Post Session: Quick Review

Indian markets after a choppy trade managed a positive close on Friday, taking cues from the upbeat global markets. Though, the trade lacked consistency throughout the session and benchmarks kept moving in and out of the red territory, with worries of corporate earnings taking its toll on the markets after IT bellwether TCS despite a margin improvement reported a sequential net profit decline of 3.3% to Rs 5,709 crore in the April-June quarter and also missed revenue guidance for the fourth straight quarter. Markets made a good start following a smart two-day rebound in the Chinese stock market and hopes of Greece securing a bailout deal in forthcoming EU meet on Sunday and were supported by International Monetary Fund (IMF), which in its World Economic Outlook Update said that India will be the world’s fastest growing economy for the second consecutive year in 2016 at 7.5 per cent.

On the global front, after the consolidation in US markets the Asian markets surged, and the Shanghai Composite posted its first back-to-back gain since June 24 and biggest since 2008 after the government banned insiders from selling stocks, and as almost half of listed companies remain halted. Meanwhile, the European markets rallied after Greece submitted a reform package that contains proposals similar to those demanded by creditors. Prime Minister Alexis Tsipras has offered that last-minute concessions to try to save the country from bankruptcy, though the Greek parliament will vote on the new proposals.

Back home, benchmarks after much of dilly-dallying managed a positive close supported by some late hour buying in the bluechip stocks, though marketmen took cautious approach ahead of the Industrial Production data to be released later in the day. Traders also remained concerned about the monsoon progress as the India Meteorological Department (IMD) reported that after a month of adequate showers in June, monsoon rainfall in India was 51% less than normal last week. It warned that rainfall activity is expected to be subdued over many parts of western India, central India and interior peninsula. The broader indices after losing their gaining momentum could not recover much and just ended with positive bias. On the sectoral front, FMCG, realty, Tech and consumer durables were the major drags, while the major gaining sectoral indices that powered the markets to green were banking, capital goods and healthcare. Metals too showed some recovery on strength in Chinese market.The auto stocks remained under pressure after Society of Indian Automobile Manufacturers (Siam) reported that car sales in June grew 1.53% from a year ago, the slowest in eight months. Market breadth was marginally in favour of the advances with 1418 stocks ending in green against 1383 stocks in red, while 116 stocks remained unchanged. 

The BSE Sensex ended at 27645.41, up by 71.75 points or 0.26% after trading in a range of 27530.90 and 27729.46. There were 15 stocks in green against 15 stocks in red on the index.(Provisional)

The broader indices despite ending in green underperformed the benchmarks; the BSE Mid cap index was up by 0.12%, while Small cap index added 0.09%.(Provisional)

The top gaining sectoral indices on the BSE were Bankex up by 1.01%, Capital Goods up by 0.92%, Metal up by 0.88%, Oil & Gas up by 0.37%, PSU up by 0.03%, while Realty down by 0.94%, TECK down by 0.83%, FMCG down by 0.71%, IT down by 0.56%, Consumer Durables down by 0.39% were the losing indices on BSE.(Provisional)

The top gainers on the Sensex were Vedanta up by 5.04%, Sun Pharma Inds up by 3.85%, HDFC Bank up by 1.52%, Larsen & Toubro up by 1.41% and BHEL up by 1.38%. On the flip side, Bharti Airtel down by 3.21%, Hindustan Unilever down by 2.43%, TCS down by 2.16%, GAIL India down by 1.84% and ONGC down by 1.72% were the top losers.(Provisional)

Meanwhile, India and US have signed an Inter Governmental Agreement (IGA) to implement the Foreign Account Tax Compliance Act (FATCA) to check offshore tax evasions which will smoothen the exchange of tax information between two countries, which will be operational from 30 September. FATCA was signed by Revenue secretary Shaktikanta Das and US Ambassador Richard Verma in New Delhi.

Under the agreement, Indian Financial Institutions would have to share information about US tax payers to the revenue department which would be passed on to US Internal Revenue Service (IRS). Under the pact, the IRS will provide similar information about Indian account holders in the US. If the financial institution does not comply to Fatca, it will be liable to pay 30% penalty tax on all its US revenues including dividends, interest, fees and sales. Furthermore, Fatca will help India in dealing with the black money menance. 

Fatca is a US law enacted in 2010 that requires foreign financial institutions to make disclosures about American taxpayers to US authorities, but contains confidentiality clauses to protect this mandatory exchange of information.

In a related development, India and five other nations had last month joined another multilateral agreement for automatic exchange of financial information - the Multilateral Competent Authority Agreement (MCAA) - to combat tax evasion and deal with the problem of black money. The finance ministry statement said that signing Fatca and MCAA are two important milestones in India’s fight against black money.

The CNX Nifty ended at 8356.90, up by 28.35 points or 0.34% after trading in a range of 8315.40 and 8377.10. There were 32 stocks on gainers side against against 18 stocks on the losers’ side on the index.(Provisional)

The top gainers on Nifty were Vedanta up by 5.62%, Sun Pharma Inds up by 3.85%, Grasim Industries up by 2.37%, Zee Entertainment up by 2.27% and Cairn India up by 2.24%. On the flip side, Bharti Airtel down by 3.48%, Idea Cellular down by 2.86%, Hindustan Unilever down by 2.78%, TCS down by 2.20% and Bajaj Auto down by 1.76% were the top losers.(Provisional)

Asian markets closed mostly in green on Friday, with China’s benchmark index closing higher, taking its two-day rise over 10% as government moves to boost the flagging market saw sentiment recover. Singapore’s economic growth is expected to have slowed down in the second quarter as sluggish global demand hurt the city-state’s manufacturing sector. Japanese wholesale prices fell 2.4% in the year to June to mark the third straight month of declines, as soft demand in China drove down commodities markets. While declines in raw material costs benefit Japanese manufacturers, they will keep life difficult for the Bank of Japan as it strives to accelerate consumer inflation toward its ambitious 2% target. Excluding the effect of last year’s sales tax hike, wholesale prices fell 2.5% in the year to June. That marked the eighth straight month of declines and the biggest drop since January. China’s vehicle sales will only grow 3% year-on-year in 2015, in a major downward revision of its prediction for the year. The China Association of Automobile Manufacturers (CAAM) in January stated that it expected combined sales for passenger and commercial vehicles to grow 7% to 25.1 million this year, compared with 6.9% in 2014. Malaysian Industrial Production rose to a seasonally adjusted annual rate of 4.5%, from 4.0% in the preceding month.