Post Session: Quick Review

Surpassing one milestone after another, local equity markets scaled life time high level yet again on Tuesday, which took Sensex and Nifty above psychologically crucial 27,000 and 8,050 levels respectively, with gains  in the range of 0.50%-0.70%. While, BSE Sensex breached the psychologically key level of 27,000 points for the first time to hit its third consecutive record high, Nifty surpassed the 8,000 point milestone level as blue-chips such as HDFC Bank gained after recent data raises hopes about the economy. Investors took a heart from macro-economic data which showed Balance Of Payments (BoP) data coming in surplus for the third straight quarter and Current Account Deficit widening well within limits. On the macro-front, while balance of payments registered a surplus of $11.2 billion during April-June, up from $7.1 billion in the January-March quarter, data from the Reserve Bank of India (RBI) showed, Current Account Deficit (CAD) for April-June stood at $7.8 billion, sharply higher than $1.3 billion in January-March but narrower from $21.8 billion a year ago. Additionally, positive global cues also added to positive milieu. In the extremely buoyant session of trade, benchmarks went on adding ground to conclude at day’s highest point, which also led broader indices rally with gains of close to a percent.

On the global front, although Asian markets concluded mostly in green, but the gains were capped by persistent geopolitical concerns and anemic manufacturing surveys in Asia and Europe showing pockets of weakness in the global economy. Euro zone manufacturing growth slowed slightly more than initially thought in August, while growth in China's factory sector slipped to a three-month low last month, adding to concerns about oil demand. Meanwhile, European shares stocks advanced a third day amid speculation that slower growth will prompt policy makers to accelerate stimulus. 

Closer home, most of the sectoral indices on BSE concluded in positive territory; however stocks from Metal and Capital Goods counters proved to be only exceptions. On the flip side, stocks from Consumer Durable, Infrastructure and Oil & Gas counters were the prominent gainers. Meanwhile, pharmaceuticals shares were the only gainers, with stocks of Cipla scaling fresh 52 week high level after the drugmaker launched an anti-asthma inhaler in Germany and Sweden.  Additionally, investors also lapped up shares of cement makers on expectation of demand improvement along with an likely hike cement prices once monsoon season ends. The market breadth on the BSE remained in the favour of advances; advancing and declining stocks were in a ratio of 1741:1249, while 122 scrips remained unchanged. (Provisional)

The BSE Sensex ended higher by 146.74 points or 0.55% at 27014.29 after trading in a range of 26886.22 and 27082.85. There were 17 stocks advancing against 13 stocks declining on the index. (Provisional)

The broader indices too ended in green; the BSE Mid cap index was up by 0.82%, while Small cap index up by 0.95%.

The gaining sectoral indices on the BSE were Consumer Durables up by 2.91%, Infrastructure up by 1.37%, Oil & Gas up by 1.02%, TECK up by 0.81% and FMCG up by 0.73% while, Metal down by 0.84% and Capital Goods down by 0.08% were the only losing indices on BSE. (Provisional)

The top gainers on the Sensex were Cipla up by 5.06%, Bharti Airtel up by 4.35%, Sun Pharma Industries up by 2.44%, HDFC Bank up by 1.95% and GAIL India up by 1.80%. On the flip side, Sesa Sterlite down by 1.91%, Tata Power down by 1.11%, Tata Steel down by 1.04%, Hindalco down by 0.99% and Wipro down by 0.84% were the top losers. (Provisional)

Meanwhile, global rating agency Moody’s Investors Service has described oil ministry’s plan to divide fuel subsidies equally between the government and the two state-owned upstream oil and gas producers namely ONGC and Oil India, as 'credit positive' for both Oil marketing companies.

According to the global rating agency, the plan, if implemented would be credit positive for ONGC and OIL since this would reduce their share of fuel subsidies by 36%, or around Rs 22,000 crore, thus improving cash flows and profitability of the upstream companies.

Presently, ONGC and Oil India share the fuel subsidy burden with the government on an ad-hoc basis as decided by the government, however if the plan is implemented, their subsidy share would include an oil industry development levy, an existing tax based on their crude oil production.

The 50% share of fuel subsidy that these upstream producers would be supposed to pay, will sum up to around Rs 50,000 crore for this fiscal, down from Rs 67,000 crore a year ago, out of which, fuel subsidies will be around Rs 40,000 crore and an oil industry development levy would be around Rs 10,000 crore. Further, with the government paying the remaining 50% share, ONGC’s revenue and operating cash flows would come down by Rs 18,500-19,500 crore in the fiscal, while OIL's would rise by Rs 1,000-1,800 crore.

India VIX, a gauge for markets short term expectation of volatility dropped 0.60% at 13.44 from its previous close of 13.53 on Monday. (Provisional)

The CNX Nifty edged higher by 61.65 points or 0.76% at 8088.85 after trading in a range of 8036.55 and 8101.95. There were 34 stocks advancing against 15 stocks declining on the index.  (Provisional)

The top gainers on Nifty were Cipla up by 5.38%, Bharti Airtel up by 4.31%, Grasim Industries up by 3.78%, Ambuja Cement up by 3.65% and ACC up by 3.63%. On the flip side, Jindal Steel & Power down by 3.65%, Sesa Sterlite down by 1.82%, Tata Power down by 1.22%, Hindustan Unilever down by 1.02% and Tata Steel down by 0.92% were the top losers. (Provisional)

European Markets were trading in the green; Germany’s DAX was up by 0.88%, France’s CAC was up by 0.37% and UK’s FTSE 100 was up by 0.23%.

Asian markets ended mostly in green on Tuesday, with momentum from prior gains fading as investors were left short of cues with the US markets closed on Monday. China’s benchmark stock index rose to a 15-month high, led by defense and technology companies, amid speculation that the government will increase military spending as part of its efforts to bolster economic growth. Japan’s indices rose to a seven-month high as the yen weakened amid speculation a politician in favor of pension reform will be appointed health minister, with duties including overseeing retirement savings. The Bank of Japan is forecast to keep its policy unchanged at a two-day meeting starting tomorrow. BOJ officials expect the premier to proceed with a second sales-tax increase next year following a hike in April to maintain confidence in the government’s finances.

Indonesian manufacturing activity contracted for the first time in a year in August, weakened by declining new orders and production, the HSBC Markit purchasing managers’ index (PMI) survey showed. The index was 49.5 in August, down from 52.7 the previous month and the lowest for Southeast Asia’s largest economy since August 2013. Inflation slowed in August as most raw food prices steadied. Meanwhile, the country posted a trade surplus in July, swinging from a deficit in the previous month. Consumer price inflation in South Korea rose less-than-expected last month. South Korean CPI rose to 0.2%, from 0.1% in the preceding month.