Post Session: Quick Review

Recovery visited Dalal Street after two straight sessions of correction, which took both Sensex and Nifty above the psychologically crucial 26,600 and 7,950 levels respectively on Wednesday, with gains of around half a percent. In the extremely volatile session of trade, whereby benchmark equity indices looked dangerously close of slipping below neutral line in the afternoon deals, recovery emerged as buying activity picked up momentum at lower levels since market-participants lapped up fundamentally strong stocks available at attractive valuations amidst hopes that Fed would stick to its pledge of keeping rates low. However, profit-booking which crept in the later hours of trade took markets from day’s high level. Meanwhile, broader indices also participated into the recovery and went home with gains in the range of 0.25%-0.30%.

On the global front, Asian markets rallied on Wednesday, led by gains of Hong Kong and Shanghai, which were boosted by reports that China´s central bank had pumped $81 billion into the country´s five biggest lenders, while traders also awaited a US Federal Reserve policy decision. Meanwhile, European shares bounced back in early trade on Wednesday, buoyed by a rise in U.S. stocks on Tuesday ahead of the release of latest Federal Reserve minutes and by targeted economic stimulus measures in China supporting Asian markets.

Closer home, amidst the broad-based optimism, only stocks from Banking, Consumer Durables and Public Sector Undertaking counters ended downbeat, rest all the sectoral indices concluded into positive territory, nevertheless the prominent gainers were the stocks from Information Technology, Power and Technology counters. Shares of IT majors gained on hopes that Fed will stick to its pledge of keeping rates low. Pharma stocks too edged higher on defensive buying, the gains were also spilled by optimism in Aurobindo Pharma stocks, which rallied over a percent after the company received final approval from the US Food and Drug Administration (USFDA) to manufacture and market Amoxicillin for oral suspension. 

Besides, Metal shares rebounded in today’s trade after China's economic stimulus raised hopes of a boost in demand in the world's biggest consumer of metals. Additionally, tyre stocks were upbeat led by the gains of JK tyre stocks which rallied over 6% after the company announced that Apollo Tyres Africa Proprietary, a wholly-owned step subsidiary of the company in South Africa, has voluntarily initiated business rescue proceedings. The market breadth on the BSE remained in the favour of advances; advancing and declining stocks were in a ratio of 1533:1480, while 105 scrips remained unchanged. (Provisional)

The BSE Sensex ended higher by 138.78 points or 0.52% at 26631.29 after trading in a range of 26511.71 and 26682.64. There were 21 stocks advancing against 9 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.25%, while Small cap index up by 0.31%. (Provisional)

The gaining sectoral indices on the BSE were IT up by 1.52%, Power up by 1.35%, TECK up by 1.26%, Auto up by 1.02% and Capital Goods up by 0.81% while, Consumer Durables down by 1.06%, PSU down by 0.15% and Bankex down by 0.04% were the few losing indices on BSE. (Provisional)

The top gainers on the Sensex were Dr. Reddys Lab up by 2.85%, Infosys up by 2.42%, Tata Power up by 2.39%, BHEL up by 2.06% and Wipro up by 1.83%. On the flip side, Cipla down by 1.95%, Coal India down by 1.22%, HDFC Bank down by 0.66%, Sun Pharma Industries down by 0.63% and ONGC down by 0.55% were the top losers. (Provisional)

Meanwhile, in the face of rising imports of iron ore from international markets by Steel Industry on account of dwindling domestic supplies, Steel Ministry is now contemplating an option of withdrawing import duty of iron-ore, which would give some relief to steel companies facing raw material crunch.

India's iron ore production has come down to an all-time low of 144 million tonnes (MT) in FY14 from the peak level of 218 MT in FY10. The production is expected to drop further to a level of 90-95 MT in current fiscal. On account of paucity of iron-ore in the domestic market, JSW Steel has been importing around 0.5 MT monthly, while Tata Steel, which so far had never had any crunch to run its Jamshedpur plant due to iron ore shortage, may also follow suit after its Noamundi mine in Jharkhand was recently closed by the state.

In a related development, in a memorandum to Commerce Minister Nirmala Sitharaman, industry body Assocham too highlighted that drop in domestic iron ore production was forcing steel industry to import iron ore from international markets and suggested government of reducing import duty on iron ore to zero from the current levy of 2.5%. Besides, Miners' body FIMI also estimated of country importing around 15 MT of iron ore in current fiscal and become a net importer with just 8-9 MT exports.

Lastly, paucity of iron-ore in the domestic market and consequent imports might tarnish the prospect of many firms also hitting the prospect of having 300 MT capacity by 2025 from around 100 MT presently.

India VIX, a gauge for markets short term expectation of volatility declined 2.52% at 12.94 from its previous close of 13.28 on Tuesday. (Provisional)

The CNX Nifty ended higher by 41.85 points or 0.53% at 7,974.75 after trading in a range of 7936.95 and 7990.65. There were 35 stocks advancing against 15 stocks declining on the index. (Provisional)

The top gainers on Nifty were Infosys up by 2.46%, Dr. Reddys Lab up by 2.40%, Tata Power up by 2.33%, BHEL up by 2.20% and Ultratech Cement up by 1.91%. On the flip side, Jindal Steel & Power down by 2.27%, BPCL down by 1.70%, Cipla down by 1.54%, Coal India down by 1.48% and Grasim Industries down by 0.73% were the top losers. (Provisional)

European Markets were trading in the green; France’s CAC was up by 0.63%, Germany’s DAX was up by 0.47% and UK’s FTSE 100 was up by 0.23%.

Asian markets ended mostly in green on Wednesday, as investors awaited a Federal Reserve policy decision.  China’s central bank joined its European counterpart in boosting liquidity to address weakening growth, underscoring a divergence in direction among the world’s biggest economies as the US reduces stimulus. The People’s Bank of China is injecting 500 billion yuan ($81 billion) into the nation’s largest banks signaling the deepest concern yet with an economic slowdown. The Bank of Japan is expected to maintain its ultra-easy monetary stance and could even take additional steps, notwithstanding signs that it could be reaching the limits of its power to reflate the economy. This month, Japan’s central bank bought bills at negative yields, essentially paying banks for the privilege of lending them cash.

Indonesia’s loan growth in July slowed to 15.7% on a yearly basis, compared with 17.2% in June. Loan growth has been on a slowing trend since the central bank tightened monetary policy from June to November last year by raising the benchmark interest rate 175 basis points to 7.5%. Indonesia’s broad money supply (M2) growth rose 11% in July from a year earlier.