Post Session: Quick Review

Indian markets bucking the global trend witnessed a wild swing of over 700 points intraday, rejoiced by the unexpected rate cut of 50 basis points by the Reserve Bank of India (RBI). With the latest interest revision, the RBI has cut repo rate by a total of 125 basis points this year to a four-year lowest level since May 2011. The decision of reducing prime lending rates would help stimulate home buyers’ interest and spur home-buying decisions. There was a knee-jerk reaction to the RBI’s decision and the markets that had made a gap-down start and were reeling in red till then suddenly bumped up erasing all its losses, but soon after profit booking appeared at the higher levels and dragged the markets lower, as RBI not only had cut policy rates but also revised downwards its real GDP forecast for 2015-16 to 7.4 per cent from earlier expectation of 7.6 per cent, saying that the growth is expected to pick up in the latter part of the fiscal. It added that the CPI inflation is expected to firm up from its current trough and rise to around 4.5 per cent in September as favourable base effects reverse and average 5.5 per cent in the third quarter and 5.8 per cent in the fourth quarter of FY16. In its policy review it said that the CPI inflation is expected to average 5.5 per cent in FY17 and moderate to around 4.8 per cent in Q4 of FY17.

There was global rout in the equity markets and after a sharp slump in the US indices, the Asian markets followed the trend and most of them ended with deep cuts, led by the Japanese market that lost over 4 percent, as the yen turned stronger against all 16 major peers, dragging down export-oriented stocks. The European markets too extended their losses with major indices losing over a percent in early deals, in a sign that investors still lack conviction in markets. Also, there continued the concern over global growth prospects amid a slowdown in China and uncertainty over the Federal Reserve’s action.

Back home, the markets bounced back in the noon trade as RBI said that its stance will continue to be accommodative, though the focus of monetary action for the near term will shift to working with the Government to ensure that impediments to banks passing on the bulk of the cumulative 125 basis points cut in the policy rate are removed. All the rate sensitives, especially the banking cheered with the RBI’s surprise and moved higher. However towards the end, once again profit taking emerged on the street and the rate cut rally seemed fizzling down, as the metal pack that were trading weak since mornings suffered sell-off on disappointing economic data out of China, which once again raised concerns about commodity demand and health of the global economy. Though, finally the rate sensitives like realty, banking and auto supported the markets to post gains of over half a percent for the day. In non sectoral gauges, Sugar stocks witnessed some profit booking after their big gains of last session with Indian Sugar Mills Association (ISMA) revising downwards sugar production estimates by a million tonnes to about 27 MT for the marketing year starting next month, compared with 28 mt predicted by it in July and almost 5% lower than the actual output of 28.31 mt. Shree Renuka Sugars and Balramput Chini ended down by over 3%, EID Parry was down by over a percent and Bajaj Hindusthan lost over half a percent.

The BSE Sensex ended at 25778.66, up by 161.82 points or 0.63% after trading in a range of 25287.33 and 26054.37. There were 15 stocks on gainers side against 15 stocks on losers side on the index.The broader indices made a mixed closing; the BSE Mid cap index was up by 0.42%, while Small cap index ended down by 0.11%.(Provisional)

The top gaining sectoral indices on the BSE were Realty up by 1.99%, Bankex up by 0.90%, Auto up by 0.76%, Capital Goods up by 0.65%, Power up by 0.52%, while Metal down by 1.45%, Oil & Gas down by 0.85%, Consumer Durables down by 0.38% were the losing indices on BSE.(Provisional)

The top gainers on the Sensex were Maruti Suzuki up by 3.24%, HDFC up by 2.86%, Coal India up by 2.08%, Mahindra & Mahindra up by 1.30% and Tata Motors up by 1.24%. On the flip side, Vedanta down by 5.92%, Hindalco down by 3.89%, Tata Steel down by 3.32%, Dr. Reddys Lab down by 2.67% and Bajaj Auto down by 1.23% were the top losers.(Provisional)

Meanwhile, a joint study by industry body Assocham and Thought Arbitrage Research Institute (TARI) has stated that to make government’s most ambitious 'Make in India' programme successful and for the country’s growth, India needs to boost its investment in the infrastructure sector from the current level of 6 per cent to nearly about 10 % of its GDP.

In the study 'Make in India: The next leap', it was stated that pension and insurance funds being long-term investors can be mobilised for infrastructure spending, besides, public-private partnership model should be redesigned through engineering, procurement and construction (EPC) model.

The report said India needs to generate 13 million jobs per annum. 'The number of people seeking jobs during this period grew by 2.23 per cent per annum while growth in actual employment was 1.4 per cent, leaving a huge gap in job creation. It also said that the culture of entrepreneurship needs to rise in India as only 4.12 per cent of the population in the age group of 18 to 64 was indulged in business. In terms of perception of social values of entrepreneurship, India fares badly.

Stating that land acquisitions were needed to be facilitated for developing physical infrastructure, Assocham said that in order to attract investment Special Economic Zones (SEZs) need to be revived by a systematic review for their failures.

The CNX Nifty ended at 7829.70, up by 34.00 points or 0.44% after trading in a range of 7691.20 and 7926.55. There were 23 stocks in green against 27 stocks in red on the index. (Provisional)

The top gainers on Nifty were Maruti Suzuki up by 3.24%, HDFC up by 3.08%, Coal India up by 2.64%, Indusind Bank up by 2.00% and Bank Of Baroda up by 1.93%. On the flip side, Vedanta down by 5.70%, Bosch down by 4.31%, BPCL down by 3.96%, Hindalco down by 3.47% and Tata Steel down by 3.08% were the top losers. (Provisional)

European markets despite some recovery were trading in red, UK’s FTSE 100 was lower by 31.11 points or 0.52% to 5,927.75, France’s CAC lost 9.95 points or 0.23% to 4,347.10 and Germany’s DAX declined by 7.87 points or 0.08% to 9,475.68.

The Asian markets closed mostly in red on Tuesday, on concerns over the health of China’s economy. South Korea and Taiwan markets were closed today on account of national holiday. Indonesia will announce the second installment of a stimulus package aimed at supporting the rupiah and reviving growth in Southeast Asia’s largest economy. President Joko Widodo, along with his economics team, will unveil the latest measures at the presidential palace in the coming hours. As part of the package, the central bank is expected to take steps to increase the onshore supply of dollars, including a relaxation of requirements on forward dollar selling and a tax incentive for exporters to keep their dollars in local banks. The government is not expected to announce revisions to the so-called negative investment list that details sectors restricted to foreign funds. The first installment of the stimulus package, announced three weeks ago, has had little effect on markets, and traders doubted whether the coming announcement would evince any significant reaction either. Profits for industrial companies in China dropped 8.8 percent in August, compared to the previous year. It was the biggest fall since October 2011, when the Chinese government first published such data. Chinese coal, oil and gas and metal companies had the greatest losses, information from the National Bureau of Statistics showed.