and ONGC was up by 1.60%. On the flip side, Jindal Steel & Power down by 4.59%, DLF down by 3.06%, Tata Power down by 2.31%, Tata Steel down by 1.92% and Bank of Baroda was down by 1.83% were the top losers. (Provisional)

European markets were reeling under pressure; with Germany’s DAX losing 89.04 points or 0.93% to 9,480.67, France’s CAC decreased 27.79 points or 0.63% to 4,367.47 and UK’s FTSE 100 was trading down by 21.35 points or 0.31% to 6,809.31.

Asian markets ended mostly in red on Thursday, as a rising yen dragged Japan’s indices lower, ahead of the release of industrial output and inflation data for July. The value of mergers and acquisitions in China hit a record in the first half of this year. The M&A deals, including domestic, outbound and inbound, rose 19% from the same period a year ago to $183 billion, while the number of deals was flat at 2,648. The National Bureau of Statistics stated that China’s industrial profits rose 13.5% in July after climbing 17.9% in June, the fastest pace since September. Hong Kong Retail Sales rose to a seasonally adjusted annual rate of -3.1%, from -6.9% in the preceding month. Philippines GDP rose to a seasonally adjusted annual rate of 6.4%, from 5.6% in the preceding month whose figure was revised down from 5.7%. The latest data bolsters expectations the central bank will follow up on July’s rate hike - the first in three years - as early as next month to stay on top of rising prices.