Benchmarks eke out slender gains ahead of RBI policy review

Indian equity benchmarks, extending their winning streak for fourth straight session, managed to eke out slender gains. Earlier, markets after a sluggish start gained momentum and recaptured their crucial 28,200 (Sensex) and 8,550 (Nifty) bastions as sentiments remained up-beat on reports that the seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ Index (PMI)-a composite single-figure indicator of manufacturing performance came at a six-month high of 52.7 in July, from 51.3 in June. Sentiments also remained jubilant after Moody’s said that the Reserve Bank of India (RBI) is likely to cut the benchmark rate by 0.25% in its monetary policy review tomorrow as inflation is likely to remain subdued on the back of average rainfall and lower commodity prices. Meanwhile, infrastructure output grew at a slower pace of 3 percent in June as sectors like coal and steel turned weak while oil and gas production fell -- bolstering the case for faster reforms and further rate cuts by the RBI.

Some support also came with Minister of State for Finance Jayant Sinha’s statement that India is aiming to be among the top 30 countries in the world in terms of ease of doing business from the present 142nd position among 189 nations. However, gains remained capped as investors opted to book some of their profits at higher levels. Traders were concerned about the logjam in the parliament with protests by Opposition members led by the Congress continuing in the Lok Sabha, forcing the adjournment of the House. Rajya Sabha too was adjourned for the day. With nearly half of the Parliament Monsoon Session nearly washed out there is hardly any chance that any important bill will be passed.

On the global front, European counters were trading in green on Monday as strong results from HSBC and Commerzbank offset the impact of weak Chinese economic data, with the reopening of the Greek bourse also in focus. Asian markets ended mostly in red amid jitters about weakening Chinese manufacturing data and the continued decline in commodity prices.

Back home, appreciation in Indian rupee too supported the sentiments. The partially convertible rupee was trading at 64.02 per dollar at the time of equity market closing against its previous close of 64.12 on the Interbank Foreign Exchange, snapping its two-day losing run, on fresh selling of the US currency by exporters amid fall in global crude prices. Buying in state-owned banks too aided the sentiments after the government proposed capital infusion to the tune of nearly Rs 20,000 crore in the next two months to boost their capital base. Earnings too kept influencing the market, with Suzlon Energy increasing over 11% after posting a consolidated net profit of Rs 1,047.41 crore for the June quarter. Also the company reported that its consolidated net Debt (excluding Foreign currency convertible bonds) was down to Rs 7,010 crore from Rs 14,821 crore as of 31st March 2015.

The NSE’s 50-share broadly followed index Nifty rose by over ten points and ended near its psychological 8,550 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by over seventy points to finish near the psychological 28,200 mark. Broader markets too traded with traction throughout the trade and ended the session with a gain of over half a percent. The market breadth remained in favor of advances, as there were 1,797 shares on the gaining side against 1,129 shares on the losing side while 107 shares remain unchanged.

Finally, the BSE Sensex gained 72.50 points or 0.26% to 28187.06, while the CNX Nifty added 10.20 points or 0.12% to 8543.05.

The BSE Sensex touched a high and a low 28263.35 and 28071.37, respectively. The BSE Mid cap index was up by 0.51%, while Small cap index was up by 0.93%.

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.37%, Bankex up by 0.99%, Power up by 0.73%, Auto up by 0.73% and PSU up by 0.51%, while Metal down by 1.08%, IT down by 0.53%, Oil & Gas down by 0.51% and TECK down by 0.28% were the losing indices on BSE.

The top gainers on the Sensex were SBI up by 3.94%, ICICI Bank up by 3.40%, Maruti Suzuki up by 2.29%, Dr. Reddys Lab up by 2.00% and BHEL up by 1.58%. On the flip side, Vedanta down by 2.50%, Mahindra & Mahindra down by 2.04%, Coal India down by 1.96%, Lupin down by 1.93% and HDFC Bank down by 1.49% were the top losers.

Meanwhile, minister of State for Finance Jayant Sinha has said that India is aiming to be among the top 30 countries in the world in terms of ease of doing business, from its current 142nd position among 189 nations in World Bank’s Ease of Doing Business 2015 report.

Sinha said that the government is taking various initiatives, including e-biz portal, Goods and Services Tax, mobile platform for setting up business, and is working with states to improve ease of doing business. He also highlighted that India is already on a growth path and should aim to become a $4-5 trillion economy in near future from the current $2 trillion economy.

Recently, a team from the World Bank Group had visited India to collect data and information for Doing Business Report, 2016. The two member mission of World Bank had reviewed metrics relating to ease of doing business in India. Currently at 142nd place India with the exception of two parameters (Getting credit and Protecting minority investors), does not feature in the top 100 in the remaining parameters. Instead for metrics such as ‘dealing with construction permits’ and ‘enforcing contracts’ parameters, India ranks in the bottom 10 economies as per the ranking. Government on its part highlighted measures including removal of minimum paid-up capital requirement for companies, only three documents required for exports and imports, removal of requirement of filing declaration of commencement for companies among others.

The CNX Nifty touched a high and low 8563.95 and 8508.10 respectively.

The top gainers on Nifty were SBI up by 4.15%, Bank of Baroda up by 4.11%, ICICI Bank up by 3.26%, PNB up by 2.65% and Bosch up by 2.55%. On the flip side, HCL down by 5.63%, Vedanta down by 2.53%, BPCL down by 1.92%, Lupin down by 1.87% and Mahindra & Mahindra down by 1.55% were the top losers.

European Markets were mostly trading in the green; France’s CAC was up by 0.50%, Germany’s DAX was up by 0.35% while UK's FTSE was down by 0.03%.

Asian markets closed mostly in red on Monday following disappointing Chinese manufacturing data and a continued slide in commodity prices. Headwinds for the world’s second-biggest economy intensified at the start of the third quarter, with manufacturing conditions in China deteriorating to their worst in two years in July and triggering fresh slides in global commodity prices. Chinese Manufacturing PMI fell to 50.0, from 50.2 in the preceding month. Similar business activity surveys for Taiwan, South Korea and Indonesia - all heavily reliant on Chinese demand - reflected varying degrees of weakness that is clouding hopes for a convincing global recovery in the second half of the year. China’s central bank injected 292.9 billion yuan ($47.2 billion) into banks in July to boost lending, in yet another step to bolster growth in China’s cooling economy. South Korea posted a record current account surplus for the first half of this year as slumping oil prices helped offset the impact of shrinking exports. The current account is the broadest measure of foreign trade in goods and services. It showed an unprecedented surplus of $52.4 billion in the six months to June. Indonesian Inflation remained unchanged at a seasonally adjusted 7.26% compared to the preceding month. Thai CPI rose to a seasonally adjusted annual rate of -1.05%, from -1.07% in the preceding month.