Post Session: Quick Review

The Indian markets extended the gains on Friday, after the US Fed left the interest rates unchanged, in the face of jittery financial markets and a global slowdown.  Traders also got some support with Minister of State for Finance Jayant Sinha’s statement that the government is aiming for an 8-10 percent annual economic growth through supply-side measures to increase the capacity of Asia`s third-largest economy rather than risk higher inflation by stimulating demand.Though, there was disappointment too with markets slipping a great deal from the highs of the day, Nifty which was once looking holding firm its 8000 bastion, too lost momentum and ended below it. There was some profit taking in late hours that curtailed the big gains of the market. Earlier the markets made a strong start with  bourses rising on across-the-board buying in taking cues from the regional peers.

On the global front, while the US markets made a mixed closing, the Asian markets ended mostly in green, albeit modestly. Chinese market too moved higher by about half a percent, as new-home price gains in August spread to more cities of the 70 monitored by the government. However, the Japanese markets plunged as the Fed’s decision made the dollar weak against a basket of major currencies, while its dovish stance saw the yen surge with sovereign bonds amid concerns about the global economic outlook. The European markets too made a weak start led by decline in automakers and banks, as the Federal Reserve’s caution regarding the global economic outlook rippled through markets.

Back home, though the markets gave up a major portion of their gains in second half but they still managed to register gains of around a percent, much higher than any of the regional peers. Not only bluechips and high beta stocks but broader markets too performed well in trade for the day. Apart from global developments, traders continued drawing support from statement by top policy makers, addressing bankers and industrialists at an event, Reserve Bank of India Governor Raghuram Rajan said that India appears an island of calm amid turmoil in other countries. He stressed upon the need for implementation of reforms for sustainable growth in Indian economy and said that in this difficult global environment, growth has to be obtained in right way. Markets also drew some encouragement with Finance Minister Arun Jaitley pitching for investment in India, participating in the Singapore Summit he expressed India's commitment to continue with economic reforms and said that the government has several legislations in the pipeline that will be pursued in coming days. Back on street, Realty and banking stocks mainly saw action followed by healthcare, power, PSU, oil&gas and teck sectors. Banking sector was in action following the RBI according “in-principal” approval for 10 small finance banks that will focus on small geographies for operations. Also, the private sector banks remained in action on reports that the government is considering increasing the foreign direct investment (FDI) limit in private banks to 100 percent.

The BSE Sensex ended at 26171.88, up by 207.91 points or 0.80% after trading in a range of 26130.36 and 26471.82. There were 17 stocks in green against 13 stocks in red on the index. (Provisional)

The broader indices too lost their momentum in last leg of trade but managed a positive close; the BSE Mid cap index was up by 0.71%, while Small cap index gained 1.01%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 2.75%, Bankex up by 2.52%, PSU up by 1.41%, Oil & Gas up by 0.99%, INFRA up by 0.81%, while, FMCG down by 0.93%, Consumer Durables down by 0.56%, Capital Goods down by 0.26% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Axis Bank up by 4.53%, ONGC up by 3.82%, Mahindra & Mahindra up by 2.96%, Hero MotoCorp up by 2.63% and Sun Pharma Inds. up by 2.60%. On the flip side, Tata Motors down by 2.63%, Bajaj Auto down by 2.42%, Hindalco down by 1.94%, GAIL India down by 1.61% and ITC down by 1.49% were the top losers. (Provisional)

Back home, ahead of the bimonthly monetary policy review by the Reserve Bank of India (RBI), Deputy Governor Urjit Patel has said that the sustained low inflation over medium- to long-term is necessary to bring down the cost of fund. He said that 'Sustained low inflation... At a low enough level is an important ingredient for making the cost apposite to that particular level of inflation and inflationary expectation.”

He has said that fiscal deficit of both the central and state governments also plays an important role in the cost of capital as they are the largest borrowers. He noted that higher cost of restructuring pushes the cost of capital and RBI is trying to address this issue. He added that 'The higher the cost of restructuring, the higher the cost of debt workout, the more it builds in the cost of capital from the side of the lender, and this is something we are in middle of addressing.”  In addition, he said a competitive, vibrant banking system is important for lowering cost of capital, and a lower taxation too is helpful.

Patel also said that the central bank expects Current Account Deficit (CAD) to be around 1.5 percent of GDP in the current fiscal. For the first quarter ended June, CAD narrowed to 1.2 percent of GDP at $6.2 billion following contraction in trade deficit and higher earnings from services exports.

The CNX ended at 7967.40, up by 68.25 points or 0.86% after trading in a range of 7955.85 and 8055.00. There were 29 stocks on gainers side against 21 stocks on decliners side on the index. (Provisional)

The top gainers on Nifty were Axis Bank up by 5.19%, ONGC up by 4.16%, NMDC up by 4.04%, Kotak Mahindra Bank up by 3.98% and Bank Of Baroda up by 3.94%. On the flip side, Bajaj Auto down by 3.26%, Hindalco down by 2.27%, Tata Motors down by 2.22%, BHEL down by 1.90% and Cipla down by 1.75% were the top losers. (Provisional)

European markets were trading in red, Germany’s DAX lost 205.21 points or 2.01% to 10,024.37, France’s CAC declined by 76.01 points or 1.63% to 4,579.13 and UK’s FTSE 100 was down by 28.94 points or 0.47% to 6,158.05.

The Asian markets closed mostly in green on Friday, following a decision by the US Federal Reserve to keep rates unchanged. The International Monetary Fund warned China to improve its economic data, especially on its growth rate, the subject of continued skepticism about its reliability. The debate over the true strength of the Chinese economy has heated up in recent months on mounting signs of slowdown and heavy turmoil in the Chinese stock markets. The Chinese government regularly reports growth in the world’s second-largest economy at 7% and above, a pace that some experts view as inflated. Some Bank of Japan board members suggested that higher government spending is a key variable in lifting price expectations, according to the minutes of the August meeting released. The minutes noted the certain job categories are commanding higher wages, but that the slowdown in China has weighed on exports and a drag on economic prospects. The central bank stated that weak oil prices continue to have a strong effect on the inflation goal. The BoJ kept policy steady and its asset buying program at 80 trillion yen annually. Japan’s trade balance rose to a seasonally adjusted -0.36T, from -0.38T in the preceding month whose figure was revised down from -0.37T.