Post Session: Quick Review

Global growth concerns kept haunting the local markets second day running in a row and the benchmark indices despite recovering from the day’s low snapped the session lower by around a percent on rising concerns of a slowdown in China, lingering uncertainty in Greece amid volatility in oil and currency. A survey showed Chinese factories contracted at their fastest pace since the global financial crisis in 2009. Marketmen also got worried with rupee plunging to its two year low near to 66/$ mark, the rupee has fallen 3.5 percent this year till now. Traders paid no heed to Railways Minister Suresh Prabhu’s statement that the Indian economy can double in three years and has the potential of becoming a $20-trillion economy. The minister also asserted that only economic growth was not the agenda; rather the removal of poverty and corruption was also essential.

After the US stocks succumbed to broad selloff, the Asian markets followed the trend that took emerging-market stocks toward their worst week in three years. The weakest Chinese manufacturing data further added to the pressure, China's manufacturing gauge fell to the lowest in more than six years. The preliminary Purchasing Managers’ Index from Caixin Media and Markit Economics was at 47.1 for August, compared to 47.8 in the previous month. The European markets too made a weak start amid mixed economic data from the region. German manufacturing growth unexpectedly accelerated to the fastest pace in more than a year. Its factory Purchasing Managers’ Index advanced to 53.2 in August from 51.8 in July. On the other hand, French manufacturing shrank for a second month in August and services growth weakened.

Back home, markets found it difficult to rebound due to sustained selling by foreign funds and retail investors. There was good recovery attempt in the final hours supported by pharma and FMCG stocks but it could only wipe out a portion of losses suffered in the early trade, as traders remained concerned about the global growth lacking any major cues. There was some support to the markets in last leg of trade on buzz that the Centre will soon firm up its views on the A.P. Shah panel report and is considering giving relief to FII’s regarding MAT, as per the panel’s approval. Banking pack was among the top loser after Finance Minister Arun Jaitley said that NPA levels are unacceptable, adding that it has been partly due to past inaction and changes in some sectors of economy. Though, hoping that the NPA situation will improve in the coming quarters, Jaitley said that an all-out effort has been launched to correct the current 'unacceptable' level of bad loans in the PSU banks. The metals counters too remained under pressure despite the government notifying the setting up of National Mineral Exploration Trust (NMET), which will look into the ways to encourage exploration of mines and minerals in the country. The trust will be headed by the minister of mines.

On the other hand, amid the slump, one sector that kept its head high in green was IT, supported by weak rupee and some gains in sector majors. Though, Infosys that launched Aikido, three enhanced service offerings in Design Thinking, Platforms and Knowledge-Based IT (KBIT), ended just modestly in green paring most of its gains. The company’s these services are aimed at helping clients address a non-disruptive renewal and simplification of their existing landscapes; introduction of new offerings and business models in a dynamic business environment and create a culture of innovation in their organisation. Infosys

The BSE Sensex ended at 27366.07, down by 241.75 points or 0.88% after trading in a range of 27131.44 and 27442.82. There were just 5 stocks in green against 24 stocks in red, while one stock ended unchanged on the index. (Provisional)

The broader indices trading in tandem with the benchmarks ended in red; the BSE Mid cap index was down by 0.89%, while Small cap index down by 0.60%.(Provisional)

The two gaining sectoral indices on the BSE were IT up by 0.37% and FMCG up by 0.11%, while Realty down by 2.55%, Auto down by 2.07%, Capital Goods down by 1.76%, Bankex down by 1.28%, INFRA down by 1.01% were the losing indices on BSE.(Provisional)

The top gainers on the Sensex were Hindalco up by 1.35%, Hindustan Unilever up by 1.31%, Cipla up by 0.71%, Infosys up by 0.69% and Wipro up by 0.21%. On the flip side, Bajaj Auto down by 3.70%, Vedanta down by 3.55%, GAIL India down by 3.29%, Tata Motors down by 2.78% and Bharti Airtel down by 2.46% were the top losers.(Provisional)

Meanwhile, amid the demand of another rate cut at the  next policy review on September 29, Reserve Bank of India (RBI) governor Raghuram Rajan, has said that 'It would be a 'great help' if realty developers sitting on unsold stock bring down prices…Once the prices stabilise, more people will be keen to buy houses.' Governor said that real estate prices need to come down in order to ease lending norms for home loans.

Rajan also said that builders should first bring down prices and clear the stock else easier home loans might keep realty rates high. He added that “I think we need the market to clear. With growing unsold stock, we need to see the ways to do it. Some of it might be by making loans easier, but we also don't want to create a situation where prices stay high at the level, which means demand can't pick up.”

RBI governor’s statement came after SBI chairman Arundhati Bhattacharya proposed that the RBI allow banks to provide home loans below the Base Rate. Such home loan schemes were available five years ago and were then described as “teaser” loans by the regulator. The governor's comments come at a time when unsold housing stocks are at a two-year-high and developers continue to hold on to prices despite a sharp fall in transactions.

Earlier, Rajan had said that Indian economy is showing signs of improvement, adding that a pick up in rural demand would further improve economic growth. He also said that the Reserve Bank of India continues to watch the progress of monsoon to assess the overall impact on inflation as well as global developments

The CNX Nifty ended at 8284.65, down by 88.10 points or 1.05% after trading in a range of 8225.05 and 8322.20. There were 10 stocks on gainers side against 39 stocks on decliners side, while one stock remained unchanged on the index. (Provisional)

The top gainers on Nifty were Hindustan Unilever up by 1.66%, Hindalco up by 1.53%, Ambuja Cement up by 1.12%, Cipla up by 0.93% and Infosys up by 0.82%. On the flip side, Yes Bank down by 4.10%, Bajaj Auto down by 3.80%, Vedanta down by 3.50%, Zee Entertainment down by 3.27% and GAIL India down by 3.22% were the top losers. (Provisional)

European markets were trading in red; UK’s FTSE 100 lost 43.25 points or 0.68% to 6,324.64, France’s CAC declined by 14.55 points or 0.3% to 4,769.00 and Germany’s DAX was lower by 10.65 points or 0.1% to 10,421.54.

The Asian markets closed in red on Friday as fears about the health of the global economy pounded equity markets. Worries of a deepening China economic slowdown intensified after a private survey showed the factory sector shrank at its fastest rate in almost 6-1/2-years in August, hammering global stocks and commodity prices. The gloomy figure sent investors fleeing for cover in gold and bonds, fearing China’s sagging economy would translate into slower global growth and muddy the outlook for the timing of the first US interest rate hike in nearly a decade. The preliminary Caixin/Markit China Manufacturing Purchasing Managers’ Index (PMI) stood at 47.1 in August, down from July’s final 47.8. It was the worst reading since March 2009, in the depths of the global financial crisis, and the sixth straight one below the 50-point level, which separates growth in activity from contraction on a monthly basis. Indonesia’s central bank has changed the auction mechanism of several monetary instruments and offered longer tenures as part of measures to support the shaky rupiah. The change is aimed at absorbing banks’ excess short-term liquidity to prevent its use to speculate against the rupiah. Japan’s trade balance fell to a seasonally adjusted -0.37T, from -0.28T in the preceding month whose figure was revised down from -0.25T.