Post Session: Quick Review

The Indian markets amid a volatile day of trade lost some ground on Tuesday, giving up most of the gains of last session. There was rampant profit-booking by investors that aggravated in the final hours despite positive macroeconomic data, dragging the markets lower by over half a percent. Traders overlooked the Consumer price inflation (CPI) data announced late yesterday that showed the retail inflation easing to 3.66 per cent in August from 3.69 per cent in July 2015, there was some concern with food inflation inching up to 2.2 percent in August from 2.15 in the previous month, that may lead RBI think again before going for its fourth rate cut. Sentiment was cautious ahead of the much-anticipated US Fed’s two-day policy meeting starting tomorrow, any rate hike in the US would not only strengthen the dollar but would lead to selling from foreign investors in emerging market stocks. Though, India has said it is prepared to meet any eventuality arising out of the second phase of winding down of monetary stimulus by the world's biggest economy in the aftermath of the 2008 global financial crisis.

On the global front, after a weak closing of the US markets, the Asian indices followed the trend and most of them ended in red led by the Chinese market. However, the Japanese market posted gains of around a percent despite the Bank of Japan (BOJ) refraining from boosting stimulus even after the economy shrank last quarter. BOJ also lowered its view on exports and production and said that it will keep increasing the monetary base at an annual pace of 80 trillion yen. The European markets made a cautious start, though some of the indices in the region have shrugged off the fear of interest rates hike by the US Fed later in the week.

Back home, while the decline in inflation numbers failed to boost market sentiments, there was concern about the monsoon that added pressure to the sentiments. The India Meteorological Department reported that India is headed towards the driest monsoon season for the third time in three decades. Renewing concerns over poor harvest and spike in food inflation, the monsoon rainfall deficit so far has widened to 16 percent. Banking stocks, especially the PSU banks remained under pressure from the beginning after Reserve Bank of India (RBI) Deputy Governor R. Gandhi said there was an “urgent” need for banks to reduce their stressed assets, given the impact on liquidity and capital in the sector. He also said that the RBI had received a proposal to limit the number of banks in a lending consortium as a way to improve recovery of loans. Power sector was unable to get any respite despite the Power and Coal Minister Piyush Goyal coming out with a statement that the Centre is working in collaboration with states to find out a permanent solution to make stress of discoms a 'thing of the past'. He further said the government is committed to finding a permanent solution of the discom problem. Bouts of profit-booking were witnessed in capital goods, metal, auto, banking and consumer durable sectors throughout the trade, while only defensive FMCG managed to close in green. Government imposing provisional safeguard duty of 20 percent on import of certain categories of steel with a view to protect domestic producers from recent surge in inward shipments, too was considered priced in and all the major steel companies suffered sharp profit taking. Tata Steel was down by over 5%, JSW Steel and Vedanta lost over 4%.

The BSE Sensex ended at 25694.72, down by 161.98 points or 0.63% after trading in a range of 25649.37 and 25909.83. There were just 7 stocks in green against 23 stocks in red on the index. (Provisional)

The broader indices too lost their momentum and ended in red; the BSE Mid cap index was down by 0.92%, while Small cap index lost 0.66%. (Provisional)

The lone gaining sectoral index on the BSE was FMCG up by 0.74%, while Metal down by 2.43%, Capital Goods down by 2.33%, Auto down by 1.76%, Consumer Durables down by 1.54%, Bankex down by 1.19% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Sun Pharma Inds. up by 1.15%, ITC up by 1.10%, Hindustan Unilever up by 0.87%, NTPC up by 0.48% and Reliance Industries up by 0.38%. On the flip side, Tata Steel down by 5.30%, Vedanta down by 4.31%, Tata Motors down by 3.82%, Larsen & Toubro down by 3.10% and Hindalco down by 3.05% were the top losers.(Provisional)

Meanwhile, amid the worries of slowing growth, Finance Ministry has assured that India's growth in the current fiscal will exceed 7.5 per cent as there are 'silver linings' in the global financial turmoil, with government committed to ensuring that the country remains a 'bright spot' in the world economy because of various reasons - the twin deficits (CAD and the fiscal deficit) are well in control, and forex reserves are fairly comfortable.

