Post Session: Quick Review

After a dismal August series, the markets started the September series on a positive note, though there were rounds of volatility, especially in the final hours that took off most of the sheen of the markets, but it still was the extension of solid gains of last session, on widening positions by participants, following the start of the new series and a firming trend at other Asian markets. Earlier the markets made a strong start and started moving higher supported by good value buying on positive global cues, while traders drawing encouragement with the government’s announcement of the ambitious Smart City project kept lapping up the infra stocks, which is hoped to attract investment to boost the economy. Government has announced Rs 48,000 crore for development of 100 Smart cities out of which 98 names were declared and rest two will be nominated in due course.

The global markets remained optimistic about the prospect that a September US rate hike was unlikely and after the US markets extended the rally for the second straight session, the Asian markets followed the trend with the China’s yuan advancing the most since April after the central bank boosted the currency’s reference rate in the biggest increase in five month and injected more liquidity. The European markets though made a cautious start and some of the indices in the region slipped into red, failing to hold their last session’s gains, even though Switzerland unexpectedly avoided a recession last quarter as investment and private consumption helped return the economy to growth. Gross domestic product increased 0.2 percent in the three months through June.

Back home, the markets after a good start and mostly a steady trade following overnight gains on the US markets on strong economic data that buoyed trading sentiments, looked losing momentum in the last leg of trade, when profit taking appeared, especially in the high beta banking pack and both private as well as public sector banks witnessed selling pressure. Traders who were putting bets on hopes that the Reserve Bank of India (RBI) will cut interest rates at its policy meeting on Sept. 29, marking a shift in expectations from earlier expectations, suddenly turned cautious, taking the profit off the table. Weakness in the European markets in early deals seems to have weighed on the domestic market sentiments, amid the weakening rupee, which was down marginally following fresh demand for the US currency from banks and importers on the back of higher dollar overseas. There were lots of sector specific actions and upstream oil & gas companies surged after Crude oil futures rose in Asian trading, adding to their biggest one-day rally in over six years, encouraging local investors to lap up shares of exploration companies. Cairn India ended up by 4 percent, ONGC rose over 5 percent, GAIL gained over 3 percent, Oil India moved up by 3 percent and Reliance Industries too managed a positive close.

The BSE Sensex ended at 26370.63, up by 139.44 points or 0.53% after trading in a range of 26270.17 and 26687.33. There were 20 stocks on gainers side against 10 stocks on decliners side on the index. (Provisional)

The broader indices after a choppy trade made a mixed closing; the BSE Mid cap index was up by 0.23%, while Small cap index declined by 0.05%. (Provisional)

The top gaining sectoral indices on the BSE were TECK up by 1.63%, IT up by 1.37%, INFRA up by 1.31%, Oil & Gas up by 0.98%, Auto up by 0.97%, while Realty down by 0.65%, Consumer Durables down by 0.43%, Bankex down by 0.35% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Vedanta up by 5.43%, ONGC up by 5.31%, Bharti Airtel up by 4.30%, GAIL India up by 3.49% and Bajaj Auto up by 3.46%. On the flip side, Lupin down by 2.29%, Coal India down by 1.55%, Sun Pharma Inds. down by 1.54%, TCS down by 0.60% and Cipla down by 0.36% were the top losers. (Provisional)

Meanwhile, RBI in its Annual Report for 2014-15  has said that uncertainty in the progress and distribution of monsoon, a key factor in performance of the farm sector, continues to be a risk for both growth as well as the inflation outlook. The report said that for the economy, the outlook for growth is improving gradually. Business confidence remains robust, and as the initiatives announced in the Budget to boost infra investments get rolled out, they should crowd in private investment and revive consumer sentiment, especially as inflation ebbs.

The apex bank further said that the government's resolve on fiscal consolidation should propel efforts to reach the target for the gross fiscal deficit for 2015-16 at 3.9 percent. On the revenue side, the report noted a massive uptick (38 per cent till July) in indirect tax collections and maintained that achieving the Budget target is contingent upon a recovery in manufacturing and services sectors.

The report also noted that the proposal to introduce a comprehensive bankruptcy code of global standards by FY16 and replacement of the exiting multiple prior permission procedure for investments by a pre-existing regulatory mechanism is expected to improve the business environment in the country.

RBI citing the areas that require significant changes has named legal and regulatory environment, labour market reforms, tax regimes and administrative environment. The report also cited gaps in distribution networks and deteriorating financials of power discoms which need to be addressed expeditiously for demand to keep pace with the ongoing easing of supply constraints. 

The CNX Nifty ended at 7998.75, up by 49.80 points or 0.63% after trading in a range of 7961.65 and 8091.80. There were 30 stocks in green against 20 stocks in red on the index. (Provisional)

The top gainers on Nifty were Vedanta up by 6.36%, ONGC up by 5.80%, Bharti Airtel up by 4.58%, Zee Entertainment up by 4.45% and HCL Tech. up by 4.31%. On the flip side, BPCL down by 2.17%, Lupin down by 1.99%, Ambuja Cement down by 1.98%, Coal India down by 1.67% and PNB down by 1.61% were the top losers. (Provisional)

European markets were trading mostly in red; UK’s FTSE 100 was up by 9.2 points or 0.15% to 6,201.23, while Germany’s DAX declined by 48.76 points or 0.47% to 10,266.86 and France’s CAC was down by 8.5 points or 0.18% to 4,649.68.

The Asian markets, barring Hang Seng, closed in green on Friday in the final trading day of the week as investors cheered a second day of gains in Chinese and US markets. China’s yuan rose sharply against the dollar with traders citing large transactions by state-owned banks on behalf of the central bank to support the currency. China will increasingly adjust its economic policies in a targeted and timely way. The National Development and Reform Commission stated that it will pay more attention to the challenges faced by the Chinese economy and will work hard to help the country meet its major economic targets for 2015. Japan’s retail sales rose to a seasonally adjusted annual rate of 1.6%, from 0.9% in the preceding month while Japanese Household Spending rose to a seasonally adjusted -0.2%, from -2.0% in the preceding month. The percentage of the total work force that is unemployed and actively seeking employment during the previous month fell to a seasonally adjusted 3.3%, from 3.4% in the preceding month. Japan’s National Core CPI fell to a seasonally adjusted 0.0%, from 0.1% in the preceding month. Tokyo’s Core CPI, which excludes fresh food costs remained unchanged at an annualized rate of -0.1%.