Post Session: Quick Review

Markets coming out of their choppiness of last session, showed a one way surge on Friday to snap the week on an extremely high note led by broad based rally. Traders were encouraged by Finance minister Arun Jaitley’s statement that the Cabinet committee on political affairs chose not to prorogue Parliament, keeping the door open for both Houses to meet at short notice before the winter session begins in November. His statement raised the hopes that GST could well see the light of the day, as the government is determined to stick to its implementation timeline of April 2016. Domestic equity markets after a positive start maintained their upward stance till last and Sensex advanced further to reclaim the 28,000-mark and Nifty conquered the 8500 level following the recent slump.
 
On the global front, after a flat closing of the US markets, the Asian markets made a mixed closing, though the yuan stabilized as China’s central bank strengthened its currency’s reference rate for the first time since Tuesday’s devaluation, though decline in technology and energy shares weighed on and led some markets to end in red. The European markets made a positive start after Greek legislators approved a bailout package that may unlock as much as 86 billion euros ($96 billion) and help the nation avoid a default next week.

Back home, the markets strengthened further with the annual rate of inflation, based on monthly WPI, coming at -4.05% (provisional) for the month of July, 2015, the record low level and the steepest fall in data going back to 2005. The latest set of numbers followed data earlier this week which showed retail inflation eased in July, which raised hopes for a possible rate cut by RBI. There was short covering rally after the continuous fall of last few sessions amid hopes of rate cuts that led the markets for a triple digit rally amid across the board buying. Traders also got some comfort with the recovery in rupee which has been falling sharply tracking the devaluation of yuan. The rupee erased all early losses to trade higher compared to dollar. The rate sensitives realty, banking and auto were the major gainers of the day.

The rejig by MSCI in its indices, too created some flutter in the markets, while Glenmark Pharma and Indiabulls Housing Finance surged on announcement of being added to the MSCI Emerging Markets Index. Jindal Steel and Power shares after hitting nearly nine-year low of Rs 62.40 in intra-day trade, its lowest level since November 2006, bounced back to end higher by over 3%. The stock will no longer be a part of its India index with effect from August 31, 2015.

The BSE Sensex ended at 28051.36, up by 501.83 points or 1.82% after trading in a range of 27643.20 and 28100.64. There were 28 stocks in green against just 2 stocks in red on the index. (Provisional)

The broader indices performing neck-in-neck to the benchmarks ended with good gains; the BSE Mid cap index surged by 2.29%, while Small cap index gained 1.75%.(Provisional)

The top gaining sectoral indices on the BSE were Realty up by 7.62%, Bankex up by 3.05%, Auto up by 2.41%, INFRA up by 2.18%, Capital Goods up by 1.81%. (Provisional)

The top gainers on the Sensex were Vedanta up by 3.73%, ICICI Bank up by 3.58%, HDFC up by 3.58%, SBI up by 3.30% and Reliance Industries up by 3.25%. On the flip side, Infosys down by 0.98% and Dr. Reddys Lab down by 0.87% were the top losers.(Provisional)

Meanwhile, extending the deflationary trend for the ninth month in a row, the Wholesale prices, as measured by wholesale price inflation (WPI) fell by 4.05 percent in July, much lower than the previous month and against the expectation of some increase, mainly due to weak food and fuel prices and lower global commodity price.

The annual rate of inflation, based on monthly WPI, stood at -4.05% (provisional) for the month of July, 2015 (over July, 2014) as compared to -2.40% (provisional) for the previous month and 5.41% during the corresponding month of the previous year. Build up inflation rate in the financial year so far was 0.80% compared to a build up rate of 2.61% in the corresponding period of the previous year.

