Post Session: Quick Review

The Indian markets witnessed a smart bounce back on Wednesday, supported by short covering, a day ahead of the F&O series expiry.  Expectations of a rate cut from the Reserve Bank of India also spurred some buying in the markets, while traders got some support with Finance Minister Arun Jaitley’s statement that we have learnt to live in the era of turmoils and the government is focusing on strengthening the country's real economy and harnessing its true growth potential of 8-9 per cent. Earlier, the start of the trade was on a somber note tailing the weak global cues with the markets dragging feet on global growth concern after weak economic data from China. Also, there was some concern with the Thomson Reuters/INSEAD Asian Business Sentiment Index report, stating that business optimism at Asia’s top companies dwindled in the third quarter to near a four-year low, with concern over China's economic health sending sentiment in Singapore to its lowest ever.

Asian markets ended mostly in red and some of the indices suffered cuts of over two percent following an overnight heavy sell-off at US markets and as Chinese manufacturing gauge plunged. The preliminary Purchasing Managers’ Index from Caixin Media and Markit Economics was at 47.0 for September, the lowest level since March 2009. delivered further evidence that the slowdown cited by the Federal Reserve in its decision to hold rates still has further to run. The European markets however showed some sign of bounce back and major indices made a positive start, after the release of mixed manufacturing and service sector activity data from Germany and France. Germany's manufacturing purchasing managers' index fell to 52.5 in September from 53.3 the previous month, while France's manufacturing PMI ticked up to 50.4 this month from 48.3 in August.

Back home, markets after dilly-dallying in first half started moving higher by the noon and gained pace with benchmarks wiping off all their initial losses. Though, it was not a smooth ride for the markets and intermittent profit booking too were seen with traders adjusting their positions ahead of the tomorrow’s series expiry. The final hour even witnessed some profit booking too, but overall it was a fabulous day of trade for the markets, posting gains of over half a percent. Traders took some encouragement with report of country's manufacturing sector growth improving on yearly basis in September. The yearly State Bank of India (SBI) Composite Index, an indicator for manufacturing activity in the country has come in at a four-month high for September and increased to 53.9 from 53.1 in the previous month. SBI report said index growth is expected to be 7.8 per cent year-on-year and -3.2 per cent month-on-month. Back on street, rate sensitives, realty and banking pack were the major gainers on hope of rate cut by RBI in its upcoming policy review, while the metal stocks coming out of the selling pressure too showed smart recovery. Banking stocks were seen in action after the Reserve Bank of India Deputy Governor S.S. Mundra called levels of debt in the domestic corporate sector “a major concern”, while admonishing banks to clean up their bad loans more quickly. There was some buzz in the non sectoral gauge of fertilizers after Road Transport, Highways and Shipping Minister Nitin Gadkari said that India will set up a gas-based urea manufacturing plant at the Chabahar port. Iran has offered to supply natural gas at $2.95 for a urea plant that India will set up at Chabahar port on the Persian Gulf. RCF ended up by over half a percent, Chambal Fertilizers lost over 2%, Coromandel Agro lost around 1% and Zuari Agro was down by about half a percent.

The BSE Sensex ended at 25822.99, up by 171.15 points or 0.67% after trading in a range of 25386.48 and 25934.02. There were 21 stocks on gainers side against 9 stocks on decliners side on the index. (Provisional)

The broader indices too ended in green albeit modestly; the BSE Mid cap index was up by 0.47%, while Small cap index ended higher by 0.71%. (Provisional)

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.70%, Bankex up by 1.46%, Realty up by 1.06%, Oil & Gas up by 1.00%, PSU up by 0.58%, while Power down by 0.31%, TECK down by 0.03% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Lupin up by 3.20%, Mahindra & Mahindra up by 3.13%, Vedanta up by 3.03%, HDFC Bank up by 2.67% and ITC up by 1.71%. On the flip side, Tata Motors down by 1.79%, Bharti Airtel down by 1.52%, BHEL down by 1.31%, Bajaj Auto down by 0.50% and Sun Pharma Inds. down by 0.43% were the top losers. (Provisional)

Meanwhile, presenting a mixed trend the SBI Composite Index, showing country's manufacturing sector growth, improved in September on yearly basis, while its monthly index showed a sharp decline. The yearly SBI Composite Index for September 2015 was at a four month high at 53.9 as compared to last month index of 53.4. However, the Monthly Index declined to 48.4 in September from 53.1 in August. SBI report said index growth is expected to be 7.8 per cent year-on-year and -3.2 per cent month-on-month.

