Post Session: Quick Review

The start of the new week brought cheers for the Indian markets and despite some sluggishness in regional peers, the local markets posted good gains of around a percent on Monday, supported by some upbeat macro data.  The market was buoyed by the unexpected rise in index of Industrial production (IIP) and fall in August WPI inflation, which shrank further to -4.95 per cent against -4.05 per cent in July. Markets got a good lead with the data of IIP announced on Friday after market hours. IIP rose by 4.2 per cent in July against 0.9 per cent growth a year ago, supported by good performance of manufacturing and capital goods sectors. On the same time the cooling inflation raised the expectation that the RBI will lower borrowing costs by at least 25 basis points (bps) at its next policy review on September 29. Wholesale Price Index (WPI) inflation remaining in deflation zone for the 10th month in a row came at -4.95% (provisional) for the month of August, 2015, against 3.85% during the corresponding month of the previous year. Traders also got encouragement with Minister of State for Finance Jayant Sinha's statement  that RBI should take into account various factors, including low inflation, while deciding on monetary policy stance. 

On the global front, the Asian markets made a mixed closing with Chinese market turning choppy again and the Shanghai Composite despite paring losses slumped the most in three weeks as data over the weekend added to concern the economic slowdown is deepening. Industrial output missed forecasts, while investment in the first eight months increased at the slowest pace since 2000. The European markets however made a positive start, though investors are gearing up for the Fed's latest policy meeting and interest rate decision late this week.

Back home, the markets recovering from the early hiccups, started moving higher despite intermittent profit taking and gained momentum in the final hours to end near the highest point of the day. It was across the board buying and apart from the blue-chips the broader markets too remained in jubilant mood from the very beginning. There were lots of sector specific actions that provided momentum to the markets, the power sector was buzzing, as the Prime Minister Narendra Modi will be meeting bosses of loss-making electricity utilities later today to debate a rescue package for a sector whose vast debts weigh on the banking system. The metal pack too was seen in action on reports that the government will soon notify a 20 per cent import tax on some hot-rolled steel products. The Directorate General of Safeguards last week recommended the duty for 200 days as it further investigates the issue. Infra sector too was buzzing, as Finance Minister Arun Jaitley promising the fairest tax regime and a stable policy environment, invited US businesses to take advantage of the huge investment opportunity in the infrastructure sector and raise bilateral trade to $500 billion.

The BSE Sensex ended at 25828.51, up by 218.30 points or 0.85% after trading in a range of 25531.07 and 25891.73. There were 27 stocks in green against 3 stocks in red on the index. (Provisional)

The broader indices performed equally well; the BSE Mid cap index surged by 1.20%, while Small cap index gained 0.79%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 2.57%, Power up by 2.41%, Bankex up by 1.78%, PSU up by 1.75%, Realty up by 1.48%, while Consumer Durables down by 0.31% was the lone losing index on the BSE.(Provisional)

The top gainers on the Sensex were NTPC up by 5.15%, Vedanta up by 3.86%, Hindalco up by 3.81%, Tata Steel up by 3.39% and Axis Bank up by 3.05%. On the flip side, Bajaj Auto down by 0.32%, Hero MotoCorp down by 0.02% and Maruti Suzuki down by 0.01% were the top losers. (Provisional)

Worried over the downward trend of the exports and to boost overseas shipments, which has been slowing since last December, the Government is likely to extend the interest subsidy scheme for exporters for the next 3 years. The ministries of commerce and finance are working on the issue and their decision is likely to be sent to Cabinet for approval.

Under the interest subvention scheme, exporters get loans at affordable rates. Loans at subsidised rates would help exporters to boost shipments as the country's exports have been in the negative zone for the past seven months, impacted by global slowdown, high interest rates. Earlier, eight sectors including handicrafts, handlooms, carpets, sports goods, and few engineering products were availing the benefit of this scheme. The scheme of 3 per cent interest subvention ended on March 31, last year. The Federation of Indian Exports Organisation (FIEO) has demanded it to be extended retrospectively from April 2014.

The Commerce Ministry is taking several steps to boost exports, which have been hovering at around $300 billion for the last four financial years. It is involving states in pushing the shipments. Besides, in order to reduce transactions cost for exporters, it has also taken steps towards promoting ease of doing business. High growth in exports would help boost manufacturing activities and overall economic growth.

Impacted by global slowdown, India’s exports contracted for the eighth straight month by 10.3 per cent in July to $23.13 billion, pushing the trade deficit to $12.81 billion. Exports registered a positive growth last was in November, when shipments expanded at a rate of 7.27 per cent.  

The CNX Nifty ended at 7867.85, up by 78.55 points or 1.01% after trading in a range of 7761.85 and 7879.95. There were 43 stocks on gainers side against 6 stocks on the losers side, while one stock remained unchanged on the index.(Provisional)

The top gainers on Nifty were NTPC up by 5.06%, Vedanta up by 4.12%, BPCL up by 3.94%, Hindalco up by 3.81% and Tata Steel up by 3.46%. On the flip side, Cairn India down by 1.58%, Idea Cellular down by 1.04%, Bajaj Auto down by 0.35%, Maruti Suzuki down by 0.13% and TCS down by 0.12% were the top losers. (Provisional)

European markets were trading higher, France’s CAC was up by 9.26 points or 0.2% to 4,557.98, Germany’s DAX gained 20.51 points or 0.2% to 10,144.07 and UK’s FTSE 100 was up by 46.66 points or 0.76% to 6,164.42.

The Asian markets closed mixed on Monday, as traders digested a slew of weak Chinese data released over the weekend and tread cautiously ahead of the Federal Reserve’s policy meeting this week. China’s stocks fell after data suggesting economic growth was running below the 2015 target level of about 7 percent heightened concerns about the health of the economy. The economic concerns offset the impact of plans announced at the weekend to reform the bloated state-owned enterprise sector and produce decisive results by 2020. Underscoring the fragility of China’s financial markets even after some respite last week, currency traders suspected the central bank intervened to prop up the yuan in onshore markets, which wobbled following a report that net capital outflows in the first quarter of the year were more than $100 billion. China has unveiled details of how it would restructure its state-owned enterprises (SOEs), including partial privatization, as data pointed to a cooling in the world’s second-largest economy. Chinese Retail Sales rose to an annual rate of 10.8%, from 10.5% in the preceding month while Chinese Industrial Production rose to 6.1%, from 6.0% in the preceding month. Chinese Fixed Asset Investment fell to a seasonally adjusted 10.9%, from 11.2% in the preceding month.  Japan’s industrial production fell to a seasonally adjusted -0.8%, from -0.6% in the preceding month. Japanese tertiary industry activity index rose to a seasonally adjusted 0.2%, from 0.3% in the preceding month.