Post Session: Quick Review

Indian markets bounced back on Tuesday coming out of the global rout of last session, though the Greece crisis was still looming large but the benchmarks managed to emerge as a clear winner despite a choppy trade for most part of the day. Traders got some support with NITI Aayog Vice Chairman, Arvind Panagariya’s statement that India’s growth rate is expected to accelerate to 8 per cent in the current financial year and the economy will surpass $3 trillion mark in less than five years. Pangariya also said that India is well prepared to handle any situation that may arise out of the Greece crisis, citing strong fundamentals of the economy.

On the global front, undeterred by the slump in the US markets, the Asian indices bounced back following the biggest global selloff since 2013, while all the major indices ended in green in the region, the Chinese markets showed remarkable recovery after Chinese authorities stepped up efforts to quell market panic, allowing pension funds to buy stocks as regulators consider halting initial public offerings. The European markets however, remained in somber mood with focus shifting to whether Greece will default on a $1.7 billion payment due to the International Monetary Fund. Greece’s current bailout package expires Tuesday, just as the payment is due to the IMF. S&P cut Greece’s credit rating by one level Monday, saying the probability of the country leaving the euro area is now 50 percent.

Back home markets recovered almost all their losses of last session on value buying in bluechip stocks, in the last leg of the trade. The benchmarks gaining pace ended at the high points of the day after Greece decided to consider the latest European Union proposal. The rally in the FMCG and consumer durables shares contributed the most to the rise, while the broader markets too gained pace and posted gains of over a percent. FMCG rally was led by Nestle India which surged by over 4% after Bombay high court permitted the company to export all nine variants of Maggi even as the ban on selling the two-minute noodles within the country will continue. Metal pack too surged on hopes of demand increase in China the largest consumer. However, the day of bounce-back was not that fruitful for the IT sector, which was already under pressure after Tech Mahindra pruned its revenue and profit margin last day, was further weighed down with research firm Gartner Inc stating that global IT spending will shrink 5.5% to $3.5 trillion in 2015 as a strong US dollar pressures vendors. The projections were down from the firm’s April forecast, which projected spending would fall 1.3% to $3.66 trillion. The rupee appreciation after five days of decline too weighed on the IT pack. The market breadth remained in favour of advances with 1730 stocks advancing against 960 declines, while 131 stocks remained unchanged.

The BSE Sensex ended at 27780.83, up by 135.68 points or 0.49% after trading in a range of 27570.95 and 27814.53. There were 18 stocks on gainers side against 12 stocks on the decliners side on the index. (Provisional)

The broader indices outperformed the benchmarks; the BSE Mid cap index ended up by 1.33%, while Small cap index added 1.07%. (Provisional)

The top gaining sectoral indices on the BSE were FMCG up by 2.02%, Consumer Durables up by 1.90%, Metal up by 1.73%, PSU up by 0.68%, Auto up by 0.56%, while IT down by 0.83%, INFRA down by 0.33%, TECK down by 0.26% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Steel up by 3.33%, Coal India up by 3.10%, Sun Pharma Inds. up by 2.98%, Lupin up by 2.59% and Bharti Airtel up by 1.93%. On the flip side, TCS down by 1.68%, Wipro down by 1.43%, ICICI Bank down by 1.17%, Hero MotoCorp down by 1.07% and GAIL India down by 0.92% were the top losers. (Provisional)

Meanwhile, amid the growing concern of Greece exit from the European Union (EU), Finance Secretary Rajiv Mehrishi has said that the economic crisis in Greece may trigger capital outflows from India and the government is consulting the RBI to deal with the situation, which would take necessary steps to deal with the issue but added that India does not have a firm plan in place to deal with any significant fallout. Greece's financial crisis intensified with Prime Minister Alexis Tsipras announcing capital controls and shutdown of banks at least for a week.

Mehrishi said that “Greece crisis does not have any effect directly on India. But interest rate may firm up in Europe. In case of firming up of interest rate in Europe, there can be outflow of capital from India.'  He added that this is a dynamic and evolving situation. There is no firm plan that we can access. Nobody can predict what the exact situation would be.

Finance Secretary said that if yields on euro bonds go up, it might impact inflows and outflows from India, adding that if yields on government securities go up in the US, that, too, may impact inflows and outflows. “We really don’t know how they (bond investors) will reallocate their portfolios.'

Industry too has raised red flag on the crisis turning contagion and Engineering Export Promotion Council of India said that exports will be affected as the European Union is the largest destination for such shipments. The industry body said it sees indirect impact from the UK, Italy, Turkey and France.  For April-May, engineering exports to the EU stood at $1.86 billion as against $1.89 billion in the year ago period.

The CNX Nifty ended at 8370.10, up by 51.70 points or 0.62% after trading in a range of 8298.95 and 8378.00. There were 35 stocks advancing against 15 stocks declining on the index. (Provisional)

The top gainers on Nifty were Zee Entertainment up by 3.72%, Idea Cellular up by 3.59%, Tata Steel up by 3.37%, Coal India up by 3.19% and Ultratech Cement up by 3.14%. On the flip side, TCS down by 1.46%, Tech Mahindra down by 1.38%, Wipro down by 1.29%, GAIL India down by 1.17% and ICICI Bank down by 1.03% were the top losers. (Provisional)

Asian markets closed in green on Tuesday, with Shanghai shares surging by more than 5% after plunging by a similar rate on a another day of heightened volatility. Japan’s inflation-adjusted real wages slid in May from a year earlier despite a tightening job market to register a 25th straight month of decline. The data highlights the challenge policymakers face in generating a virtuous cycle, under which rising revenues prompt companies to boost wages so that households increase spending. Total cash earnings rose 0.6% in the year to May, increasing for a second straight month, with regular pay up 0.3%. But inflation-adjusted real wages fell 0.1% in May after a revised decline by the same margin in April, suggesting that consumer spending will remain weak. South Korea’s industrial output slumped in May, with production losses across key automobile, semiconductor and machinery sectors prompting analysts to trim their year-end economic growth forecasts and bringing another rate cut into view. Industrial output in Asia’s fourth-largest economy fell a seasonally adjusted 1.3% in May from April, the third monthly decline. Hong Kong Retail Sales rose to a seasonally adjusted annual rate of -0.1%, from -2.2% in the preceding month.