The SBI research report though pointed that mining and electricity are still acting as a drag on the economic activity and the upturn has majorly been driven by manufacturing. The pickup in economic momentum was supported by positive trends in capital goods sector. As per the report positive developments have been seen as the credit growth in some industries like drugs & pharmaceuticals, petrochemicals, basic metals, iron & steel, and the power sector. IIP is also driven majorly by manufacturing (particularly capital goods) as revealed by higher ex-mining and ex-electricity growth.

The SBI research report further stated that it is positive momentum for the road sector to come over the next 18 months or so. The government plans to develop a total of 66,117 km of roads under different programmes, such as the National Highways Development Project (NHDP), Special Accelerated Road Development Programme in North-East (SARDP-NE) and Left Wing Extremism (LWE), and has set an objective of building 30 km of road a day from 2016.

SBI based on its internal loan portfolio and data available in the public domain, has developed a conservative yet forward-looking economic indicator - the SBI Composite Index - for tracking manufacturing activity in the country and aims to forecast the periods of contraction and expansion. The SBI Composite Index captures two components of the manufacturing cycle namely month-on-month and year-on-year growth on a scale of 0 to 100. An index value of 42 to 46 means moderate decline, 46 to 50 low decline, 50 to 52 low growth, while 52 to 55 means moderate growth and above 55 high growth.

The CNX Nifty ended at 7856.95, up by 44.95 points or 0.58% after trading in a range of 7723.25 and 7882.90. There were 30 stocks in green against 20 stocks in red on the index. (Provisional)

The top gainers on Nifty were Cairn India up by 5.01%, Vedanta up by 3.14%, Lupin up by 3.11%, Kotak Mahindra Bank up by 3.00% and BPCL up by 2.52%. On the flip side, NMDC down by 4.01%, Bosch down by 3.27%, Power Grid Corpn down by 1.91%, Tata Motors down by 1.71% and Bharti Airtel down by 1.69% were the top losers. (Provisional)

European markets were trading in green, France’s CAC increased by 44.18 points or 1% to 4,472.69, UK’s FTSE 100 was higher by 75.84 points or 1.28% to 6,011.68 and Germany’s DAX gained 97.05 points or 1.01% to 9,667.71.

The Asian markets closed in red on Wednesday, as weak Chinese manufacturing data increase fears about waning global growth. Japan stock exchange was closed on account of ‘Autumn Equinox’ holiday. A preliminary measure of Chinese factory output in September was the lowest since the financial crisis, adding to a parade of weak data that is increasingly eroding hopes that China’s slowdown would stabilize in the second half. The preliminary Caixin China Manufacturing Purchasing Managers’ Index, a gauge of nationwide manufacturing activity, fell to 47.0 in September, compared with a final reading of 47.3 in August. The reading was the lowest since March 2009, when China was grappling with the global financial crisis. China has announced a flurry of infrastructure plans in recent months, browbeaten local officials to spend their full budgets and tried to ease funding constraints for highway, rail and other projects. The infrastructure sub-index of fixed-asset investment data in August grew 19.9% year-over-year in August compared with 16.4% in July. Chinese President Xi Jinping pledged not to push the value of the yuan currency lower just to strengthen Chinese exports.

Indonesia’s House of Representatives’ Commission XI, which oversees the nation’s finance and banking sectors, has agreed to revise down its economic growth and rupiah target for next year, conceding to weaker prospects of global growth. The Commission cut growth target to 5.3% from the initial aim of 5.5% in the 2016 state budget draft, on the back of the unwelcoming global economy, slower demands for export and low commodity prices. Taiwanese Industrial Production fell to a seasonally adjusted annual rate of -5.46%, from -2.99% in the preceding month.