Post Session: Quick Review

Indian markets bucking the global trend, not only managed to pare losses but ended near to the highs of the day. The knee-jerk reaction to Greece voting against accepting further spending cuts and tax increases in an unprecedented referendum, was limited for the early few hours only, afterwards markets started gradually moving higher with traders considering the Greece impact short-lived and the present fall a good buying opportunity. Although the government said it is closely monitoring the situation as India may be indirectly impacted from the fallout, but the Chief Economic Advisor (CEA) Arvind Subramanian's statement that India is relatively well insulated from Greece fuelled fire on the street. CEA added that we are well protected in at least three ways. Our macro- economic situation is much more stable. We have (forex) reserves and we are an economy which is still a very attractive investment destination.

On the global front, the Asian markets went through another rout reacting to the result of Greek voters’ rejection of more austerity demands from creditors, fuelling fears that the country will crash out of the Eurozone. However, the Chinese markets bucked the trend on some emergency messages to stabilize the stock market after the biggest three-week rout. The European markets too made a weak start as Greek voters’ rejection of austerity sent investors to the relative safe heaven. While Greece accounts for less than 2 percent of the euro zone’s output, an exit would set a precedent for other nations that membership is reversible. Meanwhile, Yanis Varoufakis quit as Greek finance minister, a move that might go some way to help restart talks.

Back home, the markets bounced back in second half with investors using the dips to accumulate quality stocks, also as the dollar strengthened and the possibility of US delaying its interest rate hike increased. However, in the early deals the market remained under pressure on report that the Goods and Services Tax (GST) Bill is unlikely to be taken up in the coming monsoon session of Parliament, as the Congress members on the joint parliamentary panel on GST are likely to submit dissent notes against the panel’s report to be submitted on July 17. Also, as funds and investors indulged in reducing exposures amid weak cues from other Asian markets. However, things started stabilizing supported by healthy buying in healthcare, oil and gas and realty sectors. The banking stocks which looked under pressure in early trade too made a good recovery, despite the global rating agency Fitch stating that challenges for state-owned banks remain despite improving macro picture, with continued pressure on asset quality and weak capital. It also said that there were few indications of a meaningful recovery in earnings in the short-term and bad loans will add up to almost half of the equity capital of public sector banks if even a fifth of the loans they have recently restructured continue to default. In non sectoral gauge, the PSU oil marketing companies were in jubilation mood after oil prices slumped, with Brent crude slipping below $60 a barrel for the first time since April. HPCL was up by over 4%, BPCL was up by over 3% and IOC was up by over 2%. On the sectoral front, consumer durables, metal and to some extent tech remained in somber mood.

The BSE Sensex ended at 28208.76, up by 115.97 points or 0.41% after trading in a range of 27774.80 and 28235.31. There were 18 stocks on gainers side against 12 stocks on the losers side on the index. (Provisional)

The broader indices outperformed the benchmark; the BSE Mid cap index was up by 0.85%, while Small cap index surged by 1.09%.(Provisional)

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.10%, Realty up by 0.74%, FMCG up by 0.66%, PSU up by 0.54%, Capital Goods up by 0.50%, while Consumer Durables down by 0.92%, Metal down by 0.62% and TECK down by 0.02% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Dr. Reddys Lab up by 3.70%, Cipla up by 3.60%, Lupin up by 1.39%, Reliance Industries up by 1.11% and Hero MotoCorp up by 1.09%. On the flip side, Vedanta down by 4.66%, Hindalco down by 1.54%, NTPC down by 0.76%, Infosys down by 0.71% and Tata Steel down by 0.61% were the top losers. (Provisional)

Back home, Finance Minister Arun Jaitley has once again pitched for the passage of land acquisition and GST bills in Parliament, amid threats from the opposition of disrupting the upcoming monsoon session of the parliament. Jaitley has said that policy reforms and 8-10 per cent economic growth are a must to eliminate poverty, citing the results of Socio Economic and Caste Census that 'growth and economic reforms help the poor as do targeted schemes'.

He said that the latest data suggest that the investment cycle is slowly turning around and stalled projects are being unblocked at a faster pace. Passing the GST and reforming the land law will accelerate this investment turnaround.

Finance Minister also said that that NDA government was trying to create conditions for accelerating growth to 8-10 percent through a set of measures.'...The government is creating the conditions for greater private investment: implementing the GST and creating a common market, reforming the land law, easing the costs of doing business, and unblocking stalled projects are all measures that will improve the conditions for investment.'

While the Goods and Services Tax Bill is being scrutinised by a select committee of the Rajya Sabha, the Land Acquisition bill is being discussed by the joint committee of Parliament. Both the committees are expected to submit their reports at the beginning of the next session.

The CNX Nifty ended at 8523.50, up by 38.60 points or 0.45% after trading in a range of 8386.15 and 8533.15. 34 stocks ended in green against 16 stocks in red on the index. (Provisional)

The top gainers on Nifty were Cipla up by 3.67%, Dr. Reddys Lab up by 3.65%, BPCL up by 3.34%, Grasim Industries up by 1.86% and Asian Paints up by 1.72%. On the flip side, Vedanta down by 4.43%, NMDC down by 1.91%, Tech Mahindra down by 1.66%, Hindalco down by 1.45% and Power Grid Corpn. down by 1.17% were the top losers. (Provisional)

Asian markets closed mostly in red on Monday, after Greek results while Shanghai Composite index rebounded from last week’s heavy losses after regulators and the securities industry intervened to prop up the markets. Bank Indonesia has cut its loan growth forecast for the year following slow loan demand in the first six months. The central bank stated that the country’s credit growth may not reach 15 to 17 percent, but 11 to 13 percent for the whole year. The central bank’s board of governors is set to meet on July 14. Lenders in Indonesia have disbursed Rp 3,792.8 trillion ($284.64 billion) in loans for the year up to May, an increase of 10.3 percent from the same period a year before. Foreign exchange bank deposits in South Korea fell for a second month in June, central bank data showed, as some public institutions dipped into their deposits for payments, including import fees. Total deposits edged down $80 million to $64.7 billion as of the end of June, the Bank of Korea stated, bringing the overall amount to the lowest since March this year.  Fitch Ratings stated that Japan’s public debt burden is likely to remain high under a new fiscal framework approved last month as the government’s structural reforms will not boost economic growth and tax revenue significantly. Japan’s Monetary Base fell to 34.2%, compared to 35.6% in the preceding month.