Post Session: Quick Review

Indian markets after slew of slide posted a strong day of trade on Wednesday, with benchmarks not only registered gains of over a percent but regaining their crucial psychological levels of 26750 (Sensex) and 8100 (Nifty). Markets after a cautious start turned strong in very first hour of trade, moving confidently thereafter for the whole day. Traders were encouraged with report that MSCI Inc. held off from adding mainland Chinese equities to its benchmark indexes. MSCI said China still needs to improve market accessibility and address concerns about the ownership status of mainland shares before they are eligible for global equity gauges. Chinese market has doubled in the last one year; it would have been difficult for foreign investors to allocate more funds if the shares were to be included in the MSCI index.

On the global front, while the US markets ended flat, the Asian markets made a mixed closing, apart from China the Japanese market too lost ground, as the yen surged after Bank of Japan Governor Haruhiko Kuroda said it was hard to see his nation’s currency falling further. On the other hand the European markets made a positive but cautious start, as Greek Prime Minister Alexis Tsipras prepares to meet German Chancellor Angela Merkel and French President Francois Hollande in Brussels to try and make progress on debt talks.

Back home, the oversold Indian equity markets finally got a smart relief rally aided by short covering and bottom fishing by the domestic institutional investors. Also, the delay in inclusion of Chinese A shares to MSCI index, complemented by the government’s approval of interest-free 1-yr loans to sugar companies helped the market’s surge, reclaiming the crucial psychological levels and Nifty breaking its seven days losing streak with a triple digit rally. Some profit taking emerged in the final hours that dragged the benchmarks slightly lower from the high points of the day; still they ended with notable gains. The broader markets too posted gains of over a percent for the day, while all the sectoral indices on the BSE ended in green led by capital goods, IT, tech and auto. Sugar stocks were in the most jubilant mood after Cabinet Committee on Economic Affairs (CCEA) approved an interest-free loan package worth Rs 6,000 crore for the debt-laden industry. The sugar mills are under pressure as they owe over Rs 21,000 crore to farmers in cane dues. Bajaj Hindustan surged 10 per cent, Renuka Sugars was up by 7 percent, Balrampur Chini gained 2.5 per cent, Dhampur Sugar was up by 3.5 per cent, Andhra Sugar surged 6.8 per cent and Oudh Sugar Mills rallied by 9 per cent.  The auto pack too moved higher encouraged by Society of Indian Automobile Manufacturers’ (SIAM) data that domestic passenger car sales grew 7.73 percent to 1,60,067 units in May, from 1,48,577 units in the year-ago month. Sales of commercial vehicles grew 3.95 percent to 48,841 units in May, however Motorcycle sales last month declined 3.04 percent to 9,53,322 units, from 983,210 units a year earlier.

The BSE Sensex ended at 26838.18, up by 356.93 points or 1.35% after trading in a range of 26493.29 and 26934.74. There were 28 stocks advancing against just 2 declines on the index. (Provisional)

The broader indices too ended with good gains; the BSE Mid cap index was up by 1.00%, while Small cap index ended higher by 1.09%. (Provisional)

The top gaining sectoral indices on the BSE were IT up by 2.08%, Capital Goods up by 2.02%, Auto up by 1.81%, TECK up by 1.78%, Bankex up by 1.24%, while none of the sectoral gauges ended in red. (Provisional)

The top gainers on the Sensex were BHEL up by 4.35%, Wipro up by 3.86%, Bajaj Auto up by 3.06%, Reliance Industries up by 2.57% and Larsen & Toubro up by 2.33%. On the flip side, Cipla down by 0.28% and ITC down by 0.02% were the two losers. (Provisional)

Meanwhile, India has pitched for a better ranking on ease of doing business apprising the World Bank about various reform measures taken in the past one year including relaxation in company laws. A two-member mission of the World Bank Group is visiting India to collect data and information for Doing Business Report, 2016. India ranked 142 among 189 nations in World Bank's Ease of Doing Business 2015 report.

A meeting was convened on June 8 at the Department of Economic Affairs (DEA) under the chairmanship of Additional Secretary Ajay Tyagi and attended by representatives from the DEA, Department of Industrial Policy and Promotion (DIPP), Ministry of Corporate Affairs and Central Board of Direct Taxes (CBDT), as well as members of the World Bank Group.

The Indian officials impressed upon the importance given by the government to improve regulatory environment across India, the World Bank Mission appreciated the efforts made by the government and promised to take note of initiatives taken by Government of India and State Government.

The members of the Mission Nadine Abi-Chakra and Baria Nabil Daye were also informed about the various reforms undertaken by the government, including, single step incorporation of companies through INC-29 Form, loans or guarantee to fully owned subsidiary company facilitated and process to approve related party transaction made simpler. The government is keen to improve ease of doing business in the country to attract foreign funds as well as spur domestic investments.

The CNX Nifty ended at 8125.50, up by 103.10 points or 1.29% after trading in a range of 8023.80 and 8152.25. There were 42 stocks advancing against 8 declining stocks on the index. (Provisional)

The top gainers on Nifty were Cairn India up by 5.95%, BHEL up by 4.04%, Wipro up by 3.62%, Bajaj Auto up by 3.39% and Tech Mahindra up by 3.24%. On the flip side, Idea Cellular down by 1.30%, NMDC down by 1.19%, Lupin down by 0.91%, BPCL down by 0.56% and Power Grid Corpn down by 0.51% were the top losers. (Provisional)

European markets were trading higher; France’s CAC increased 22.56 points or 0.47% to 4,872.78, UK’s FTSE 100 gained 23.94 points or 0.35% to 6,777.74 and Germany’s DAX was higher by 54.25 points or 0.49% to 11,055.54.

Asian markets closed mixed on Wednesday, following a tepid lead from Wall Street while Shanghai was hit by news Chinese A shares would not yet be included in a global benchmark index of equities. Bank of Japan Governor Haruhiko Kuroda stated that aggressive easing will continue as financial markets and asset prices are not overheated. He added that there is no asset bubble in Japan at this point. The governor declined comment on daily fluctuations in the currency market but repeated foreign exchange rates must reflect economic fundamentals. Earlier, BoJ board member Takehiro Sato stated to business leaders in central Japan that there was no need to change the pace of government bond buying now around 80 trillion yen annually. Mitsuhiro Furusawa, deputy managing director of the International Monetary Fund (IMF) stated that policymakers in Asia need to put greater emphasis on growth-friendly fiscal policy to sustain growth momentum in the face of demographic changes that could weigh on their economies. Japan’s Corporate Goods Price Index remained unchanged at a seasonally adjusted annual rate of -2.1%. Japan’s Core Machinery Orders rose to 3.8%, from 2.9% in the preceding month. South Korean Unemployment Rate rose to a seasonally adjusted annual rate of 3.9%, from 3.7% in the preceding month. Philippines Industrial Production fell to a seasonally adjusted annual rate of -4.2%, from 7.4% in the preceding month.