Post Session: Quick Review

Dashing all hopes of a relief rally, Indian markets ended in red again on Tuesday, the weak global cues amid mixed earnings kept the markets under pressure. Traders were not very convinced by Finance Minister Arun Jaitley’s assurance that the government will not take any action that may jeopardise investment climate and the government would apply its mind on the recommendations in due course and would avoid any decision that could hurt investor sentiment. Both the benchmarks lost their another crucial psychological levels of 27500 (Sensex) and 8400 (Nifty) in a very volatile day of trade and ending near the lows of the day, as selling intensified in final hours.

On the global front, after a weak closing of the US markets the Asian markets made a mixed closing, with Chinese market slumped again even though Chinese regulators said they were prepared to buy shares to stabilise the stock market, while the central bank injected cash into money markets and hinted at further monetary easing. On the other hand the European markets rose for the first time in six days amid signs of a pickup in corporate takeovers, while earning season remained in full swing.

Back home, markets witnessed good bounce back in the very first hour of trade, but the joy was short lived and benchmarks found stiff resistance around 27650 (Sensex) and 8400 (Nifty) levels and profit booking dragged the markets back to the neutral line, afterwards the trade turned choppy, with benchmarks moving in and out of the red, but in the last leg of the trade the market mood deteriorated dragging the major indices lower. The weakness in rupee too weighed down the sentiments; the domestic currency has extended its losses for the fourth straight session on persistent dollar demand from banks and importers. Sectorally, apart from the consistent performer capital goods, power and banks too managed a positive close, while the apprehension of RBI not going for a rate cut in its upcoming monetary policy review made reality the top loser. Banking pack was supported by some improved asset quality of the PSU banks despite posting profit decline.

The BSE Sensex ended at 27457.81, down by 103.57 points or 0.38% after trading in a range of 27416.39 and 27676.65. There were 11 stocks in green against 19 stocks in red on the index. (Provisional)

The broader indices too gave their early gains and ended in red; the BSE Mid cap index was down by 0.21%, while Small cap index lost 0.14%.(Provisional)

The gaining sectoral indices on the BSE were Capital Goods up by 0.64%, Power up by 0.48%, Bankex up by 0.41%, while Realty down by 2.77%, Metal down by 0.94%, Auto down by 0.74%, Oil & Gas down by 0.44%, Consumer Durables down by 0.44% were the losing indices on BSE.(Provisional)

The top gainers on the Sensex were BHEL up by 2.15%, NTPC up by 2.01%, Hindalco up by 1.34%, HDFC Bank up by 1.08% and Axis Bank up by 0.85%. On the flip side, Dr. Reddys Lab down by 2.76%, Hero MotoCorp down by 2.60%, HDFC down by 2.49%, ICICI Bank down by 1.96% and Bharti Airtel down by 1.95% were the top losers.(Provisional)

Back home, Arvind Subramanian, Chief Economic Advisor (CEA) of the country has said that India can grow at the rate of 8-10% if it has strong performing exports. CEA said that the International Economic environment of exports is not in the favor of India, as Europe, China and Japan are slowing down and said “I don't think there is one historical experience in the last 50-60 years where countries have rapid rate of growth without having strongly performing exports”. While talking about loose monetary policy which is followed by some countries he said that it will surely impact the growth performance of India. 

CEA expressed his concern that India might lose the biggest export market of the world and is going to be a victim of trade diversion, as negotiations of big countries for preferential trade agreements is increasing, where US is close to competing agreement with a number of Asian countries and the European Union. Also, China which is going to be a part of trans-Atlantic trade agreement is a real risk for India to get excluded from the biggest market of the world. Non tariff barriers can also be disadvantageous for India and these are a huge challenge for the external trade environment which should be taken care of.

Further CEA said that India should have a competitive exchange rate where we have to upgrade local infrastructure which will boost exports growth and also added that the government's Make in India initiative will help to strengthen the economy.

The CNX Nifty ended at 8341.20, down by 19.80 points or 0.24% after trading in a range of 8321.75 and 8397.40. There were 22 stocks on gainers side against 28 stocks on the losers’ side on the index.(Provisional)

The top gainers on Nifty were PNB up by 5.44%, BHEL up by 2.56%, NTPC up by 2.35%, Kotak Mahindra Bank up by 2.29% and Yes Bank up by 1.61%. On the flip side, NMDC down by 4.74%, Hero MotoCorp down by 3.07%, Asian Paints down by 2.93%, HDFC down by 2.69% and Dr. Reddys Lab down by 2.52% were the top losers.(Provisional)

European markets were trading in green, France’s CAC gained 57.7 points or 1.17% to 4,985.30, UK’s FTSE 100 was higher by 62.12 points or 0.95% to 6,567.25 and Germany’s DAX increased by 150.64 points or 1.36% to 11,207.04.

Asian markets closed mostly in red on Tuesday, on heightened fears about the financial stability of the world’s second biggest economy. The wild volatility in China’s markets has stoked fears among global investors about the broader health of the Chinese economy, and sent Asian investors scurrying for safe-haven assets such as government bonds and the Japanese yen. China’s top economic planning agency stated that the economy still faces downward pressure and growth momentum is insufficient. For the first six months, China reported a growth rate of 7 percent, in line with Beijing’s full-year target. But a stock market plunge since June has fueled concerns about the health of the economy. China’s central bank stated that stable financial markets are expected to continue supporting steady gains in the real economy. Standard & Poor’s Ratings kept Malaysia’s long-term foreign currency sovereign credit rating at ‘A-‘, with a stable outlook, saying allegations of graft involving debt-laden state fund 1Malaysia Development Berhad (1MDB) will not impede policymaking. The agency also added that it does not see the decline in energy prices affecting Malaysia’s long-term fiscal consolidation. Japan’s Corporate Services Price Index (CSPI) fell to a seasonally adjusted annual rate of 0.4%, from 0.6% in the preceding month.