Post Session: Quick Review

Indian markets after a resilient trade for most part of the day suffered sharp sell-off in the final hours that dragged the markets lower by around a percent for the day ahead of the RBI policy on Tuesday. Though, expectations are high from RBI governor Raghuram Rajan to deliver a rate cut and a rate cut will surely boost sentiments on the Street, but the market seems to have already priced in a 25 basis points cut and even if that does not materialise, then the markets could correct further from current levels. Earlier, the markets made a positive start, bucking the regional cues where the Asian markets lost ground after Fed chief Janet Yellen said that Fed remains on track to raise rates this year. Traders were also concerned with a survey by the Boston Consulting Group and apex industry chamber Confederation of Indian Industry (CII) stating that at present rate of government’s ambitious ‘Make in India’ initiative, its target of creating 100 million jobs and achieving 25 percent of GDP from manufacturing sector by 2022 may be difficult to meet.

On the global front, while some of the Asian indices remained closed, most of the other ended in red, with reports of biggest drop in China’s industrial-firm profits in almost four years. Profit at Chinese industrial companies plunged 8.8 percent in August from 12 months earlier.  Japanese market was one of the biggest losers as the yen climbed and more than 1,000 companies traded without the right to a dividend. Markets in South Korea, Hong Kong and Taiwan closed for holidays. Later the European markets too made a soft start, though Greece’s new finance minister, Euclid Tsakalotos said that growth will return to the beleaguered European nation.

Back home, while traders eyed Reserve Bank of India’s (RBI’s) bi-monthly policy review, they overlooked Niti Aayog vice-chairman Arvind Panagariya’s statement that the economy is now in a much better shape than before and he backs the idea of aggressive rate cuts. The rate-sensitive stocks such as realty, banking and consumer durables traded higher for most part of the day and while banking gave up all the gains, realty ended higher by over a percent and consumer durables ended with gains of around 3%. There were lots of sector specific actions and sugar stocks surged on report that Indian Sugar Exim Corp. will export 100,000 tonnes of sugar in 2015-16 at loss to boost local prices. Fertilizer companies too showed good upmove on a report that the government is planning $83 million debt waiver for fertilizers and chemicals companies. Fertilizers and Chemicals Travancore surged by over 8%, Rashtriya Chemicals and Fertilisers was up by around 7%, Chambal Fertilisers & Chemicals gained around 3%, Zuari Agro gained around 2%.

There was some scrip specific movements too, Multi Commodity Exchange of India gained around 2%, as the Forward Markets Commission (FMC) was formally merged with the Securities and Exchange Board of India (Sebi). With the commodity derivatives coming under Sebi's jurisdiction, Finance Minister Arun Jaitley said the regulator must ensure that manipulative activities are curbed in this market.

The BSE Sensex ended at 25620.14, down by 243.36 points or 0.94% after trading in a range of 25593.56 and 25936.89. There were just 5 stocks in green against 25 stocks in red on the index. (Provisional)

The broader indices too ended in red; the BSE Mid cap index was down by 0.28%, while Small cap index lost 0.24%. (Provisional)

The top gaining sectoral indices on the BSE were Consumer Durables up by 2.72%, Realty up by 1.08%, while Metal down by 2.84%, Capital Goods down by 1.88%, Auto down by 1.83%, TECK down by 1.30%, IT down by 1.18% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Dr. Reddys Lab up by 5.60%, Lupin up by 2.05%, Hindustan Unilever up by 1.51%, TCS up by 0.87% and SBI up by 0.69%. On the flip side, Tata Motors down by 6.32%, Vedanta down by 4.56%, Sun Pharma Inds down by 3.28%, Coal India down by 3.19% and Infosys down by 2.85% were the top losers. (Provisional)

Meanwhile, raising serious doubts over the rate at which the government's ambitious 'Make in India' initiative is progressing, a recent survey from the Boston Consulting Group (BCG) and apex industry chamber Confederation of Indian Industry (CII) has said that its target of creating 100 million jobs and achieving 25 percent of GDP from manufacturing sector by 2022 may be difficult to meet.

The CII-BCG report entitled 'Future of Indian Manufacturing: Bridging the Gap' noted that though manufacturing exports increased from $ 188 billion in 2011 to $203 billion in 2014. India's share in global market still remains at 1.5 percent, as expected, this shortfall is reflected in job creation in this sector. 'Make in India' aspires to create 100 million jobs by 2022 in the manufacturing sector. 'However, in reality, only four million jobs are estimated to have been created in the sector since 2010. Extrapolating this growth of 1.5 percent, we will fall short of the target by 92 million jobs by 2022'.

However, as per the report the outlook is broadly positive given the growth in IIP as well as clear uptick in the manufacturing FDI.  The overall IIP grew 3.2% in the first quarter and 14 of the 22 sub-sectors showed positive growth. The buzz around Make in India has been positive and many large ticket announcements have been made. The report also notes the efforts on reforms related to land, labor, GST and procedural simplifications. Though, only 20% of the executives surveyed feel that there has been an improvement in 'ease of doing business'. Nevertheless, 42% of the executives feel that the government's manufacturing drive has been effective, as against the 21% who feel otherwise.

The report also highlighted that in a positive development, several states are upping their game to attract manufacturing investments. The report calls for continuing action by the State and the Central government on reforms, simplification and infrastructure build-out. In addition, it also highlights the industry responsibility to invest in creating long term capabilities and shun the urge to adopt “jugaad” methods.

The CNX Nifty ended at 7802.45, down by 66.05 points or 0.84% after trading in a range of 7787.95 and 7893.95. There were 13 stocks on gainers side against 36 stocks on losers side while one stock remained unchanged on the index. (Provisional)

The top gainers on Nifty were Dr. Reddys Lab up by 5.23%, Idea Cellular up by 2.48%, Lupin up by 2.24%, Adani Ports &Special up by 1.90%, Power Grid Corpn up by 1.48%. On the flip side, Tata Motors down by 6.18%, Vedanta down by 4.76%, Ultratech Cement down by 3.32%, Coal India down by 3.28% and Sun Pharma Inds down by 3.18% were the top losers. (Provisional)

European markets were trading in red with cut of over a percent, Germany’s DAX declined by131.96 points or 1.36% to 9,556.57, France’s CAC was down by 76.89 points or 1.72% to 4,403.77 and UK’s FTSE 100 lost 74.05 points or 1.21% to 6,034.96.

The Asian markets closed mostly in red on Monday, tracking the lackluster cues from Wall Street. Hong Kong, South Korea and Taiwan markets were closed today on account of national holiday. Indonesia’s central bank will announce new policies aimed at increasing onshore supply of dollars, as part of the second installment of a stimulus package to support the shaky rupiah. Indonesia’s Finance Minister Bambang Brodjonegoro stated that the government is set to slash taxes for exporters in its second policy package to bolster the nation’s foreign exchange reserves and reduce volatility in the local exchange rate. The government is planning to lower income tax rates on interest exporters earn when they deposit their proceeds in local banks, as part of a strategy to keep dollar-denominated funds from leaving the country. China’s top economic planner with National Development and Reform Commission, Wang Changlin, stated that despite the weakened environment in the traditional industry sector, the service and high-tech sectors are emerging as strong growth drivers and helping the economy maintain growth at a medium-high pace. Tokyo’s core CPI, which excludes fresh food costs fell to at an annualized rate of -0.2%, from -0.1% in the preceding month.