The overall Primary Articles index, having weight of 20.12%, declined by 0.5 percent to 247.2 (provisional) from 248.4 (provisional) for the previous month. In the primary article index, the index for ‘Food Articles’ group declined by 0.6 percent to 255.7 (provisional) from 257.3 (provisional) for the previous month. The index for ‘Non-Food Articles’ group declined by 1.3 percent to 215.6 (provisional) from 218.5 (provisional) for the previous month, however the index for ‘Minerals’ group rose by 3.0 percent to 255.9 (provisional) from 248.5 (provisional) for the previous month.

Fuel & Power index having weight 14.91%, declined by 2.0 percent to 187.1 (provisional) from 191.0 (provisional) for the previous month.

Manufactured Products index, having the majority weightage of 64.97% declined by 0.3 percent to 153.7 (provisional) from 154.2 (provisional) for the previous month. Among the manufactured products, Food Products group declined by 0.6 percent, the index for ‘Beverages, Tobacco & Tobacco Products’ group declined by 0.3 percent, the index for ‘Leather & Leather Products’ group declined by 0.7 percent, Non-Metallic Mineral Products group declined by 0.9 percent and index for ‘Basic Metals, Alloys & Metal Products’ group declined by 1.0 percent.

On the other hand, the index for ‘Textiles’ group rose by 0.2 percent, Wood & Wood Products group rose by 0.8 percent, Paper & Paper Products’ group rose by 0.5 percent, Machinery & Machine Tools’ group rose by 0.1 percent and Transport, Equipment & Parts’ group rose by  0.1 percent.

For the month of May, 2015, the final Wholesale Price Index  based on final index stood at -2.20 percent as compared to -2.36 percent (provisional).

After retail inflation falling to multi-year low of 3.78 per cent in July, the shockingly low WPI inflation at -4.05 per cent has raised hopes of another rate cut by the Reserve Bank of India at the September review of the policy. Though, the RBI had hinted at a lower inflation because of the base effect and it expects the retail inflation to rise to over 5 per cent mark towards the end of the year.

The CNX Nifty ended at 8518.90, up by 163.05 points or 1.95% after trading in a range of 8381.20 and 8530.10. There were 47 stocks on gainers side against 3 stocks on decliners side on the index. (Provisional)

The top gainers on Nifty were PNB up by 8.96%, Zee Entertainment up by 4.79%, Yes Bank up by 4.54%, Bank Of Baroda up by 4.33%, Kotak Mahindra Bank up by 3.95%. On the flip side, BPCL down by 1.30%, Dr. Reddys Lab down by 1.02% and Infosys down by 0.82% were the top losers. (Provisional)

European markets after a positive start have given up their early gains and were trading lower, Germany’s DAX declined by 24.79 points or 0.23% to 10,989.84, France’s CAC lost 18.39 points or 0.37% to 4,968.46, while UK’s FTSE 100 was down by 2.19 points or 0.03% to 6,566.14.

The Asian markets closed mixed on Friday, while Shanghai’s benchmark edged up as investors turned bullish after concerns about the yuan’s depreciation eased. Japan now faces a critical stage in its battle to defeat deflation, and is being helped by falling oil prices boosting Japan’s terms of trade and getting the economy nearer its full potential. The Cabinet Office in its annual economic report stated that Japan was making steady progress towards ending deflation, noting that the Bank of Japan’s massive asset purchases had lifted inflation expectations, an important step to creating price stability.  Core consumer inflation has ground to a halt and may fall slightly until around end-September due largely to last year’s oil price collapse, keeping the Bank of Japan under pressure to ease again to achieve its ambitious 2 percent price growth goal. The Cabinet Office echoed the BOJ’s view that cheaper oil prices were positive for the economy, stimulating economic activity. Japan’s annual export growth was expected to slow in July from June’s big gain, suggesting overseas demand may not be enough to help the economy rebound from last quarter’s expected contraction. China’s central bank stated that the gold reserves rose to 53.93 million fine troy ounces by the end of July, up from 53.32 million at end-June. The adjustment in June was the first in more than six years. Malaysian GDP fell to a seasonally adjusted 4.9% compared to 5.6% in the preceding month.