Post Session: Quick Review

Indian markets despite witnessing rounds of volatility managed to recover some of their last session’s losses, though the trading was marred by intermittent profit taking and selling in some specific counters that kept the markets under pressure throughout the day, but finally benchmarks managed a gain of around a percent with Sensex reclaiming 26000 and Nifty 7900 respectively. In early deals while there was some support of rebound in the regional peers, traders also drew solace from economy front after the SBI Composite Index report stated that Country's manufacturing sector growth improved both in terms of month-on-month as well as yearly basis in August. Also, as Moody’s latest report said that a fall in commodity prices, particularly crude oil prices, and tighter fiscal and monetary policies have helped restore India's macro-economic balance over the last two years and this improved balance offers the Indian economy and financial system some resilience to potential volatility in global capital flows in coming months. Traders also got some support from the recovery in rupee, which bounced back from its two years low on dollar selling.

Signs of recovery appeared in the markets after a global rout, though the US markets ended in red overnight after suffering their worst session in years, but were well off the days’ low. The Asian markets too followed the trend and made mostly a positive start, though by the end, while the Taiwanese market outperformed, the Chinese and the Japanese markets extended their sell-off. Japanese market that once recovered recouping all its losses, plummeted after witnessing its wildest trading range in four years. The European markets made a good start on report of German business confidence unexpectedly rebounding in August as companies brushed off concerns that China’s slowing economy will drag on global growth.

Back home, more or less it was good day of trading for the markets and traders went for value buying and short covering after historic fall of last session. Benchmarks after a good start lost their momentum towards the noon and suffered sharp selling that dragged them considerably lower and it looked that Indian markets following the extension of Chinese slump too will decline further, but gradually markets started recovering and towards the end were near to their day’s high. Traders got some confidence with Finance Minister Arun Jaitley stating that Prime Minister Narendra Modi remains confident that the country’s economy will remain stable despite a global financial decline triggered by China that caused the global mayhem. Jaitley said Modi planned to continue his reform agenda and increase public spending, saying that the problem was “external and not internal.” Though, all the sectoral indices recovered, IT was the only one that looked in a bit somber mood after the sign of rupee strengthening against dollar. The beaten down rate sensitives too were in jubilant mood and realty and banking kept the spirit high of the markets despite RBI governor Rajan reiterating that taming inflation was essential for sustained long-term growth instead of steroids in the form of lower rates, or an easier liquidity position. He said that India was in better shape than most and that he would not commit the mistakes of other central banks in looking to prop up markets. Back on street, the broader markets too showed smart recovery and the midcaps even outperformed the benchmarks.

The BSE Sensex ended at 26086.69, up by 345.13 points or 1.34% after trading in a range of 25298.42 and 26124.83. There were 24 stocks in green against 6 stocks in red on the index. (Provisional)

The broader indices too made a good bounce back; the BSE Mid cap index surged by 2.19%, while Small cap index gained 1.22%. (Provisional)

The gaining sectoral indices on the BSE were Realty up by 6.66%, Metal up by 4.30%, Oil & Gas up by 4.21%, PSU up by 2.83%, Bankex up by 2.63%, while IT down by 0.34% was the lone losing index on BSE. (Provisional)

The top gainers on the Sensex were Vedanta up by 7.73%, Tata Motors up by 6.41%, Coal India up by 5.35%, ICICI Bank up by 5.11% and Axis Bank up by 4.85%. On the flip side, HDFC down by 1.61%, Maruti Suzuki down by 1.12%, Infosys down by 0.70%, TCS down by 0.61% and Hero MotoCorp down by 0.34% were the top losers. (Provisional)

Meanwhile, adding some cheers to the manufacturing sector, the report of the SBI Composite Index has stated that country's manufacturing sector growth improved both in terms of month-on-month as well as yearly basis in August. The yearly SBI Composite Index, an indicator for manufacturing activity in the country, for August increased to 53.1 from 49.7 in the previous month, while the Monthly Index improved to 52.2 in August from 46.7 in July.

The SBI research report though pointed that mining and electricity are still acting as a drag on the economic activity and the upturn was majorly driven by manufacturing. The pickup in economic momentum was supported by positive trends in capital goods sector. As per the report one of the positive developments is the order inflow of four major companies-BHEL, L&T, ABB and Thermax which grew by 5.5% (y-o-y) in the Jun’15 quarter. Furthermore, the Medium & Small companies in Capital Goods (Electrical & Non-Electrical Equipment) are making some in-roads in topline growth. Also, the recent quarter results (Q1FY16) reveal that the capital goods (electrical equipment) reported profit. Looking ahead, it is expected that growth in order inflow in FY16 would be in the range of 15%-17% largely driven by state utilities.

The research report has further stated that looking ahead, it is expected that growth in order inflow in this fiscal would be in the range of 15-17 percent and this would largely be driven by state utilities. Though, it cautioned that pricing pressure still persists in the system due to excess manufacturing capacity and lower opportunities. The report added that, as the government is taking steps in the right direction in terms of policy action, we believe that execution will pick up from second half of fiscal year 2015-2016.

The SBI Composite Index captures two components of the manufacturing cycle namely month-on-month and year-on-year growth on a scale of 0 to 100. An index value of 42 to 46 means (moderate decline), 46 to 50 (low decline), 50 to 52 (low growth), while 52 to 55 means (moderate growth) and above 55 high growth.

The CNX Nifty finally ended at 7901.30, up by 92.30 points or 1.18% after trading in a range of 7667.25 and 7925.40. There were 37 stocks on gainers side against 13 stocks on losers side on the index. (Provisional)

The top gainers on Nifty were Yes Bank up by 8.47%, Tata Motors up by 7.06%, Vedanta up by 6.66%, BPCL up by 5.91% and ICICI Bank up by 5.22%. On the flip side, Tata Power down by 6.59%, Ambuja Cement down by 1.96%, HDFC down by 1.71%, HCL Tech. down by 1.43% and Power Grid Corpn. down by 1.22% were the top losers. (Provisional)

European markets were trading in green, France’s CAC was up by 142.52 points or 3.25% to 4,525.98, UK’s FTSE 100 gained 163.7 points or 2.78% to 6,062.57 and Germany’s DAX surged by 293.84 points or 3.05% to 9,942.27.

The Asian markets closed mostly in green on Tuesday, while China stocks ended sharply lower extending a selloff that has unnerved investors around the globe. Japan’s finance minister warned over the yen’s rapid rise after the dollar plunged to a seven-month low against the unit on fears over China’s economy and global growth. A bloodbath on global equity markets driven by fears over a slowdown in China - and the broader impact on the global economy - pushed traders into the yen, which is seen as a safe haven in times of turmoil. Indonesia’s central bank is strengthening steps to stabilize the rupiah and is intervening in large amount in the foreign exchange and government bond markets. The deputy governor of Bank Indonesia stated that the central bank is coordinating with the state enterprises ministry for share buybacks and with the finance ministry to buy government bonds in the secondary market. Indonesia stepped up efforts to protect its battered financial markets from global volatility, imposing new daily limits on how much shares can fall and organizing a concerted share buyback program. Malaysian Unemployment Rate remained unchanged at a seasonally adjusted 3.1%. Taiwanese Industrial Production fell to a seasonally adjusted annual rate of -2.99%, from -1.35% in the preceding month.