Benchmarks end higher amid choppy trade

Bucking the weak global trends, Indian equity benchmarks ended the choppy day of trade with a gain of over one third of a percent on Wednesday. Markets, after a weak opening, make decent recovery in early trade and scaled intraday high to regain their crucial 28,000 (Sensex) and 8,500 (Nifty) levels, but witnessed a choppy trade till last, with benchmarks paring some of the gains by the end. The local markets got major boost with Chinese stocks reversing sharp declines to end higher after the central bank injected more funds into the financial system for a second day in a bid to calm panicky markets.

Sentiments also remained up-beat with Finance Minister Arun Jaitley’s statement, who making a case for interest rate cut has said that that RBI will take note of the declining inflation and take a decision accordingly. Some support also came after the FM asserted that India must completely open up its economy to global investment, except for rare sectors. He said that while macroeconomic indicators like inflation and industrial production were positive, the challenges included slow credit off-take.

On the global front, European counters have made a weak opening with CAC, DAX and FTSE were trading lower in early deals on concern that the selloff in emerging markets is spreading. Meanwhile, the German parliament appeared set to back a third bailout for Greece after Chancellor Angela Merkel lobbied lawmakers in a bid to stem a revolt within her caucus against the aid package. Asian markets ended the Wednesday’s trade mostly in red, though the most significant was the sudden slump in the Chinese market and its subsequent recovery on expectations of fresh government support.

Back home, appreciation in Indian rupee too aided the sentiments. The partially convertible rupee was trading at 65.17 per dollar at the time of equity market closing against the Tuesday’s close of 65.31 on the Interbank Foreign Exchange. Buying in software and pharma counters too aided sentiments. Stocks related to these spaces edged higher on expectations that the weakening rupee would help boost revenues of these export-oriented sectors during the second quarter.

On the flip side, stocks related to metal counter remained under pressure tracking concerns of weak demand from China. Additionally, Coffee stocks that moved higher in last session, witnessed profit taking after the government said there was no “immediate plan” to permit foreign direct investment in the country's coffee and rubber plantation sector.

The NSE’s 50-share broadly followed index Nifty rose by over thirty points to end near the psychological 8,500 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by hundred points to finish above the psychological 27,900 mark. Broader markets too witnessed choppy trade and managed to end slightly in green. The market breadth remained in favor of advances, as there were 1,491 shares on the gaining side against 1,385 shares on the losing side while 123 shares remain unchanged.

Finally, the BSE Sensex surged by 100.10 points or 0.36% to 27931.64, while the CNX Nifty gained 28.60 points or 0.34% to 8495.15.

The BSE Sensex touched a high and a low 28021.39 and 27721.25, respectively. The BSE Mid cap index was up by 0.06%, while Small cap index was up by 0.24%.

The top gaining sectoral indices on the BSE were Healthcare up by 2.63%, Consumer Durables up by 1.39%, IT up by 0.72%, Capital Goods up by 0.51% and Auto up by 0.46%, while Metal down by 1.33%, PSU down by 1.09%, Realty down by 1.01%, Bankex down by 0.46% and Oil & Gas down by 0.11% were the losing indices on BSE.

The top gainers on the Sensex were Sun Pharma up by 4.32%, Lupin up by 2.28%, Wipro up by 2.15%, Hero MotoCorp up by 1.82% and Cipla up by 1.79%. On the flip side, Hindalco down by 3.14%, SBI down by 2.08%, Coal India down by 1.96%, Axis Bank down by 1.13% and NTPC down by 0.94% were the top losers.

Meanwhile, Finance Minister Arun Jaitley has launched two funds by Small Industries Development Bank of India (SIDBI) with total corpus of Rs 12,000 crore for the purpose of funding start-ups in India and to aid small enterprises. The funds include Rs 2,000 crore India Aspiration Fund (IAF) and SIDBI Make in India Loan for Enterprises (SMILE) scheme with an investment of Rs 10,000 crore. Arun Jaitley said that the country is witnessing a start-up revolution and to harness the potential of India’s innovators and entrepreneurs, a vibrant financial ecosystem was essential, where the IAF is intended to play a vital role in this financial ecosystem.

The India Aspiration Fund, a fund-of-funds managed by SIDBI is expected to catalyze tens of thousands of crores of equity investment into start-ups and MSMEs (micro and small enterprises), creating employment for lakhs of people, mostly educated youth, over next four to five years. IAF will have an initial corpus of Rs 2,000 crore and further more money can be infused as per requirement. Further, Life Insurance Corportaion of India (LIC) will be a partner and co-investor in the fund.

The Rs 10,000 crore SIDBI Make in India Loan for Enterprises (SMILE) scheme which was announced in the Budget in February will provide soft loans in the nature of quasi-equity and term loans on relatively soft terms to MSMEs to meet the required debt-equity ratio norm as also for pursuing opportunities of growth by existing MSMEs. The scheme has built-in higher concessional terms for the enterprises promoted by Scheduled castes(SC)/Scheduled tribes(ST), persons with Disabilites (PwD), women and is expected to benefit around 13,000 enterprises with employment of nearly 2 lakh persons.

SIDBI will be providing 15% of the total corpus which will be mobilized by the start-ups through various resources under IAF or fund of funds. Further, SIDBI is going to finance Rs 752 crore to the start-ups which will be further mobilising Rs 8,620 crore under IAF and are expecting to provide Rs 2,000 crore under the scheme which was likely to mobilize fund in future to the tune of Rs 20,000 crore as sanctioned by the MUDRA Bank.

SIDBI chairman and managing director Kshatrapati Shivaji said that they provide loan under the scheme under 2:1 debt-equity ratio. In the near future SIDBI will be providing funds under the scheme to sectors like IT, biotechnology and digital technology.

The CNX Nifty touched a high and low 8520.45 and 8425.95 respectively.

The top gainers on Nifty were Sun Pharma up by 4.30%, ACC up by 4.16%, Lupin up by 3.02%, Wipro up by 2.40% and Cipla up by 1.93%. On the flip side, Hindalco down by 3.09%, SBI down by 2.25%, Coal India down by 1.88%, Bank of Baroda down by 1.83% and PNB down by 1.52% were the top losers.

European Markets were trading in the red; France’s CAC was down by 0.52%, Germany’s DAX was down by 0.91% and UK's FTSE was down by 0.73%.

The Asian markets closed mostly in red on Wednesday as concerns about the impact of the weaker yuan weighed on the market. Asian lenders are seeing their loan books rapidly deteriorate across the region as China’s slowing economy dampens trade and hurts companies that had borrowed heavily from the banks. China has injected nearly $100 billion from its foreign exchange reserves into two policy banks, which lend based on government directives, to help spur the country’s sluggish economy. The injection suggests the central bank is trying to guide funds to go to the real economy, like exports and infrastructure construction. China’s economy, the world’s second-largest, expanded 7.4 percent last year, its weakest since 1990, and has slowed further this year, growing 7.0 percent in each of the first two quarters.  Japan’s export growth slowed in July on reduced shipments of cars and electronics to Asia in a sign that the global demand outlook may be losing its luster. The 7.6 percent annual increase in exports in July was bigger than the median estimate for 5.5 percent annual growth expected, but still slower than June’s robust 9.5 percent year-on-year rise. Slowing export growth in July suggests overseas demand in third quarter may not be strong enough to help Japan’s gross domestic product recover from an annualized 1.6 percent contraction in April-June as exports slumped and consumers cut back spending, raising questions about the need for more official economic stimulus. Japan’s All Industries Activity Index rose to a seasonally adjusted 0.3%, from -0.5% in the preceding month.