Post Session: Quick Review

Indian markets after sporting a strong rally in previous session, went through choppiness on Thursday. Benchmarks that made a positive start of the day turned cautious in the very first hour of trade after touching their intraday high. There were intermittent profit taking that kept the major indices moving in and out of the red zone, however there was sudden slump around noon that dragged the benchmarks below their crucial psychological levels of 28500 (Sensex) and 8600 (Nifty) with Rajya Sabha once again getting adjourned today. The upper house had not transacted any business for the second successive day on Wednesday as treasury and opposition benches stuck to their positions, with opposition aggressively pressing for the resignation of external affairs minister Sushma Swaraj along with Rajasthan and Madhya Pradesh chief ministers. However, there was some recovery afterwards but that was not enough to place the markets in green once again.

On the global front after a weak closing of the US markets, the Asian markets made a mixed closing. Though, Shanghai Composite Index rose a sixth straight day, the longest streak of gains since May. Japanese markets too ended higher after country’s exports increased the most in five months in June, boosted by growth in automobile and electronic parts. The European markets also made a green start but were trading cautiously reacting to some earnings announcements that offset decline in energy stocks. Meanwhile, Greek Prime Minister Alexis Tsipras won parliamentary approval for a second package of reforms required to start talks on a financial rescue deal.
 
Back home, the early gains that were generated on GST Bill winning majority support of the Rajya Sabha Select Committee, which endorsed almost all the provisions, was short lived and the markets once after losing their way never looked confident, moving in and out of the green, the concern that major bills will not be taken up in monsoon session, dragged the markets lower in midway trade and after wards there were only some futile attempts that failed to lift the sentiments. Traders were also concerned with fear of the Reserve Bank keeping the interest rates on hold in the next month's monetary policy meet given the acceleration in June headline CPI inflation and increase in core CPI for the third consecutive month. The choppy trade of markets was also contributed by some high profile earnings, with investors booking profit where expectations were not met, while indulging in hefty buying in companies which outperformed. Bajaj Auto’s first quarter profit surpassed street expectations, boosted by other income but the topline and operating profit missed forecast. The company’s profit grew by 37.2 percent year-on-year to Rs 1,015 crore. But there was sharp drop in the average realization per vehicle, implying that the product mix of the company may have turned poorer. Lupin too was one of the major laggard of the day, falling over 5% after the drugmaker missed Q1 street estimates, reporting a net profit of Rs 525 crore on sales of Rs 3,074 crore in the June quarter. Back on street, the broader markets too remained cautious and made a mixed closing, profit booking in IT, tech and banking along with metal stocks dragged the markets lower.

Reliance Industries which surged 1.5 per cent to hit its fresh 52-week high in intraday trade ahead of its earnings announcements tomorrow, too turned lower by the end. In other scrip specific action Sun TV surged by over 7% after the Madras High Court issued an interim order allowing Sun Group to participate in the Phase-III auction process of FM radio.

The BSE Sensex ended at 28363.45, down by 141.48 points or 0.50% after trading in a range of 28315.37 and 28578.33. There were 13 stocks on gainers side against 17 stocks on the losers side on the index. (Provisional)

The broader indices made a mixed closing; the BSE Mid cap index was down by 0.15%, while Small cap index ended higher by 0.50%.(Provisional)

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.54%, Oil & Gas up by 0.54%, Auto up by 0.52%, INFRA up by 0.38%, Realty up by 0.37%, while TECK down by 0.91%, IT down by 0.81%, Bankex down by 0.75%, Capital Goods down by 0.64%, Metal down by 0.54% were the losing indices on BSE.(Provisional)

The top gainers on the Sensex were Tata Motors up by 3.08%, Dr. Reddys Lab up by 1.82%, Mahindra & Mahindra up by 1.29%, Maruti Suzuki up by 1.14% and NTPC up by 0.77%. On the flip side, Lupin down by 5.27%, Bajaj Auto down by 4.74%, Tata Steel down by 3.66%, TCS down by 1.67% and Bharti Airtel down by 1.56% were the top losers.(Provisional)

Meanwhile, domestic rating agency India Ratings and Research (Ind-Ra) has said that the Centre's housing for all (HFA) project is expected to give the economy Rs 15-trillion (trn) boost over the next 7 years, though it also cautioned that its success will depend on ramping up existing urban infrastructure, fast tracking approval process and targeting the actual beneficiary.

As per the study, the direct benefit of HFA to the economy is estimated to be Rs 15trn in a seven-year timeframe (FY16-FY22). Funding of the investment of Rs 15trn through public-private partnerships and ramping up the supply of raw materials for construction namely steel and cement are big challenges for the execution of the HFA scheme. Municipal services such as supplying piped water, sewerage, sanitation and municipal solid waste management are also far from being equipped to take on a project of this magnitude in the next seven years. 

The government’s scheme to provide 20 million houses in three phases over FY16-FY22 has a central grant component (Rs100,000 per slum household) going to the state government, and central assistance (Rs150,000 other households) is likely to go directly to households. Also, the central government will provide interest subvention to households at 6.5% for loans up to a 15-year tenor through two nodal agencies – Housing and Urban Development Corporation and National Housing Bank. The rating agency has also said that the government will have to find more resources to finance this, so as to adhere to its fiscal deficit target.

Ind-Ra has said that allied sectors to construction, such as cement, iron and steel, will also grow, depending on the strength of the forward and backward linkages of the construction sector with the rest of the economy. It expects the demand for cement for the scheme alone to be closer to FY15 production levels and steel demand to be higher than the production levels of bars and rods. Local bodies will face challenges in supplying piped water, sewerage, sanitation and municipal solid waste management.

The CNX Nifty ended at 8586.80, down by 46.70 points or 0.54% after trading in a range of 8573.80 and 8654.75. There were 15 stocks in green against 35 stocks in red on the index.(Provisional)

The top gainers on Nifty were Cairn India up by 6.08%, Tata Motors up by 3.32%, Dr. Reddys Lab up by 2.01%, Mahindra & Mahindra up by 1.32% and Maruti Suzuki up by 0.82%. On the flip side, Lupin down by 5.26%, Bajaj Auto down by 5.18%, Tata Steel down by 3.85%, Zee Entertainment down by 2.86% and Tech Mahindra down by 2.00% were the top losers.(Provisional)

Asian markets closed mixed on Thursday, as sentiments were on up-beat mood in view of the Greek parliament approving a contentious bailout package. Chinese vice finance minister stated that China will pursue a pro-active fiscal policy to stabilize investment growth and boost domestic consumption in the world’s second-largest economy. Liu Kun notified that an active fiscal policy was part of six crucial areas that the ministry was focused on, alongside lifting growth in investment and consumption. Other priorities were helping companies to move up the production value chain, strengthening environmental protection controls, accelerating the development of logistic networks, and deepening reforms of food and agricultural product subsidies.  Japan’s trade balance fell to a seasonally adjusted -0.25T, from -0.16T in the preceding month whose figure was revised up from -0.18T. South Korean GDP rose to a seasonally adjusted 0.3%, from 0.8% in the preceding month. Taiwanese Industrial Production rose to a seasonally adjusted annual rate of -1.35%, from -3.18% in the preceding month.