Post Session: Quick Review

Indian markets went through a volatile day of trade and the jubilation of last session after Eurozone leaders unanimously reached an agreement to start talks for a third bailout program for Greece, seemed already priced in and traders started considering domestic factors for further cues where there was conflicting inflation data, with CPI inflation numbers for June, surging to eight month high of 5.4 percent mainly due to costlier food items, on the other hand  India's annual rate of inflation based on wholesale prices continued in the negative territory for the eighth straight month in June, falling further to (-)2.4 per cent from (-)2.36 per cent for the month before. Trade also remained a bit cautious with India Ratings calling for continuous government interventions to fill the deficits in physical and social infrastructure spaces for long-term higher growth, despite retaining its 7.7 per cent growth forecast for this year. It also warned that full-blown investment recovery is still some 12-18 months away primarily because of the low capacity utilisation in the manufacturing sector.

On the global front, while the US markets rallied overnight, the Asian markets could not keep up their momentum intact and some of the indices ended in red despite a good start, as attention shifted back to the timeline for higher US interest rates. Investors will parse comments by Federal Reserve Chair Janet Yellen, who testifies before the U.S. Congress later this week. The European markets too fell as investors shifted their focus to central banks and weighed whether the Greek parliament will pass the reforms necessary for a new bailout.

Back home, markets kept moving in and out of the red zone in the second half despite witnessing good bounce back and reaching the intraday highs in latter part of trade after oil prices tumbled following the deal that could see an easing of sanctions against Tehran and a gradual increase in its oil exports. Iran and six major powers reached a historic nuclear deal, which includes a compromise between Washington and Tehran that would allow UN inspectors to press for visits to Iranian military sites as part of their monitoring duties, the deal could eventually reshape global oil markets. Iranian Oil Minister Bijan Namdar Zanganeh has said that the country can increase exports by 500,000 barrels a day as soon as sanctions are lifted. back on street, on the sectoral front, the rate cut pause jitters weighed on the rate sensitive sectors of banking, auto and realty and they witnessed cut of over half a percent. On the same time the rupee weakness after dollar strengthened overseas on hopes of a rate hike by US Fed, supported the IT and tech pack, they were also encouraged by the Greek deal, hoping for better business options. The broader markets managed a positive close and the market breadth was in the favour of advances with 1552 stocks gaining against 1279 declines, while 115 stocks remained unchanged. 

The BSE Sensex ended at 27924.26, down by 36.93 points or 0.13% after trading in a range of 27853.96 and 28018.59. Stocks were evenly distributed on the index with 15 advances against 15 declines.(Provisional)

The broader indices despite giving up their early gains outperformed the benchmarks; the BSE Mid cap index was up by 0.02%, while Small cap index ended higher by 0.29%.(Provisional)

The top gaining sectoral indices on the BSE were IT up by 0.87%, TECK up by 0.66%, Metal up by 0.59%, PSU up by 0.56%, Oil & Gas up by 0.54%, while Auto down by 0.92%, Bankex down by 0.73%, Realty down by 0.68% were the losing indices on BSE.(Provisional)

The top gainers on the Sensex were Coal India up by 3.20%, Infosys up by 2.20%, Hero MotoCorp up by 2.09%, Hindustan Unilever up by 1.86% and BHEL up by 1.37%. On the flip side, Tata Motors down by 4.29%, Hindalco down by 1.97%, Vedanta down by 1.80%, SBI down by 1.75% and Tata Steel down by 1.12% were the top losers.(Provisional)

Meanwhile, in its bid to safeguard the retail investors from excessive speculation through the derivatives route, the market regulator Securities and Exchange Board of India (SEBI) has increased the minimum contract size in the equity derivatives segment to Rs 5 lakh, from the present, minimum contract size of Rs 2 lakh. It’s for the first time since the launch of derivatives in June 2000 that SEBI has proposed the review of the minimum contract size.

In its latest circular, modifying the circular dated January 08, 2010, SEBI stated that “The lot size for derivatives contracts in equity derivatives segment shall be fixed in such a manner that the contract value of the derivative on the day of review is within Rs 5 lakhs and Rs 10 lakhs”. The revision will be made effective from the next trading day after expiry of October 2015 contracts.

The circular further specified that for stock derivatives with minimum lot sizes of 50, the subsequent lot sizes will be fixed as a multiple of 25. But if the contract value of the minimum lot size of 50 is more than Rs 10 lakhs, then subsequent lot size will be a multiple of 5, provided the lot size is not below 10. “For index derivatives, the lot size (in units of underlying) shall be fixed as a multiple of 5, provided the lot size is not less than 10.”

SEBI further stated that the stock exchanges shall jointly ensure that the lot size is same for an underlying traded across exchanges. The stock exchanges will also have to review the lot size once in every 6 months based on the average of the closing price of the underlying for last one month and wherever warranted, revise the lot size by giving an advance notice of at least 2 weeks to the market. If the revised lot size is higher than the existing one, it will be effective for only new contracts. In case of corporate action, the revision in lot size of existing contracts shall be carried out as per SEBI circular dated December 18, 2002.

The CNX Nifty ended at 8442.40, down by 17.25 points or 0.20% after trading in a range of 8424.10 and 8480.25. There were 25 stocks in green against 25 stocks in the red on the index.(Provisional)

The top gainers on Nifty were Coal India up by 3.14%, Infosys up by 2.09%, BPCL up by 1.92%, Hindustan Unilever up by 1.79% and Ambuja Cement up by 1.57%. On the flip side, Tata Motors down by 4.19%, SBI down by 2.08%, Hindalco down by 2.02%, Vedanta down by 1.73% and Cairn India down by 1.39% were the top losers.(Provisional)

The European Markets were trading in red, Germany’s DAX was down by 65.78 points or 0.57% to 11,418.60, UK’s FTSE 100 lost 25.26 points or 0.37% to 6,712.69 and France’s CAC declined by 15.82 points or 0.32% to 4,982.28.

Asian markets closed mostly in green on Tuesday, while Shanghai stocks ended lower in volatile trade after rallying in the previous three sessions on government support. China’s central bank will fine-tune its policy to provide ample and appropriate liquidity for the economy.  According to a transcript of a PBOC, the recent bank reserve requirement and interest rate cuts helped boost M2 growth, a broad measure of money supply. Ample liquidity in China’s interbank market and falling interest rates have lowered financing costs in the real economy, with companies’ general cost of financing falling to 6.32 percent at the end of June from 7.0 percent at the end of 2014. Singapore economy unexpectedly contracted in the second quarter as sluggish global demand knocked the city-state’s manufacturing sector, dimming the outlook as growth in key trade partner China continues to cool. Advance estimates from the Ministry of Trade and Industry (MTI) showed that gross domestic product shrank 4.6 percent in the second quarter from the previous three months on an annualized and seasonally adjusted basis, pressured by the manufacturing sector contracting 14 percent on quarter.