Post Session: Quick Review

Indian markets coming out of the gloom finally witnessed a relief rally on Thursday, supported by some encouraging comments and as the global epicenter of the volatility, Chinese market remained calm on holiday due to WWII anniversary. On the domestic front the traders were encouraged with chief economic adviser Arvind Subramanian’s comments that the Indian economy is still expected to grow around 8 percent in the fiscal year to March 2016, after economic growth slowed to 7 percent in the quarter to June. Though, he also warned that deflation is a far greater worry than inflation. Citing the GDP data, the economic advisor said ‘in terms of prices measured by the national income accounts’, we are closer to deflation territory and far, far away from inflation territory. However, International Monetary Fund (IMF) said that near-term growth prospects remain favourable in India despite some still existing macroeconomic imbalances.

The positive global cues too supported the local markets, while the US markets rallied overnight on getting some upbeat economic data, the Asian markets followed the trend, rising for the first time this week, as a two-day holiday in Chinese markets gave investors respite from the volatility it has induced for last some time. Japanese market moved higher on weakness in the yen. The European markets too made a strong start and rallied over a percent in early deals. Meanwhile, Sweden’s central bank kept its benchmark interest rate unchanged at a record low amid signs the unprecedented monetary stimulus is helping steer the country out of a deflationary trap.

Back home, markets witnessed a strong relief rally, which strengthened in the second half supported by the positive start of the European counterparts. Traders also got some support with CBDT circular asking its fields officers to keep in abeyance pending MAT assessments and not to recover any outstanding demand. Earlier the government accepted the recommendations of an expert committee formed to study MAT to exempt foreign funds from tax on profits earned before April 1, 2015. On the same time there was hope of more liquidity coming to the markets on reports that after EPFO, smaller pension funds too are likely to invest in stocks, as Coal Miners Pension Fund, Seamen's Provident Fund Organisation, Assam Tea Planters' Fund, Jammu & Kashmir employees' pension fund and several other such funds are now talking to Sebi for investing in stocks. Though, there was some cautious in late trade too, as the Monsoon rains are likely to be below the prior forecast of 88 percent of the long-term average, which could make it the driest year since 2009 and worsen rural distress by cutting farm output. This would be the second straight year of drought - or drought-like conditions for only the fourth time in 115 years. The World Meteorological Organization too has said that the current El Nino weather phenomenon, which leads to dry weather in some parts of the world and causes floods in other, was expected to peak between October and January and could turn into one of the strongest on record. back on street, the broader markets too remained in jubilant mood from the beginning and posted gains of over a percent. On sectoral front while all the sectoral indices posted notable gains, barring few defensive sectors, the realty was the top gainer, up by about 5%, led by DLF on rate cut hopes from RBI when it reviews its monetary policy on September 29.

The BSE Sensex ended at 25774.16, up by 320.60 points or 1.26% after trading in a range of 25555.77 and 25835.41. There were 26 stocks in green against just 4 stocks in red on the index. (Provisional)

The broader indices ended higher in sync with benchmarks; the BSE Mid cap index was up by 1.33%, while Small cap index gained 1.16%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 4.63%, Metal up by 2.26%, Capital Goods up by 2.07%, INFRA up by 1.90% and Power up by 1.88%. (Provisional)

The top gainers on the Sensex were Tata Steel up by 4.39%, HDFC up by 4.30%, Axis Bank up by 4.06%, Vedanta up by 3.78% and Hindalco up by 3.15%. On the flip side, Lupin down by 0.58%, Hero MotoCorp down by 0.57%, Sun Pharma Inds. down by 0.44% and Dr. Reddys Lab down by 0.01% were the losers. (Provisional)

Meanwhile, International Monetary Fund (IMF) in its report ‘Global prospects and policy challenges’, meant for the G20 meeting of finance ministers in Ankara has stated that near-term growth prospects remain favourable in India but some macroeconomic imbalances still exist. The report highlighted that, while the faster-than-expected fall in inflation has created space for considering modest cuts in the nominal policy rate, medium-term inflationary pressures and upside risks to inflation remain.

The report said that in India, domestic demand is accelerating, underpinned by the large positive terms of trade shock (mostly due to collapsing commodity-import prices),' noting that the outlook for emerging economies has weakened in 2015 relative to last year. With balance sheet strains in the corporate and banking sectors, financial sector regulation in India should be enhanced, provisioning increased, and debt recovery strengthened.

IMF report has further stated that in India, the post-election recovery of confidence and lower oil prices offer an opportunity to pursue much-needed structural reforms. It added that in India, which is one of the world's largest commodity importers, growth will benefit from recent policy reforms, a consequent pickup in investment, and lower commodity prices.

The report talking about other countries has said that global growth in the first half of 2015 was lower than in the second half of 2014, reflecting a further slowdown in emerging economies and a weaker recovery in advanced economies. China, growth is expected to decline as excesses in real estate, credit, and investment continue to unwind, with a further moderation in investment growth, especially residential real estate.

The CNX Nifty ended at 7831.25, up by 114.25 points or 1.48% after trading in a range of 7754.05 and 7845.60. There were 44 stocks on gainers side against 6 stocks on decliners’ side on the index. (Provisional)

The top gainers on Nifty were Cairn India up by 5.78%, Tata Steel up by 4.51%, HDFC up by 4.32%, Axis Bank up by 4.16% and Ultratech Cement up by 4.12%. On the flip side, Idea Cellular down by 3.01%, BPCL down by 1.07%, Bosch down by 0.95%, Lupin down by 0.77% and Hero MotoCorp down by 0.71% were the top losers. (Provisional)

European markets were trading higher, France’s CAC gained 58.67 points or 1.29% to 4,613.59, UK’s FTSE 100 was higher by 87.84 points or 1.44% to 6,171.15 and Germany’s DAX surged by 166.7 points or 1.66% to 10,214.75.

The Asian markets closed in green on Thursday while Shanghai Stock Exchange was closed on account of ‘Victory Day’ holiday and Hong Kong Stock Exchange was closed on account of Anniversary day of the victory of war against Japanese. International Monetary Fund (IMF) chief Christine Lagarde stated that Asian economies were doing pretty well despite the volatility created by China’s slowdown and unease on global financial markets. Lagarde added that now the situation is changing yet again, and everyone is feeling the impact of China’s rebalancing and moving to a revised business model. To tackle the bumpy road ahead, she suggested policymakers consider reining in excessive credit growth, adopt tighter fiscal policies, use the exchange rate as a shock absorber, maintain adequate foreign exchange reserves and bolster regulatory oversight of the financial sector. Activity in Singapore factories, including the key electronics sector, shrank for a second straight month in August, indicating sluggish global economic growth hurt the trade-dependent economy. The Singapore Institute of Purchasing & Materials Management’s Purchasing Managers’ Index (PMI) fell to 49.3 from July’s 49.7. South Korean GDP rose to a seasonally adjusted 0.3% compared to the preceding month.