Post Session: Quick Review

Markets snapped their two days gaining streak on Friday, after a volatile session. Though, the trade never looked confident, with benchmarks moving in and out of the red terrain but the major slide came in the final leg of trade and the bourses which were looking to hold in a tight band, lost their momentum completely, ending down by about a quarter percent. Apart from the cautiousness of US jobs data announcement later in the day, there were some jitters in the markets on Sebi starting crack down on offshore units of major global banks for their suspected role in manipulation of share prices in the Indian stock market. The regulator is closely looking at possible instances where share prices of companies listed in the domestic stock market are being manipulated through offshore centres of foreign banks.

On the global front, after the US markets ended lower, the Asian markets followed the trend and made a mixed closing; though the Chinese stocks rose on speculation the government will take measures to support the market, while the Japanese markets too recovered after the BOJ maintained its unprecedented monetary stimulus. The European markets too made a soft start, declining for a second straight day ahead of the US jobs data to gauge the likelihood of a Federal Reserve rate increase next month. Meanwhile, the German industrial production unexpectedly decreased in June, highlighting the risks for Europe’s largest economy from weaker growth in emerging-market countries.

Back home, markets finally fell in line to the global trend and ended lower, major benchmarks still managing to hold the crucial levels of 28200 (Sensex) and 8550 (Nifty). Trade also remained impacted by some weak earnings numbers especially the industrial-goods makers BHEL, after its net profit fell by 82% to Rs 34 crore in the quarter ended June 30, 2015, as compared to Rs 193 crore in the same quarter of the previous year. Also, banking stocks kept pressurizing the markets from the beginning, even though, there was some good news for banks, as the Reserve Bank of India (RBI) allowed the banks to shift, merge or close all branches except rural branches and sole semi-urban branches at their own discretion. The banks have also been allowed to shift some activities of a branch in any centre due to space or rent constraints without seeking prior approval of the RBI. Traders were concerned as Rajya Sabha got adjourned again with no work amid protests by the opposition parties, though Finance Minister expressed his hopes of meeting GST deadline. The broader markets too lost their way in last and gave up all their gains, while on the sectoral front oil & gas and consumer durable ended in green but most of the sectoral indices ended in red, led by power, metal and banks.

In scrip specific actions, Vedanta shares ended up over 2 per cent on reports that the company will restart mining of iron ore in Goa next week. On the other hand, Jaypee Infratech after a day of surge in its other group company, Jaiprakash Power Venture, slumped over 7 per cent after reporting 43.23 per cent drop in standalone net profit for the quarter ended June 30.

The BSE Sensex ended at 28241.35, down by 56.78 points or 0.20% after trading in a range of 28193.93 and 28335.67. There were 11 stocks in green against 19 stocks in red on the index.(Provisional)

The broader indices despite posing still resistance too gave up and ended modestly in red; the BSE Mid cap index was down by 0.20%, while Small cap index ended lower by 0.10%.(Provisional)

The top gaining sectoral indices on the BSE were Oil & Gas up by 2.10%, Consumer Durables up by 0.43%, FMCG up by 0.06%, IT up by 0.02%, while Power down by 1.41%, Metal down by 1.01%, Bankex down by 0.62%, Capital Goods down by 0.56%, PSU down by 0.33% were the losing indices on BSE.(Provisional)

The top gainers on the Sensex were ONGC up by 4.68%, Tata Motors up by 2.32%, Vedanta up by 1.97%, Hindalco up by 0.83% and Infosys up by 0.69%. On the flip side, BHEL down by 5.39%, Coal India down by 3.80%, SBI down by 2.24%, Bajaj Auto down by 1.45% and NTPC down by 1.22% were the top losers.(Provisional)

Meanwhile, global rating agency, Moody's reacting to the latest government proposal of fund infusion in public sector banks has said that government’s decision to infuse Rs 70,000 crore in PSU banks is a credit positive but “not a game changer” as the amount is relatively small and they will have to access capital from markets to meet their needs.

In its report the rating agency said that front-loading of the capital allocation -- with Rs 50,000 crore of the total Rs 70,000 crore coming in the first two years -- is also credit positive, while the four-year time span offers medium-term visibility regarding the PSU banks' capital positions. The report has said that this represents a key and crucial change compared to the capital allocation policy announced in February of this year. By that policy, only those banks which met specified profitability thresholds would be provided capital.

Moody’s however cautioned that the banks still need access to the equity markets to materially improve their capital levels and pointed that in the recent times the PSU banks have not been able to access capital market which is a “key negative driver of their overall credit profile.” It further said that for their capital position to stop being a negative driver of their credit profile, PSU banks will have to demonstrate access to equity capital markets.

Government recently announced that it would infuse Rs 70,000 crore in the PSU banks in next four years, while the remaining Rs 1.10 lakh crore would be raised from market. As per government's capital infusion plan, Rs 25,000 crore would be infused in 2015-16 and 2016-17 and Rs 10,000 crore each in 2017-18 and 2018-19.

The CNX Nifty ended at 8570.45, down by 18.20 points or 0.21% after trading in a range of 8552.70 and 8595.95. There were 16 on gainers side against 34 stocks on the losers side on the index.(Provisional)

The top gainers on Nifty were ONGC up by 4.21%, Tata Motors up by 2.47%, BPCL up by 2.07%, Vedanta up by 2.05% and Grasim Industries up by 1.49%. On the flip side, BHEL down by 5.49%, Coal India down by 3.70%, SBI down by 2.46%, Bank Of Baroda down by 1.98% and Bosch down by 1.70% were the top losers.(Provisional)

European markets were trading in red, Germany’s DAX declined by 17.72 points or 0.15% to 11,567.38, France’s CAC was down by 6.97 points or 0.13% to 5,185.14 and UK’s FTSE 100 lost 2.99 points or 0.04% to 6,744.10.

The Asian markets closed mostly in red on Friday, while Shanghai Composite closed higher on reports that a government agency and Chinese funds are looking to add billions into the stock market. China’s foreign exchange reserves, the world’s largest, fell by $42.5 billion in July to $3.65 trillion, the sharpest monthly drop since March amid signs of capital outflows. China’s slowing economic growth and jitters over the stock market turmoil may be behind the bout of capital flight. Indonesia’s tax revenue growth stagnated in the first seven months of 2015 amid a slowing economy, fostering expectations that the government will need to expand its budget deficit to finance its ambitious infrastructure programs. The property and automotive sectors are expected to boost the economy in the second half of 2015, after Bank Indonesia decided to loosen the lending requirements for purchases of homes, cars and motorcycles. The central bank, in a bid to step up economic growth, recently reduced the minimum down-payment percentages for cars and motorcycles and increased the maximum loan-to-value (LTV) ratio for people buying their first homes. The central bank estimates the economy will grow in the range of 5 to 5.4 percent this year and between 5.4 percent and 5.8 percent next year. Japan’s index of leading economic indicators rose to a seasonally adjusted 107.2, from 106.2 in the preceding month.