Benchmarks stage smart recovery; Sensex regains 26,000 mark

Indian equity benchmarks, despite volatile session, staged splendid performance on Tuesday to recover some of their previous session’s losses, with frontline gauges recapturing their crucial 26,000 (Sensex) and 7,850 (Nifty) levels as investors opted to buy beaten down but fundamentally strong stocks. Markets after a positive start lost their momentum towards the noon deals and entered into red terrain following the slump in Chinese markets, but gradually markets started recovering and managed to end near intraday high levels. Sentiments turned buoyed in second half after the government has said it was considering reconvening Parliament to make another attempt to pass the Goods and Services Tax (GST). The Union Minister, M Venkaiah Naidu, said that government may convene second part of the Monsoon Session to pass key legislations after talking to all the political parties.

Traders also got some support with Finance Minister’s statement that the economy is in a revival phase and hint that it will clock a growth rate in excess of 8 per cent in 2015-16, after the total indirect tax collections during the first four months of the fiscal rose by 37 per cent. Some encouragement also came with the SBI Composite Index’s report that has stated that Country’s manufacturing sector growth improved both in terms of month-on-month as well as yearly basis in August.

Firm opening in European counters too helped sentiment with CAC, DAX and FTSE were trading with a gain of over around four percent in early deals as investors went for value buying after a sharp sell-off in the previous day that saw around 450 billion euros ($520.70 billion) wiped off the value of leading stocks. Asian markets ended mostly in green. Though, Chinese market witnessed selling pressure and ended lower as investors shunned riskier assets on concerns over sluggish economic growth.

Back home, significant recovery in Indian rupee against dollar too aided the sentiments. The partially convertible rupee was trading at 65.95 per dollar in noon deals as against the Monday’s close of 66.64 on the Interbank Foreign Exchange. The beaten down rate sensitive counters like realty and banking too remained in jubilant mood despite RBI governor Rajan reiterated that taming inflation was essential for sustained long-term growth instead of steroids in the form of lower rates, or an easier liquidity position. Additionally, public sector oil marketing companies (OMCs) edged higher after recent sharp sell-off in international crude oil prices.

The NSE’s 50-share broadly followed index Nifty rose by over seventy points and ended above the psychological 7,850 support level, while Bombay Stock Exchange’s Sensitive Index -- Sensex surged by over two hundred and ninety points to finish above the psychological 26,000 mark. Broader markets too were traded with traction and ended the session with a gain of over a percentage point. The market breadth remained in favor of decliners, as there were 1,214 shares on the gaining side against 1,506 shares on the losing side while 108 shares remain unchanged.

Finally, the BSE Sensex surged by 290.82 points or 1.13% to 26032.38, while the CNX Nifty soared by 71.70 points or 0.92% to 7880.70.

The BSE Sensex touched a high and a low 26124.83 and 25298.42, respectively. The BSE Mid cap index was up by 1.99%, while Small cap index was up by 1.01%.

The top gaining sectoral indices on the BSE were Realty up by 6.78%, Metal up by 4.04%, Oil & Gas up by 3.73%, PSU up by 2.54% and Bankex up by 2.52%, while IT down by 0.48% was the losing index on BSE.

The top gainers on the Sensex were Vedanta up by 7.73%, Tata Motors up by 6.30%, Coal India up by 5.23%, ICICI Bank up by 5.06% and Axis Bank up by 4.18%. On the flip side, HDFC down by 1.82%, Maruti Suzuki down by 1.20%, Infosys down by 0.56%, Larsen & Toubro down by 0.48% and TCS down by 0.46% were the top losers.

Meanwhile, Reserve Bank of India while releasing a working group report on compilation of flow of funds (FOF) accounts to assess nature and pace of financial development recommended that the FOF accounts of money market funds (MMFs) and non-MMFs to be compiled and published separately instead of the mutual funds sector which was part of the other financial institutions in the extant FOF accounts. Besides it also recommended that the RBI may examine the possibility of compiling and publishing the FOF accounts on quarterly basis beginning with the financial sector. The data flow into the FOF database will be automated to the possible extent.

The working group report highlighted  that compilation of FOF accounts for Indian economy may be restructured with adoption of five mutually exclusive institutional sectors  including that of non-financial corporations, financial corporations, general government, households and non-profit institutions serving households (NPISHs) and the Rest of the World. It stated that the non-financial corporations' sector would include Non-Government Non-Financial Public and Private Limited Companies, Government Non-Financial Departmental/Non-Departmental Commercial Undertakings, Port Trusts (public and private) and Cooperative Non-Credit Societies.

Further RBI said that the FOF accounts of the provident/pension funds may be compiled separately and comprise non-government provident/ pension funds. However, the central and state government Employees' Provident Fund would be included under the central and state governments sectors, respectively. Moreover, FOF accounts of RBI and insurance companies would continue to be compiled as done at present. Apart from this, RBI has also invited comments and feedback on recommendations of the report by September 15, 2015 by email or by post.

The CNX Nifty touched a high and low 7925.40 and 7667.25 respectively.

The top gainers on Nifty were Yes Bank up by 8.15%, Tata Motors up by 6.89%, Vedanta up by 6.29%, BPCL up by 6.13% and ICICI Bank up by 5.20%. On the flip side, Tata Power down by 6.43%, HDFC down by 1.52%, Power Grid down by 1.45%, HCL down by 1.42% and Ambuja Cement down by 1.25%, were the top losers.

European Markets were trading in the green; France’s CAC was up by 3.76%, Germany’s DAX was up by 3.85% and UK's FTSE was up by 3.24%.

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.