Post Session: Quick Review

Indian markets after showing mostly a steady trade in previous session, witnessed equally volatile trade on Thursday, when the benchmarks after a positive start slipped into red, to bounce back in green again in latter trade, with bouts of profit taking making the trade jittery. The early gains were contributed by Finance Minister Arun Jaitley’s statement expressing confidence of over eight per cent growth rate in the current fiscal year and saying that the Indian economy will boost further with the government taking all effective measures in the financial sector. Jaitley while elaborating the measures taken by the government said the banks, which are suffering due to non-performing assets (NPAs), will be recapitalised to the tune of Rs 1.80 lakh crore in the next five years to ensure their sound health. Though, banking stocks witnessed some profit taking after rallying in last session.

On the global front, while the US markets made a flat closing overnight, the Asian markets ended mostly in red, barring the Japanese market, which was up on yen weakness against dollar. The European markets made a soft start, dragged down by oil shares ahead of the release of Bank of England August interest-rate decision, officials’ votes and new forecasts in London. Meanwhile, German factory orders surged in June in a sign of robust growth in Europe’s economic powerhouse.

Back home,markets bounced back in second half bucking the sluggishness in the global markets, though the trade wasn’t smooth but major benchmarks managed to keep themselves in green till the last, extending their gains to the second straight session. The jubilation got a strong support with retirement fund manager Employees Provident Fund Organisation (EPFO) entering the stock market through exchange-traded funds (ETFs). The retirement fund manager will invest up to 5% or Rs 5,000 crore and Rs 6,000 crore of its incremental corpus in ETFs between 6 August and 31 March 2016. The rupee too strengthened against the US dollar following increased selling of the American currency by exporters amid higher foreign funds inflow. There was some sectoral specific buying that powered the markets, pharmaceutical stocks moved higher after some positive comments from broking community and some upbeat earnings report. Meanwhile, government deferred proposed talks between the Chief negotiators on India-EU Broadbased Investment over EU banning sale of around 700 pharma products clinically tested by GVK Biosciences. The IT pack though came off the day’s high but managed a green close taking cues from the earnings of the US-headquartered Cognizant Technology Solutions, which reported a 6% sequential growth in revenues for the June quarter and also raised its annual guidance. In other sectoral movement, consumer durables, capital goods and auto posted good gains, while FMCG and metal were the top laggard.

The BSE Sensex ended at 28282.39, up by 59.31 points or 0.21% after trading in a range of 28163.69 and 28359.96. There were 17 stocks in green against 12 stocks in red on the index. (Provisional)

The broader indices made a mixed closing; the BSE Mid cap index ended up by 0.40%, while Small cap index lost 0.20%. (Provisional)

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.64%, Capital Goods up by 1.50%, Auto up by 0.62%, Bankex up by 0.48%, IT up by 0.31%, while FMCG down by 1.29%, Metal down by 0.74%, Oil & Gas down by 0.37%, Power down by 0.25%, PSU down by 0.15% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Larsen & Toubro up by 2.59%, Dr. Reddy’s Lab up by 2.00%, Tata Motors up by 1.31%, TCS up by 1.31% and Lupin up by 1.30%. On the flip side, ITC down by 1.94%, Coal India down by 1.69%, Vedanta down by 0.98%, Reliance Industries down by 0.91% and Tata Steel down by 0.76% were the top losers. (Provisional)

Meanwhile, a day after disappointing the street by maintaining status quo on policy rates, Reserve Bank of India (RBI) governor Raghuram Rajan has said the central bank will cut interest rate provided it feels confident that inflation will remain below 6 per cent even after the reduction. He said that “We will cut rate when we see that even after the rate cut, inflation will remain below 6 per cent.”

Rajan said that RBI’s expectation for retail inflation is around 6.1 per cent in January-March, 2016, but it should be actually below that. That is what we are looking for to see how much room we have. He said there is perception among people that inflation is rising because of increase in prices of milk and vegetables, which is “worrying”. RBI tracks CPI, or retail inflation, in deciding its monetary policy action.

The Governor raised a red flag on the sustained hardening of inflation minus the food and fuel elements. Nevertheless, he said that the Reserve Bank was reducing its average inflation projections by 0.2 per cent for the January 2016 to March 2016 period. The risks around the six per cent target were broadly balanced. On growth prospects, Rajan has said the current financial year is expected to end with a growth rate of 7.6%, which is a 'strong growth'.

The Reserve Bank has reduced policy rates by a total of 75 basis points in three tranches since January, though in its Third Bi-monthly Monetary Policy Review, 2015-16, the RBI has maintained a status quo. However, unlike the previous policy statements, the tone of the policy statement this time around was much more dovish as the Governor made it clear that the Reserve Bank was looking for an opportunity to cut rates further.

The CNX Nifty ended at 8587.00, up by 19.05 points or 0.22% after trading in a range of 8551.50 and 8606.30. There were 30 stocks on gainers side against 20 stocks on the losers side on the index. (Provisional)

The top gainers on Nifty were Larsen & Toubro up by 2.94%, Dr. Reddys Lab up by 2.22% and Kotak Mahindra Bank up by 2.03%, PNB up by 1.79% and SBI up by 1.65%. On the flip side, Tech Mahindra down by 3.29%, ITC down by 1.84%, Coal India down by 1.71%, Asian Paints down by 1.20% and Vedanta down by 1.14% were the top losers. (Provisional)

European Markets were trading in red, UK’s FTSE 100 lost 22.3 points or 0.33% to 6,730.11, Germany’s DAX declined by 4.58 points or 0.04% to 11,631.72 and France’s CAC was down by 3.34 points or 0.06% to 5,193.39.

Asian markets, barring Nikkei 225 and Straits Times closed, in red on Thursday. Indonesian Central Bureau of Statistics highlighted that the economy will find it hard to meet the Indonesian government’s expectations for 5.2 percent growth this year. Earlier, the statistics bureau (BPS) reported that Southeast Asia’s largest economy expanded 4.67 percent in April-June from a year ago. South Korea’s president called for major surgery on the economy, which faces slowing growth and increasing challenges as she approaches the half-way point of her single five-year term. Park Geun-hye, whose popularity has dipped below 40 percent, has fallen short on pledges to breathe fresh momentum into Asia’s fourth-largest economy and seen her push for labor market reforms and job creation sputter. South Korea’s economy recorded its weakest growth in six years in the second quarter, battered by a deadly outbreak of Middle East Respiratory Syndrome (MERS) and poor exports, prompting the government to scramble to put together a stimulus package with a supplementary budget. Thai consumer confidence fell to a 14-month low in July, dented by slow economic growth, contracting exports and low commodity prices. The consumer confidence index of the University of the Thai Chamber of Commerce dropped to 73.4 in July from 74.4 in June, its seventh consecutive monthly decline. The reading was the lowest since May 2014, when the army seized power to end political unrest. Japan’s index of leading economic indicators rose to a seasonally adjusted 107.2, from 106.2 in the preceding month.