Economic Affairs Secretary Shaktikanta Das has said that the ministry believes that India remains as one of the very few bright spots in the global economy, a view echoed by the IMF as well and this year we are targeting about 7.5 per cent to 8 per cent growth. We are quite confident that upwards of 7.5 per cent is what we can reasonably expect.

He said that there has been some concerns around agriculture sector, but there is some visibility of pick up in rural demand. Besides, increased infrastructure spending and more FDI coming in with global majors like GE and Foxconn investing in India makes a case for better manufacturing output. He also said that there are some concerns with regard to corporate profits having come down and affecting the corporate results and therefore the direct tax collections. But, the indirect tax collections have been very buoyant and the overall budgeted tax numbers will be achieved.

Shaktikanta Das said given the global crisis, India is now focusing on governance reform, strengthening resilience in macro economy so that it can seize the opportunity that the current global situation throws up. Das added that the RBI and the government are monitoring the current account deficit position and will take steps to keep it at manageable levels and the government is committed to continue with reforms, ease of doing business. The Indian economy expanded by 7 per cent in the first quarter (April-June) of current fiscal compared to 7.3 per cent in the same quarter last fiscal.

The CNX Nifty ended at 7818.45, down by 53.80 points or 0.68% after trading in a range of 7799.75 and 7880.00. There were 12 stocks on gainers side against 38 stocks on losers side on the index. (Provisional)

The top gainers on Nifty were Tech Mahindra up by 2.87%, Hindustan Unilever up by 1.24%, Sun Pharma Inds. up by 1.13%, ITC up by 1.08% and Cairn India up by 0.91%. On the flip side, Tata Steel down by 5.48%, Vedanta down by 4.74%, Tata Motors down by 3.59%, Larsen & Toubro down by 3.31% and Hindalco down by 2.99% were the top losers. (Provisional)

European markets were showing a mixed trend, France’s CAC was marginally higher by 1.28 points or 0.03% to 4,519.43, while UK’s FTSE 100 declined by 30.65 points or 0.5% to 6,053.94 and Germany’s DAX lost 17.42 points or 0.17% to 10,114.32.

The Asian markets closed mostly in red on Tuesday, as investors await the outcome of a US Federal Reserve meeting. The Bank of Japan held fire on expanding its unprecedented monetary easing scheme but raised concern that the economy was being dragged by a slowdown key emerging markets, while it was forecast to unveil further measures before too long. BoJ kept its 80 trillion yen ($665 billion) annual asset-buying scheme unchanged, saying in a statement the economy has continued to recover moderately, although exports and production are affected by the slowdown in emerging economies. The decision came despite data showing Japan’s economy shrank 0.3% in the three months to June. The country’s near-zero inflation rate is also far below the BoJ’s 2% target. Indonesia’s trade surplus shrunk to $430 million in August from its revised target of $1.38 billion in July, when shipments to and from Indonesia began to improve. Indonesian exports increased by 11 percent to $12.7 million in August from $11.5 billion July, while imports increased by 22 percent to $12.3 billion per month. However, Indonesia’s cumulative imports fell by 17 percent and exports fell by 12 percent in comparison to the year before, extending the surplus streak for the ninth consecutive month.

China’s new residential property inventory dropped from the previous year for the first time in 54 months in August. Property inventory in 35 cities dropped 1.4 percent year on year and 0.8 percent from July, the sixth consecutive month-on-month decrease. Official data showed sales value of commercial housing in the first eight months went up 15.3 percent year on year. The growth rate was 1.9 percentage points higher than the first seven months, indicating nascent signs of recovery in some cities. China’s property market took a downturn in 2014 due to weak demand and a surplus of unsold homes. The cooling has continued into 2015, with both sale and prices falling and investment slowing. Singaporean Unemployment Rate remained unchanged at 2.0% compared with the preceding quarter.