Post Session: Quick Review

Fireworks extended on the Dalal Street with the markets posting another splendid session of trade on Wednesday, encouraged by rally in the other global markets and optimistic statements by the government. Prime Minister’s in a meeting with Indian industry asked them to take risk and invest more, as his government was stepping up investment in infrastructure and improving ease of doing business to attract global investment. Also, the Paris-based think tank Organisation for Economic Cooperation and Development (OECD) said that India is expected to see “firming growth” while the outlook for China continues to deteriorate. Gush of buying was seen from the very beginning, as the markets made a gap-up opening tailing the global markets which surged on hopes of strong stimulus measure from Beijing, the  markets showed mostly a steady trade and ended with decent gains with no sign of any profit taking.

On the global front, the US markets rallied overnight and gave a good lead to the Asian markets amid growing optimism that China will be able to stabilize its financial markets, boosting appetite for riskier assets. While the Chinese market rose for a second day on speculation that authorities will be able to calm market volatility, the Japanese market soared around 8 percent, posting its steepest advance since October 2008. The European markets too followed the trend and made a gap-up opening, surging by around two percent. 

Back home, the short covering continued for the second straight session that took Nifty above its crucial level of 7,800 and Sensex above the 25700 mark, supported by gains in FMCG, IT, auto, banks, metal and power stocks. The breadth of the market too remained strong with BSE midcap and smallcap indices surging over 2 per cent. Traders also drew some comfort with Finance minister Arun Jaitley’s statement that it was important to stay on the path of reform and build momentum to achieve higher economic growth and that he still wants to implement a new goods and services tax (GST) by next April 1, though he also said that there will be no extension of the monsoon session and the government has asked the president to prorogue the session.

Later there were some key policy announcements that boosted the morale further of the markets. Government approved 6% increase in the dearness allowance for the central government employees from 113% to 119% and approved sovereign gold bond scheme, RBI will be issuing gold bonds on behalf of the government. The cabinet also approved the Gold Monetization Scheme, which will enable depositors to earn interest on their gold accounts. There was sudden surge in the telecom stocks after the cabinet approved the spectrum trading guidelines. The decision is aimed to boost availability of frequencies to cellular companies to improve connectivity and address the issue of call drops. Spectrum trading approval also opens up additional source of revenues for other telecom companies. RCom surged by over 11%, Bharti Airtel and Idea Cellular too gained over 2%. Steel stocks too moved higher after Finance Minister Arun Jaitley said that the government is examining more steps to check dumping of steel, a move which will help the industry deal with cheap imports of the metal. JSW Steel was up by over 4%, Tata Steel and SAIL were up by around 5%.

The BSE Sensex ended at 25678.03, up by 360.16 points or 1.42% after trading in a range of 25553.61 and 25820.56. There were 26 stocks in green against 4 stocks in red on the index. (Provisional)

The broader indices too posted good gains; the BSE Mid cap index was up by 1.85%, while Small cap index gained 1.76%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 3.26%, Auto up by 2.85%, Realty up by 2.62%, Power up by 2.20% and Consumer Durables up by 2.07%. (Provisional)

The top gainers on the Sensex were Hindalco up by 7.62%, Vedanta up by 6.63%, NTPC up by 5.59%, Tata Steel up by 4.37% and Tata Motors up by 3.92%. On the flip side, GAIL India down by 0.76%, Sun Pharma Inds down by 0.66%, Wipro down by 0.54% and Hindustan Unilever down by 0.03% were the losers. (Provisional)

Meanwhile, Chief Economic Advisor Arvind Subramanian has said that Indian economy will grow at the highest rate and also remain an attractive investment destination, amid the global financial turmoil. He further stated “Whatever projections you are seeing, as a highest growing country among all the major economies, India will remain a relatively attractive investment destination”.

Outlining the opportunities before India, Subramanian said the country has a lot of untapped potential in many areas including infrastructure. In order to make investment more attractive in this sector, the cost of building infrastructure needs to go down and said that various global companies like Siemens and Foxconn are looking to invest in India.  Further, talking about the problems in China, he said that the slowdown will have less impact on India as the country’s export to China as share of GDP is much less, though some sectors like steel may face challenges as it has excess capacity. Subramanian also stated the impact of declining oil prices will help India to maintain macro-economic stability because oil is a key determinant of inflation, fiscal deficit and current account deficit.

Subramanian further highlighted that in a sense some of these investments are also being used as a hedge against China's slowdown. So for all these reasons India will remain an attractive investment destination and added that the despite global financial turmoil, the challenges are potential opportunity for India going forward. Besides, he asserted that the Prime Minister has clarified that 'this is not a matter of one country taking advantage of another country's performance deteriorating, it is a matter of seeing challenges as opportunity that arise'.

The CNX Nifty ended at 7804.85, up by 116.60 points or 1.52% after trading in a range of 7764.55 and 7846.05. There were 42 stocks on gainers side against 8 stocks on decliners side on the index. (Provisional)

The top gainers on Nifty were NMDC up by 8.21%, Hindalco up by 7.70%, Vedanta up by 6.47%, NTPC up by 5.81% and Tata Steel up by 4.44%. On the flip side, Bosch down by 0.66%, Tech Mahindra down by 0.65%, Sun Pharma Inds down by 0.57%, Power Grid Corpn down by 0.48% and GAIL India down by 0.39% were the top losers. (Provisional)

European markets were trading in an upbeat mood, France’s CAC gained 114.56 points or 2.49% to 4,712.82, UK’s FTSE 100 was up by 118.17 points or 1.92% to 6,264.27 and Germany’s DAX surged by 178.12 points or 1.73% to 10,449.48.

The Asian markets closed in green on Wednesday with Japan’s Nikkei 225 Stock Average rising to its highest level since October 2008 as the rally was triggered by a mix of investors betting that a recent sell-off in stocks was overdone, and the promise of further tax cuts. China’s imports tumbled in August, raising concerns about the health of the world’s second-largest economy and its contribution to global growth. The data will add to the pressure on Beijing policymakers trying to ensure China’s economy avoids a hard landing, though authorities will take some comfort that their efforts to steady the country’s stock markets. Imports dived 13.8 percent from a year earlier, and a tenth consecutive monthly drop, reflecting both lower global commodity prices and sluggish demand. Chinese Trade Balance rose to 60.24B, from 43.03B in the preceding month. China’s economy still faces relatively large downward pressure, the head of the country’s top economic planner stated adding that the largest problem facing the Chinese economy now is industrial overcapacity. Indonesia is set to announce what President Joko Widodo called a massive deregulation package, aimed at luring more investment and supporting a currency that has weakened to 17-year lows. In March, after the rupiah hit its lowest level since 1998, Widodo launched his first policy package which included a plan to impose temporary anti-dumping import duties and waive visa for dozens of countries.  Indonesia’s economic growth in the second quarter dropped to 4.67 percent its slowest since 2009, with prices for commodity and energy exports remaining weak.