Post Session: Quick Review

Market mayhem came to haunt the Indian equities again, just after a day of break with benchmarks losing another over a percent, giving up more than what they have gained in last session. It was a roller costar ride that started on a negative note and showed sign of recovery towards the mid of the trade when the markets touched their intraday peak, to fell again in red soon after. However, the real drag was witnessed in the final hour when the markets showed a one way slide to close near the day’s low. In early deals traders got some support with the global rating agency Moody’s latest report that it will upgrade India's rating if the government is able to push through reforms, inflation stabilises, regulatory environment improves and infrastructure investment rises. Traders also drew some comfort from Reserve Bank of India Governor Raghuram Rajan’s statement that there is confidence that we are actually quite healthy, last time we did not have the confidence that is the big difference this time. We know this will pass and at some point the market will wake up and at that point start differentiating.

There was mixed global trend, as the US markets faltered again, giving up all the early gains to end lower, as traders remained concerned about developing economies and the outlook for US interest rates. The Asian markets after a good start made a mixed close, with Chinese markets extending its plunge. The market see-sawed in volatile trade after China cut interest rates in a bid to tame worries over the economy, traders remained worried that the fresh rate cuts would not be enough to stabilise the world's second largest economy or halt falls in global equity markets. The European markets made a soft start with major indices in the region resuming declines led by health-care companies and miners.

Back home, the penultimate session of F&O series expiry proved a dismal one as the last hour profit taking forced the markets to make another soft closing, there was no sign of resistance and traders kept booking profit on fear of sell-off aggravating further after another slide in Chinese market. There were lots of sector specific actions, logistics companies remained in lime light on reports that the government may convene a special session for the much debated Goods and Services Tax Bill (GST). The government said that it was prepared to convene the second part of the monsoon session to pass crucial legislation, most importantly the GST. The aviation stocks though showed a mixed trend after Federation of Indian Airlines (FIA), which represents domestic Indian airlines, urged the Government to drop the proposal to scrap the 5/20 rule as it will unsettle the level playing field in the Indian aviation sector and may favour new entrants, established and controlled by foreign airlines. The metal pack too made recovery on reports that India will auction about 20 major iron ore mines this year in its first such sale ever. The IT sector that showed smart recovery on rupee weakness and remained resilience for most part of the day, too gave up and ended in red. The broader markets however made a mixed closing.

There was some buzz from the primary markets too, as the shares of Power Mech Projects, a power infrastructure services company, made a muted debut on the bourses today, in an otherwise volatile market and got listed 6 per cent below the issue price of Rs 640 and finally ended down by over 9% at Rs 585.75 on the BSE. (Provisional)

The BSE Sensex ended at 25714.66, down by 317.72 points or 1.22% after trading in a range of 25657.56 and 26156.61. There were 10 stocks on gainers side against 20 stocks on decliners side on the index. (Provisional)

The broader indices made a mixed closing; the BSE Mid cap index ended down by 0.79%, while Small cap index was up by 0.16%. (Provisional)

The gaining sectoral indices on the BSE were Power up by 1.64%, Metal up by 0.23%, INFRA up by 0.12%, while Bankex down by 1.68%, TECK down by 1.04%, Oil & Gas down by 0.98%, FMCG down by 0.96%, IT down by 0.96% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were BHEL up by 3.79%, Bajaj Auto up by 1.60%, Coal India up by 1.16%, Wipro up by 1.14% and Tata Motors up by 0.68%. On the flip side, Hero MotoCorp down by 4.42%, HDFC down by 3.28%, Mahindra & Mahindra down by 3.18%, SBI down by 2.92% and Bharti Airtel down by 2.87% were the top losers.(Provisional)

Back home, trying to soothe the nerves of the investors after the global rout, the Reserve Bank of India Governor Raghuram Rajan has said that there is confidence that we are actually quite healthy, last time we did not have the confidence that is the big difference this time. We know this will pass and at some point the market will wake up and at that point start differentiating.' He further added that “Based on what I have seen so far there is no strong reason to believe that we are on the verge of another crisis...But we have to be vigilant about some of those fragilities that have built up.'

Talking about the China-led slowdown he said China is a big country and every adverse development has impacts, even as he warned against overburdening central banks to fix struggling economies. He said “There is a lot of uncertainty about what the real numbers are...The numbers have to come out but China is a big country, has become very important to the global economy. Every adverse development across the world affects the rest of the world in some ways.” The devaluation of the Chinese yuan on August 11 sparked a global selloff in equities, commodities and currencies.

RBI governor also acknowledged that his situation was not typical in the current climate because unlike most global economies India still has high inflation at close to 6 percent. Interest rates are also high at 7.25 percent despite having been cut three times this year to try and stimulate growth.

Rajan though said that panic should soon subside, even in the worst environment of the last 50-60 years, during the 2008 crisis, it was a few months after which it turned normal. I have no doubt that we have enough ammunition, reserves, good policies to withstand that.

The CNX Nifty ended at 7789.15, down by 91.55 points or 1.16% after trading in a range of 7777.10 and 7930.05. There were 16 stocks in green against 34 stocks in red on the index. (Provisional)

The top gainers on Nifty were BHEL up by 4.24%, Tata Power up by 3.25%, Cairn India up by 2.46%, Power Grid Corpn. up by 1.98% and Bajaj Auto up by 1.92%. On the flip side, Tech Mahindra down by 4.11%, Hero MotoCorp down by 3.83%, Ambuja Cement down by 3.66%, HDFC down by 3.20% and Bank Of Baroda down by 3.09% were the top losers.(Provisional)

European markets were trading lower, Germany’s DAX lost 164.9 points or 1.63% to 9,963.22, UK’s FTSE 100 lost 91.28 points or 1.5% to 5,990.06 and France’s CAC declined by 77.36 points or 1.69% to 4,487.50.

The Asian markets closed mostly in green on Wednesday, while China’s stock market has fallen again, for the fifth day running, as the market rout continues despite its central bank’s efforts to calm the crisis by cutting interest rates on Tuesday. The People’s Bank of China cut its benchmark interest rate and lowered the amount of cash banks are required to hold, as Beijing steps up efforts to support a stock market rout and a deepening economic slowdown. The People’s Bank of China cut the one-year lending rate to 4.6% from 4.85% effective Wednesday. China’s central bank also reduced its reserve requirement ratio by 0.5%, with that requirement effective on September 6. China’s central bank injected 140 billion yuan ($21.8 billion) into the interbank money market via short-term liquidity operations (SLOs). The loans, which mature in six days, have an average interest rate of 2.3%. The PBOC launched SLOs in 2013 to supplement its other monetary policy tools. The facility is mainly used to provide one- to three-day direct lines of credit to commercial banks, though loans with other maturities are occasionally used. The Bank of Korea board member stated that the biggest risk facing South Korea’s economy in the second half of the year is the US Federal Reserve’s pending interest rate hike. The government and the central bank is also preparing responses for future risks, including volatility from economic troubles in China and uncertainties coming out of other emerging market economies. Japan’s corporate services price index rose to a seasonally adjusted annual rate of 0.6%, from 0.4% in the preceding month. Singaporean Industrial Production fell to an annual rate of -6.1%, from -4.0% in the preceding month whose figure was revised up from -4.4%.