Post Session: Quick Review

Depicting the true nature of the final session of the F&O series expiry, the Indian markets showed a volatile trend on Thursday, but finally managed to post modest gains. Earlier the start was on a somber note under the influence of weak global cues, the benchmarks after initial decline continued moving in a range with some attempts of recovery, though there was not much supportive cue that could have helped the markets in recovering ground. Also, there was some concern with a World Bank report terming India’s urbanisation as “messy and hidden” and calling for initiatives at the policy and institutional level to tap the economic potential it offers. The World Bank said there has been difficulty in dealing with pressures that increased urban populations put on basic services, infrastructure, land, housing and environment. However, markets held a tight range amid hopes that the Reserve Bank of India will cut interest rates for the fourth time this year in its upcoming policy review, as falling energy prices have cooled inflation and the economy has slowed despite all government measures.

The Asian markets made a mixed closing and while the Chinese market ended higher, the Japanese market suffered sharp plunge coming after a long holiday, as the yen advanced against most major peers as stocks retreated with US index futures before a Thursday speech by Janet Yellen. The European markets broadly made a lower start on Thursday, as investors remained cautious ahead of a report on Germany's business climate and as European Central Bank President Mario Draghi's comments made yesterday continued to weigh.

Back home, the markets started recovering in the second half supported by short covering ahead of the September F&O series expiry, though the series ended with loss of about a percent for the major benchmarks the midcap performed worst. However, for the day, while the bluechips witnessed selective buying the broader markets remained in fine fettle from the very beginning and maintained the momentum till last. Traders drew some comfort with Economic Affairs Secretary Shaktikanta Das’ statement, who while expressing optimism that the growth in the current fiscal will exceed 7.5 percent, said that the government will not wait for the Budget and will continue with reforms measures to make India an attractive investment destination. There was also some support to the markets with RBI proposing to allow domestic companies to borrow money from pension funds; sovereign wealth funds (SWFs) and insurance funds as part of the ECBs, in order to encourage overseas funding. The auto sector that were under a bit somber mood in a spillover effect of the Volkswagen issue, showed some upmove after Union Minister Nitin Gadkari said that the government is watching the developments related to emission cheating scandal involving Volkswagen in the US but the issue is not a concern right now. In non sectoral gauges, most of the port sector stock ended lower despite the government reporting a 8.7 percent increase in revenue generation from 12 major ports in the country during 2014-15, and stating that the trend showed a reversal in performance of the shipping industry's sub-segment. Furthermore, the government has set a target to generate a net profit of Rs 2,500 crore from the 12 major ports in the next two years. Gujarat Pipvav Port was down by over 2%, Adani Port lost over 3% and Essar Port too down by about half a percent.

The BSE Sensex ended at 25863.50, up by 40.51 points or 0.16% after trading in a range of 25670.96 and 25949.90. There were 16 stocks on gainers side against 14 stocks on losers side on the index. (Provisional)

The broader indices too made a green close; the BSE Mid cap index was up by 0.22%, while Small cap index gained 0.58%. (Provisional)

The top gaining sectoral indices on the BSE were IT up by 2.02%, Consumer Durables up by 1.98%, TECK up by 1.59%, FMCG up by 0.98%, Realty up by 0.59%, while Metal down by 1.37%, Capital Goods down by 1.13%, PSU down by 0.96%, Oil & Gas down by 0.76%, Bankex down by 0.45% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Lupin up by 3.82%, Infosys up by 2.45%, GAIL India up by 2.00%, ITC up by 1.88% and Bajaj Auto up by 1.77%. On the flip side, ONGC down by 3.66%, Coal India down by 2.76%, Tata Motors down by 2.60%, Tata Steel down by 2.51% and Larsen & Toubro down by 2.20% were the top losers. (Provisional)

Meanwhile, the Reserve Bank of India (RBI), in order to encourage overseas funding has proposed the draft framework on External Commercial Borrowings (ECBs) and placed it on its website for comments/feedback till October 1. ECB has implications for monetary stability as it adds to the country’s overall external debt and future repayment liability. RBI has stated that the basic objective of the extant External Commercial Borrowings (ECB) policy is to supplement domestic capital for creation of capital assets in the country, limited by considerations for capital account management. With this objective in view, the ECB regime has been progressively liberalised over the years, allowing different entities to raise ECB.

Elaborating further, it has said that within the overarching stance of calibrated approach to the capital account liberalisation, an attempt has now been made to replace the ECB policy with a more rational and liberal framework, keeping in view the evolving domestic as well as global macro-economic and financial conditions, challenges faced in external sector management and the experience gained so far in administering the ECB policy.

The draft framework on External Commercial Borrowings (ECBs) has proposed to lower the all-in cost borrowing by 0.50 per cent to ensure that the funds are borrowed from abroad at a reasonable interest rate. According to the draft guidelines, there will only be a small negative list which include stock market operations, real estate activity and purchase of land. They will not be allowed to raise resources through ECBs and rupee denominated borrowing.

RBI has also proposed to expand the list of recognised ECB lenders by including overseas regulated financial entities, pension funds, insurance funds, sovereign wealth funds and similar other long-term investors. It also allowed Indian banks to act as ECB lenders subject to norms and proposed to cap the minimum maturity of ECB up to $50 million at 3 years and 5 years for amount exceeding $50 million. The minimum average maturity for long term ECB should be 10 years. The guidelines also proposed part pre-payment by existing borrower by raising fresh ECBs.

The CNX Nifty ended at 7868.50, up by 22.55 points or 0.29% after trading in a range of 7804.10 and 7894.50. There were 27 stocks in green against 23 stocks in red on the index. (Provisional)

The top gainers on Nifty were Lupin up by 3.59% and Tata Power up by 3.40% and HCL Tech. up by 3.12% and Indusind Bank up by 2.50% and GAIL India up by 2.33%. On the flip side, ONGC down by 4.08%, NMDC down by 3.31%, Coal India down by 2.68%, Tata Steel down by 2.53% and Tata Motors down by 2.43% were the top losers. (Provisional)

European markets were trading in red, Germany’s DAX declined by 67.21 points or 0.7% to 9,545.41, France’s CAC lost 14.32 points or 0.32% to 4,418.51 and UK’s FTSE 100 was down by 12.85 points or 0.21% to 6,019.39.

The Asian markets closed mostly in red on Thursday, after more dour economic news in China and the United States piled pressure on riskier assets. Stock markets at Indonesia, Malaysia and Singapore were closed on account of holiday. China’s central bank raised the ceiling on cross-border yuan fund flows for multinationals via two-way cross-border yuan cash pooling and cut the threshold to conduct the business. The cap on the net inflow was raised to 50 percent of the total shareholders’ equity in the cash pool. The initial ceiling for inflow was 10 percent and there was no limit on outflow. Japanese Prime Minister Shinzo Abe will announce a plan to raise gross domestic product by around 22 percent to 600 trillion Japanese yen ($5 trillion) as he refocuses on the economy after the passage of controversial security bills that eroded his popularity. Abe wants to turn attention back to the faltering economy after last week’s enactment of unpopular bills that could let troops fight overseas for the first time since 1945, a milestone in his push to loosen the limits of the pacifist constitution.  Japan’s All Industries Activity Index rose to a seasonally adjusted 0.2%, from 0.5% in the preceding month whose figure was revised up from 0.3%.