Post Session: Quick Review

Indian markets recovering from their early somberness bounced back in style to make a strong start of the holiday truncated week. The early cautiousness that kept the markets in a range for quite some time was mainly induced by country's number four IT company HCL Technologies, which just ahead of the market start reported 2.7 percent fall in its consolidated net profit at Rs 1,823 crore for the first quarter ended September 30, 2015, against Rs. 1,873 crore in the year-ago period. However, things improved with the progress of trade and the stock itself ended up by around 2 percent after the knee-jerk reaction, as the company had already warned of a “tepid” September quarter on account of adverse currency impact and a client-specific issue. On the same time traders were encouraged by surge in market heavyweight Reliance Industries which climbed over 5 percent after the petrochemical major posted a record profit of Rs 6,720 crore for the second quarter ended September, helped by record refining margins. However, there was some cautiousness too on China's weak factory output numbers and sub-7 per cent GDP growth, which is lowest since 2009, stoking global economic concerns and putting metals stock under pressure.

The global cues remained positive and the Asian indices ended mostly in green, though the Chinese market ended with mild losses, as China's  Gross domestic product grew 6.9 percent year-on-year in the third quarter, slightly slower than the 7 percent expansion seen in the first two quarters. Though, it was better than expected on the back of strong service sector performance. The European markets too made a good start and company earnings too pushed some stocks higher. Though, the commodities dropped on China reporting the slowest economic growth since 2009.

Back home, result reactions mainly guided the mood on the markets and volatility was visible throughout the day, with benchmarks gaining pace in second half , with Sensex and Nifty both coming very near to their crucial levels of 27400 and 8300 respectively. Traders drew some encouragement with report that the government is likely to go for a fresh round of consultations on Goods and Service Tax with the Opposition parties after the Bihar elections. Parliamentary affairs minister M Venkaiah Naidu has said that further discussions with the Opposition on passing the bill will be held during the Winter Session of Parliament. Meanwhile, Reserve Bank of India governor Raghuram Rajan said that India cannot expect to accelerate its economic growth to 9% per annum unless it improves its supply chain to prepare to the increase in demand that a higher growth rate could lead to. Back on street, sentiments were boosted, as in order to attract more retail investors into the stock markets, the Department of Disinvestment (DoD) has suggested tax incentives for small investors. The broader market remained firm with both the BSE midcap and smallcap indices posting gains of near to a per cent. On sectoral front, while realty tech and IT remained the major gainers, there was some profit taking in capital goods and metals counter. In non sectoral gauges aviation stocks were flying high after InterGlobe Aviation announced that it will launch its Rs 3,200-crore initial public offer (IPO) on 27 October and fixed a price band of Rs.700-765 for the issue.

The BSE Sensex ended at 27365.62, up by 151.02 points or 0.55% after trading in a range of 27246.79 and 27387.91. There were 16 stocks on gainers side against 12 stocks on losers side on the index. (Provisional)

The broader indices outperformed the benchmark; the BSE Mid cap index was up by 0.68%, while Small cap index ended higher by 0.77%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 2.56%, TECK up by 1.47%, IT up by 1.26%, Oil & Gas up by 1.02%, FMCG up by 0.73%, while Capital Goods down by 0.88%, Metal down by 0.56%, Consumer Durables down by 0.48%, Bankex down by 0.37%, Auto down by 0.32% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Reliance Industries up by 5.38%, Bharti Airtel up by 3.82%, Infosys up by 1.68%, Sun Pharma Inds. up by 1.61% and Dr. Reddys Lab up by 1.43%. On the flip side, ONGC down by 2.38%, Tata Steel down by 1.82%, Tata Motors down by 1.81%, Larsen & Toubro down by 1.41% and Hindalco down by 1.31% were the top losers. (Provisional)

Meanwhile, in order to attract more retail investors into the stock markets, the Department of Disinvestment (DoD) has suggested tax incentives for small investors. The department has made a formal proposal for tax incentives to the Department of Economic Affairs (DEA) in the Finance Ministry.

Further, the DoD wants a broad based retail market to be created to get good value for the government stake sale planned in several PSUs. The DoD has been long trying to attract more retail investors into the equity market so that they can own a pie in the government companies as and when PSU stake sales happen. According to the DoD, a tax incentive will attract retail investors to equities of both public and private companies. Furthermore, it added that encouraging retail investors will ensure flow of savings into domestic capital markets which would improve its depth.

Currently, the government reserves 20 per cent of the issue size for retail investors, who are allowed to invest up to Rs 2 lakh in the Offer for Sale (OFS). Also a 5 per cent discount is offered to them over the bid price. However, the quota reserved for retail investors has not been fully subscribed in some of the big-ticket stake sales like Indian Oil Corp (IOC) and Coal India Ltd (CIL).

The CNX Nifty ended at 8271.55, up by 33.40 points or 0.41% after trading in a range of 8239.20 and 8283.05. There were 24 stocks in green against 26 stocks in red on the index. (Provisional)

The top gainers on Nifty were Reliance Industries up by 5.50%, Bharti Airtel up by 3.85%, HCL Tech. up by 2.12%, Infosys up by 1.87% and Sun Pharma Inds. up by 1.64%. On the flip side, ONGC down by 2.31%, Tata Steel down by 2.02%, Ultratech Cement down by 1.85%, Tata Motors down by 1.84% and Adani Ports &Special down by 1.81% were the top losers. (Provisional)

European markets were trading mostly in green, France’s CAC was up by 15.03 points or 0.32% to 4,717.82, Germany’s DAX increased by 82.55 points or 0.82% to 10,186.98, while UK’s FTSE 100 was marginally down by 6.81 points or 0.11% to 6,371.23.

The Asian equity markets ended mostly in green on Monday, while China shares fell after the world’s second largest economy expanded at its slowest pace since 2009 in the third quarter. China’s economy will maintain stable growth in the future after growth eased to the slowest since the global financial crisis. China’s exports face increased downward pressure and the government needs time to absorb excess capacity in traditional industries. Chinese GDP fell to an annual rate of 6.9%, from 7.0% in the preceding month. Chinese Industrial Production fell to 5.7%, from 6.1% in the preceding month. Chinese Retail Sales rose to an annual rate of 10.9%, from 10.8% in the preceding month while Chinese Fixed Asset Investment fell to a seasonally adjusted 10.3%, from 10.9% in the preceding month. Japan’s economy is expected to have slowed sharply in the third quarter as demand across Asia ebbed, keeping the Bank of Japan and policymakers under pressure to inject more stimulus to revitalize growth.  The poll of 21 economists predicted the economy grew at an annualized rate of 0.4% in the third quarter, a significant downgrade from last month’s 1.3% forecast. Hong Kong Unemployment Rate remained unchanged at a seasonally adjusted 3.3% compared to the preceding month.