Post Session: Quick Review

Markets building on the early gains posted strong rally on Wednesday. Fresh positions built up was seen by investors tracking gains in other Asian bourses and overnight rally in US markets ahead of the Federal Reserve’s rate decision this week.  Although the Fed has signalled its plans to lift interest rates in 2015 - which would be its first hike in nearly a decade, but there was optimism that Federal Reserve will leave interest rates unchanged later this week prompted by turbulence in the global financial markets. An interest rate hike in the US could accelerate the selling from foreign investors in Indian markets too along with other emerging markets. Meanwhile, traders completely overlooked the trade data, which showed grim condition of exports, falling for the ninth consecutive month, dipping by 20.66 per cent in August to $21.26 billion on the back of a steep decline in engineering and petroleum shipments. Imports too declined but despite government efforts to clamp down on gold imports, the precious metal imports rose by 140 percent to $4.95 billion in the month, compared to $2.06 billion in August last fiscal.

On the global front, following the rally overnight in the US markets, most of the Asian markets ended in green with the Chinese Shanghai composite surging around 5% on signs of some government buying in late hours. Japanese market too ended in green, though after the market hours Japan's debt ratings were reduced to A+ from AA- by Standard & Poor's.  The European markets too made a strong start extending their last session gains on optimism that Federal Reserve will leave interest rates unchanged. Meanwhile, UK wages grew at their fastest pace in more than six years and the unemployment rate unexpectedly fell.

Back home, markets went for a good relief rally supported by lower level buying in bluechip stocks, though the participation of broader markets was missing today and some volatility too was seen in the final moments that dragged the markets from the highs of the day, as traders lightened positions ahead of the US Federal Reserve rate decision and going for a holiday. Indian markets will remain closed on Thursday on account of a local holiday. Back on street, in early trade markets were supported by the government's decision to consider foreign investments in partly paid shares and warrants eligible instruments under the foreign direct investment policy, bringing greater flexibility in their use to raise capital. Later in the second half some boost came with Cabinet approval of Shyama Prasad Mukherjee RURBAN Mission, allocating Rs 5,142 crore to develop 300 smart village clusters across the country. Also, there was report that the government panel set up to suggest a uniform rate of indirect tax under the GST regime will submit its report by this month-end and the roll out of the reform measure is possible any time next fiscal. On sectoral front, Banking, power, IT and tech stocks were among the outperformers today, while some selling pressure was seen in consumer durable and oil & gas stocks.

The BSE Sensex ended at 25948.02, up by 242.09 points or 0.94% after trading in a range of 25816.50 and 26006.75. There were 25 stocks in green against just 5 stocks in red on the index. (Provisional)

The broader indices underperforming the benchmarks ended in red; the BSE Mid cap index was down by 0.35%, while Small cap index ended lower by 0.52%. (Provisional)

The top gaining sectoral indices on the BSE were Bankex up by 1.35%, Power up by 0.59%, TECK up by 0.51%, IT up by 0.42%, INFRA up by 0.36%, while Consumer Durables down by 1.51%, Oil & Gas down by 0.57%, Capital Goods down by 0.54%, Realty down by 0.35% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Axis Bank up by 2.55%, Bharti Airtel up by 2.50%, Sun Pharma Inds. up by 2.23%, Vedanta up by 2.12% and Hero MotoCorp up by 2.05%. On the flip side, Dr. Reddys Lab down by 0.64%, Larsen & Toubro down by 0.63%, BHEL down by 0.54%, Coal India down by 0.15% and Hindustan Unilever down by 0.09% were the top losers. (Provisional)

Meanwhile, in a bid to encourage banks to carry out better independent credit checks and do more to chase rogue borrowers, the Reserve Bank of India (RBI) is considering a proposal that would limit the number of participants in a single lenders' consortium. The banking regulator is also discussing a few ideas with lenders and ARCs to improve the bad loan management at banks.

RBI deputy governor R Gandhi elaborating the issue said that banks with small exposures assume less responsibility when loans sour. He also pointed that banks with very meager share neither have the incentive nor the information to independently assess a proposal. They typically go by one who has the bigger share.

He further said that the suggestion is to have a regulatory limit on the number of members in a consortium, so that every member will have a serious independent credit appraisal and credit mindset. Though, he added that the proposal could also have drawbacks, as it effectively restricts a bank's freedom.

Bad debts are a major problem for India, as it seeks to tackle $50 billion of bad debt that's slowing credit growth and hampering a broader economic recovery. Gandhi also said that the rate of growth of bad loans of Indian banks in 2011-15 was higher than credit expansion. Gross bad debt of 41 listed banks have jumped to Rs.3.3 lakh crore in June compared to Rs.91,178 crore on March 2011. Apart from regulatory limit on the number of participants in a consortium lending or multiple banking arrangement, proposal of a ready list of financial sector experts which could be referred to if a JLF were to enforce change in management at a defaulting firm is being considered.

The CNX Nifty ended at 7888.15, up by 59.05 points or 0.75% after trading in a range of 7853.30 and 7913.90. There were 37 stocks on gainers side against 13 stocks on losers side on the index. (Provisional)

The top gainers on Nifty were Yes Bank up by 4.22%, Ambuja Cement up by 2.74%, Axis Bank up by 2.47%, Sun Pharma Inds. up by 2.33% and Bharti Airtel up by 2.26%. On the flip side, BPCL down by 1.75%, NMDC down by 1.52%, Bosch down by 1.46%, Asian Paints down by 1.11% and Cairn India down by 0.86% were the top losers. (Provisional)

European markets were trading in green, UK’s FTSE 100 was up by 44.36 points or 0.72% to 6,181.96, Germany’s DAX gained 48.63 points or 0.48% to 10,236.76 and France’s CAC increased by 50.51 points or 1.11% to 4,619.88.

The Asian markets closed mostly in green on Wednesday, with Shanghai Composite halting a two-day slump, as investors returned to the market amid speculation of state-led buying. The Bank of Japan stated that Japanese factory output will remain flat in the current quarter and an expected pick-up in October-December is clouded with uncertainty as shipments to Asia take a hit from China’s slowdown. The cautious assessment underlines a waning conviction among central bank policymakers that Japan’s economy will make a solid rebound in July-September after shrinking in the second quarter. China’s non-financial outbound direct investment (ODI) rose 18.2% year-on-year to 473.4 billion yuan ($74.34 billion) in the first eight months of this year from the same period a year earlier. ODI outflows in August grew 7% from a year earlier to $13.5 billion. The commerce ministry last week stated that the country attracted 525.3 billion yuan or $85.3 billion in foreign direct investment (FDI) in the first eight months of 2015, up 9.2% from a year earlier. FDI inflows in August rose 22% from a year earlier to 54.2 billion yuan or $8.71 billion. Singaporean Unemployment Rate remained unchanged at 2.0% compared with the preceding quarter. KLSE Composite was closed on account of ‘Malaysia Day’ holiday.