Post Session: Quick Review

Indian markets showed mostly a steady trade on Wednesday, recovering from last session’s disappointment of RBI maintaining status quo in its monetary policy review. Amid across the board buying, benchmarks reclaimed their psychological levels of 28200 (Sensex) and 8550 (Nifty). There were lots of upbeat earnings that give a strong lead to the markets, while traders rejoiced the report of seasonally adjusted Nikkei Services Business Activity Index rising back above the 50.0 no-change mark in July, posting 50.8 from 47.7 in June. For the first time in three months the Services PMI has nudged above the 50 mark that separates growth from contraction. Foreign traders were encouraged on some reports that as per the recommendations of Justice AP Shah-led three-member committee on minimum alternative tax (MAT), foreign investor is not liable to pay MAT prior to April 1, 2015.

On the global front, after a weak ending of the US markets overnight, most of the Asian markets ended in green, though Chinese market resumed its declining streak, as turnover waned and concern grew that government intervention is driving away investors. The European markets made a positive start on growing expectation that the US Federal Reserve will become the first major central bank to raise rates in the current economic cycle, in September. Meanwhile, Business activity in Germany's private sector continued to grow in July as new orders flowed faster.

Back home, market gains were powered by capital inflows by foreign funds and buying by retail investors amid a strong Asian trend. There was mild profit taking in the final hours and the markets pared some of the gains, though it was modest but the state-run banks that have been on a winning streak to a fifth straight day, lost their momentum and ended lower. Shares of sugar companies remained in jubilant mood from the beginning, on report that government is likely to bring in rules to make it compulsory for sugar mills to export millions of tonnes of surplus supplies to support local prices. Dalmia Bharat Sugar, Dwarikesh Sugar, Sakthi Sugar, Bajaj Hindustan and Simbhaoli Sugar Mills, all gained anywhere between 7-13 per cent. On the same time, the market buoyancy kept the pharma stock in upbeat mood, despite US regulator FDA hiking its fees for new generic drug applications by up to 30 per cent to $76,030 from October 1, from $58,730 currently, a move that may hit hard Indian drugmakers, which account for a major chunk of generic medicines sold in that country. On the other hand the fees for facility inspection of foreign companies have been reduced, which may encourage more firms to opt for audit of their facilities by the regulator. There were lots of bluechip stocks that bounced back from their last session’s fall and strengthened the market momentum. Nestle India surged by over 7%, after a FSSAI-approved laboratory of Central Food Technological Research Institute (CFTRI) found Maggi noodles to be in compliance with the country's food safety standards. On the same time Bharti Airtel gained about a percent after the company reported over a 40 per cent jump in consolidated net profit at Rs 1,554.3 crore in the first quarter of the current fiscal.

The BSE Sensex ended at 28202.62, up by 130.69 points or 0.47% after trading in a range of 28135.68 and 28315.71. There were 21 stocks on gainers side against 9 stocks on the losers side on the index.(Provisional)

The broader indices maintain their gains outperformed the benchmarks; the BSE Mid cap index was up by 0.72%, while Small cap index gained 0.92%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 3.45%, IT up by 1.64%, TECK up by 1.40%, FMCG up by 1.37%, Auto up by 0.90%, while Bankex down by 0.31%, PSU down by 0.10% and Consumer Durables down by 0.02% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Bajaj Auto up by 2.68%, Wipro up by 2.66%, Infosys up by 2.35%, Tata Steel up by 2.20% and Lupin up by 2.08%. On the flip side, Tata Motors down by 1.43%, SBI down by 1.13%, Coal India down by 0.91%, ICICI Bank down by 0.91% and Hindalco down by 0.82% were the top losers. (Provisional)

Meanwhile, government showing its seriousness to protect the interests of sugarcane farmers has asked banks to expedite the release of soft loans to millers to pay cane arrears. Recently, Prime Minister Narendra Modi has reviewed the progress with regard to the Rs 6,000 crore incentive package approved by the union government in June 2015 and emphasized that the farmers' interest be kept foremost at all times and issues related to sugar sector be monitored regularly.

Millers have already submitted applications for about Rs 1,400 crore to different banks but loan has been sanctioned only in a couple of cases. To ensure that farmers are paid their dues expeditiously, in the present scheme, banks have to obtain the list of farmers and their bank accounts from millers with details of the extent of cane dues to be paid. The amount released by banks is directly paid into the account of the farmers on behalf of the sugar mills.

In June, cabinet committee on economic affairs (CCEA) had approved the scheme to provide Rs 6,000 crore soft loans to the sugar industry. It had decided to provide one year moratorium on this loan and to bear Rs 600 crore interest subvention. The CCEA had set the precondition that the soft loan will be provided to only those units which clear at least 50% (of dues) before June. Millers had to get these certificates from the cane commissioners in states.

In the past few months, besides the soft loan of Rs 6,000 crore, the government has raised the import duty on sugar from 15 to 40 percent, increased the export subsidy to Rs 4,000 per tonne and raised the level of ethanol blending in petrol to 10 percent. The government also allowed the export of additional 2,095 tons of raw sugar to the US under the tariff rate quota, under which imports there attract a relatively lower customs duty.

The CNX Nifty ended at 8567.05, up by 50.15 points or 0.59% after trading in a range of 8545.85 and 8591.85. There were 35 stocks advancing against 15 stocks declining on the index. (Provisional)

The top gainers on Nifty were Infosys up by 2.78%, Zee Entertainment up by 2.58%, Bajaj Auto up by 2.56%, Wipro up by 2.55% and Lupin up by 2.47%. On the flip side, Bank Of Baroda down by 1.36%, Coal India down by 1.29%, Yes Bank down by 1.27%, SBI down by 1.26% and Tata Motors down by 1.22% were the top losers. (Provisional)

European Markets were trading in green, UK’s FTSE 100 increased by 12.24 points or 0.18% to 6,698.81, France’s CAC gained 52.63 points or 1.03% to 5,164.77 and Germany’s DAX was higher by 125.52 points or 1.1% to 11,581.59.

Asian markets, barring Shanghai Composite, closed in green on Wednesday. An economic adviser to Japan’s Prime Minister stated that he saw no need for the Bank of Japan to deploy additional stimulus to meet its 2% inflation goal next year, warning that it could cause the yen to weaken and prices to overshoot. Etsuro Honda, special adviser to the Cabinet and a leading architect of Prime Minister Shinzo Abe’s reflationary economic policy, added that the next step for the central bank could be to taper its massive asset purchases. Activity in China’s services sector expanded at its fastest pace in 11 months in July, thanks to stronger new business, a welcome development at a time factories in the world’s second largest economy are struggling. The services Purchasing Managers’ Index (PMI) compiled by Caixin/Markit rose to 53.8 from June’s 51.8. The July level is the highest since August 2014 and marks a 12th straight month of expansion. A sub-index measuring new business jumped to 54.0 from June’s 52.2 while the employment sub-index also edged up, indicating increased hiring on stronger new businesses. Indonesian GDP fell to a seasonally adjusted annual rate of 4.67%, from 4.71% in the preceding month. Malaysian Trade Balance rose to 7.98B, from 5.50B in the preceding month. Taiwanese CPI rose to a seasonally adjusted annual rate of 0.66%, from -0.56% in the preceding quarter.