Buying in second half help benchmarks to end positive

Indian equity benchmarks staged a smart recovery in second half of trade on Monday and ended the session in green with a gain of around half a percent, supported by short-covering in beaten down but fundamentally strong stocks. Nevertheless, traders remained cautious ahead of the September F&O expiry on Thursday. Earlier in the day, after opening in red, key benchmark indices languished in the negative territory till early noon trades. The indices even went on to test important psychological 26,900 (Sensex) and 8,050 (Nifty) levels, but the key gauges got solid support around those intraday low levels as they convalesced from thereon. However, a divergent trend was visible in the broader markets. The midcap and smallcap indices which were resilient for most part of the day lost some steam in the closing hour of trade.

Global cues remained somber with European markets were trading in the red in early deals as investors remained sidelines ahead of European preliminary consumer sentiment report. The consumer sentiment index is expected to come in at -10.5 in September following the -10 score in August. Asian markets ended mostly in the red as investors awaited data this week that could provide more evidence of a slowdown in China, while the dollar gave back a little of its recent gains. China’s flash manufacturing PMI reading on Tuesday could come in below the 50 level, indicating that manufacturing activity is contracting.

Back home, stocks related to jewellery sector remained on buyers’ radar ahead of festive season. Telecom stocks too edged higher on report that the Home Ministry has insisted that obtaining prior security clearance should be made mandatory for service providers for granting them telecom licences. Meanwhile, Department of Industrial Policy and Promotion (DIPP) has stated that foreign direct investment (FDI) in the services sector rose marginally to $1.03 billion during the April-July period of the ongoing fiscal, compared to $1.02 billion during the same period of the previous fiscal, 2013-14.

On the flip side, pharma stocks edged lower with the government capping the prices of another 36 drugs, including those used to treat infections and diabetes, in its latest move to make essential medicines more affordable. Stocks related to textile sector too remained under pressure, as the Prime Minister’s Office has rejected the Textile Ministry’s request for linking the entire textile sector to the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA), however, could be linked to specific sectors within the textile industry such as handicraft and handloom.

The NSE’s 50-share broadly followed index -- Nifty -- rose by over twenty points to end near the psychological 8,150 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex – surged by over one hundred and ten points to finish below the psychological 27,200 mark. Moreover, broader markets also traded with traction and ended the session in the green terrain. The market breadth remained in the favour off advances, as there were 1,682 shares on the gaining side against 1,353 shares on the losing side while 96 shares remain unchanged.

Finally, the BSE Sensex surged by 116.32 points or 0.43%, to 27206.74, while the CNX Nifty gained 24.85 points or 0.31% to 8,146.30.

The BSE Sensex touched a high and a low of 27254.80 and 26918.93, respectively. The BSE Mid cap index was up by 0.20%, while the Small cap index gained 0.51%.

The top gainers on the Sensex were Tata Motors up by 3.93%, ONGC up by 3.48%, ITC up by 3.12%, Hero MotoCorp up by 1.65% and SBI up by 1.30%. On the flip side, Cipla down by 2.27%, BHEL down by 2.09%, Tata Steel down by 1.86%, Hindalco down by 1.37% and Infosys down by 1.36% were the top losers in the index.

On the BSE Sectoral front Consumer Durables up by 3.12%, FMCG up by 1.90%, Auto up by 1.10%, Oil & Gas up by 0.88% and PSU up by 0.62% were the top gainers, while Metal down by 1.22%, Healthcare down by 0.89%, Infrastructure down by 0.87%, Realty down by 0.80% and Power down by 0.60% were top losers in the space.

Meanwhile, Textile sector has received a setback with the Prime Minister's Office (PMO) rejecting the Textile Ministry's request for linking the entire textile sector to the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGA). Textile Minister Santosh Gangwar, soon after taking charge had written to Prime Minister Narendra Modi, requesting him to link the entire textile sector, including garments and fibre, to MGNREGA.

Although, the scheme could be linked to specific sectors within the textile industry such as handicraft and handloom but major reservation came from the Rural Development Ministry, which does not want to tamper with the existing scheme and has opined that many within the textile industry, including garment producers, could afford to offer more than the minimum wages given by the Government to attract labour.

The MGNREGA scheme, where the Government guarantees minimum wages for a minimum 100 days in a year for every household, is already available for the silk cultivation sector, but the garment sector within the Textile sector, has been demanding for long that the scheme be available for workers employed by it, complaining of labour shortage during peak demand season, as many workers prefer to work under the MGNREGA schemes.

The CNX Nifty touched a high and low of 8,159.90 and 8,064.80 respectively.

The top gainers of the Nifty were Tata Motors up by 3.94%, ONGC up by 3.70%, ITC up by 3.23%, BPCL up by 2.09% and IndusInd Bank up by 1.96%. On the other hand, DLF down by 3.40%, Asian Paints down by 2.49%, Tata Steel down by 2.34%, Zee Entertainment Enterprises down by 2.25% and BHEL down by 2.25% were the top losers. 

European markets were trading in red, France’s CAC 40 was down by 0.20%, Germany’s DAX was down by 0.19% and United Kingdom’s FTSE 100 was down by 0.83%.

Asian markets ended in red on Monday, after China’s Finance Minister Lou Jiwei damped speculation that government will boost economic stimulus. Lou Jiwei stated that the government won’t change its economic policies drastically merely because of weakness in one economic indicator. The biggest Chinese banks are set to win better ratings for their Basel III bond offerings than some overseas peers with similar credit scores amid mounting signs of government support for state-owned lenders. Moody’s Investors Service plans to grade subordinated debt from the nation’s banks one level below their standalone rating, compared with its standard grading two steps below. Japan’s All Industries Activity Index fell to a seasonally adjusted -0.2%.

Indonesian Finance Minister Muhammad Chatib Basri stated that Asia’s developing nations may have to sacrifice some growth next year and focus on keeping their economies stable amid potential fallout from higher US interest rates. Former Finance Minister Sri Mulyani Indrawati stated that Indonesia’s economy can grow more than 7% annually, provided that the next government dares to take unpopular policy steps, especially with regard to reducing the burden of fuel subsidies on the state budget.