Post Session: Quick Review

Global cues played the spoilsport in the rally mood, halting the rally of the Indian markets after two-days of sharp gains; markets despite a valiant attempt of recovery in the latter part of the trade ended marginally in red on Thursday. BSE Sensex and Nifty after a gap down opening, traded lower for most part of the session on Thursday. Though they managed to recover great lot of ground in end but trade remained volatile and traders lacked conviction to place higher bets. There was some concern in the market with FM Arun Jaitley stating that the government is trying to bring the domestic tax system at par with global standards and will list of possible corporate tax exemptions that would be phased out to help a reduction in the rate from 30% to 25%. The statement came even as he said that the government had laid out a clear roadmap and had substantially put the whole idea of retrospective taxation to rest. Relentless selling from foreign investors in Indian stock markets continued, they sold Indian stocks worth nearly Rs 6,000 crore in the past seven sessions. Also, the met department said that rainfall is 14% deficient so far and the overall monsoon is likely to be 82% against the earlier estimated 88%, it added that El Nino could be a reason of early monsoon withdrawal from various part of the country.

On the global front too there was trend reversal and after a sharp sell-off in the US markets, the Asian indices followed the trend, snapping their two session’s rally amid renewed concern over higher US interest rates and China’s economic slowdown. China’s Consumer Prices grew at fastest pace in a Year, also the producers prices tumbled the most in six years falling for the 42nd straight month. European markets too made a weak start after three-day winning streak amid renewed investor concern about a potential increase in US interest rates after a data on American job openings bolstered the case for higher US interest rates.

Back home, there was some pick-up in the late trade led by the banking stocks that showed a smart bounce back, but that could not wipe all the losses of the markets. The sentiments got a boost with NITI Aayog Vice Chairman Arvind Panagariya stating that RBI has room to cut interest rate by 0.5-1% and that investment sentiment is turning around. He also said that would not write off the possibility of  8% GDP growth rate this year. However, there was some concern in the market with the downgrading of Brazil's sovereign rating by S&P, though it’s not likely to have any major bearing on India, still several Indian companies that have significant exposure to the Brazilian market like United Phosphorous, Torrent Pharma, Glenmark, KEC International, Rallis India, Cadila, Tata Motors, Havells India and TCS remained under pressure. Torrent Pharma was down by around 5%, Glenmark was down by over a percent. ONGC which has high oil stake in the country too lost around 2%.

Banking, metal, realty and capital goods stocks that had outperformed in the previous two sessions, witnessed strong selling pressure in the early trade but buying returned to them in final hours that helped the markets to recover. Auto companies drew some comfort with the industry body SIAM’s report that domestic passenger car sales rose 6.06 per cent to 1,63,093 units in August from 1,53,781 units in the same month a year ago. Total two-wheeler sales in August though was down 2.98 per cent to 13,05,350 units as against 13,45,506 units in the same month last year.

The BSE Sensex ended at 25693.89, down by 25.69 points or 0.10% after trading in a range of 25287.50 and 25702.43. There were 13 stocks in green against 17 stocks in red on the index. (Provisional)

The broader indices made a mixed closing; the BSE Mid cap index was up by 0.98%, while Small cap index ended lower by 0.33%. (Provisional)

The top gaining sectoral indices on the BSE were Capital Goods up by 1.31%, Auto up by 1.09%, Bankex up by 0.48%, FMCG up by 0.21%, Power up by 0.05%, while Consumer Durables down by 1.53%, TECK down by 0.74%, IT down by 0.71%, Metal down by 0.62%, PSU down by 0.47% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Motors up by 2.70%, ICICI Bank up by 1.91%, Bajaj Auto up by 1.90%, BHEL up by 1.88% and Larsen & Toubro up by 1.87%. On the flip side, Hindalco down by 2.67%, Dr. Reddys Lab down by 1.56%, Wipro down by 1.46%, Hindustan Unilever down by 1.45% and HDFC down by 1.23% were the top losers. (Provisional)

Meanwhile, the government has approved spectrum trading guidelines which will allow telecom players to buy or sell their unutilized spectrum to other operators. This move will improve the quality of services through availability of more spectrum to the telecom operators. Accordingly, for spectrum trading agreements, telecom companies will not require any prior permission from the government but will have to inform 45 days before. The buyer will have to pay 1 per cent trading fee which will be calculated based on market rate or previous auction price whichever is higher.

Under the guidelines if any service provider sells only a part of its spectrum holding in a band, both the buyer and the seller will be required to pay the remaining installments of payment, prorated for the quantum of spectrum held by each of them subsequent to the spectrum trade. Regarding spectrum usage charges (SUC), the seller should clear its SUC and its installment of payment till the effective date of trade. Besides, Spectrum trading will not alter the original validity period of spectrum assignment as applicable to the traded block of spectrum. The seller will clear all his dues prior to entering into any agreement for spectrum trading. Thereafter, any dues recoverable up to the effective date of transfer shall be the liability of the buyer.

A telecom service provider will be allowed to sell the spectrum only after two years from the date of its acquisition through auction or spectrum trading or administratively assigned spectrum converted to tradable spectrum. In case of administratively assigned spectrum converted to tradable spectrum after paying the prescribed market value, the period of two years will be counted from the effective date of assignment of spectrum.

Communications and IT Minister Ravi Shankar Prasad informed that the Cabinet has approved spectrum trading in all the bands and the ownership right will be of government of India. Further, Prasad  said that if it is found during sample checking that the companies are not complying to all the rules in the undertaking, then the government will take strong action and the 'licensee shall not be allowed to trade”. This will also address the non-contiguous spectrum issue and allow telecom operators to offer better services.

The CNX Nifty ended at 7819.30, up by 0.70 points or 0.01% after trading in a range of 7678.50 and 7819.85. There were 23 stocks on gainers side against 27 stocks on decliners’ side on the index. (Provisional)

The top gainers on Nifty were Tata Motors up by 2.93%, Tata Power up by 2.70%, Bosch up by 2.61%, BPCL up by 2.16% and Bajaj Auto up by 2.11%. On the flip side, NMDC down by 3.07%, Hindalco down by 2.80%, HCL Tech. down by 2.65%, Power Grid down by 1.67% and Hindustan Unilever down by 1.49% were the top losers. (Provisional)

European markets were showing mixed trend, Germany’s DAX was up by 11.06 points or 0.11% to 10,314.18, UK’s FTSE 100 declined by 15.53 points or 0.25% to 6,213.48 and France’s CAC was tad lower by 2.67 points or 0.06% to 4,661.92.

The Asian markets barring KLSE Composite and KOSPI Composite closed in red on Thursday. Chinese Premier Li Keqiang stated that change in the world’s second-largest economy is burdened with difficulties and uncertainty, but sought to reassure an international audience that the country does not threaten the global economy. Chinese leaders are overseeing a transition in the country’s growth model from the emphasis on exports and investment that saw it boom to a more sophisticated one in which consumer spending plays the dominant role. China’s manufacturers slashed prices at the fastest rate in six years in August as commodity prices fell and demand cooled, signaling stubborn deflation risks in the economy and adding to expectations for further stimulus measures. The producer price index (PPI) fell 5.9 percent in August from the same period last year, its 42nd consecutive month of decline and the biggest drop since the depths of the global financial crisis in late 2009. The market had expected a decline of 5.5 percent after a drop of 5.4 percent in July. The consumer price index (CPI) rose 2 percent from a year earlier to a one-year high, but the gain was due largely to soaring food prices, not an improvement in economic activity. Japan’s Corporate Goods Price Index fell to a seasonally adjusted annual rate of -3.6%, from -3.0% in the preceding month.