Post Session: Quick Review

Indian equity markets that started their trade on a firm note suffered profit booking at the latter part of the day dragging the benchmarks lower gyrating around the neutral line. The firm trade started with market participants indulging their bets after the government listed the much-awaited GST Bill for consideration and passage in Rajya Sabha’s agenda for this week. The proposed tax reform, the biggest since India’s independence from Britain in 1947, seeks to replace a slew of federal taxes and levies in 29 states, transforming the nation of near 1.3 billion people into a customs union. Union Home Minister Rajnath Singh has expressed confidence over getting the long-pending GST bill passed in Parliament. The rupee strengthened for the fifth straight day against the dollar at the Interbank Foreign Exchange today on sustained selling of the US currency by exporters and banks amid sustained foreign fund inflows provided some upside support. Traders also got some encouragement with a survey of industry body Assocham stating that India Inc expects growth in sales and profitability to pick up by the year-end in sync with an uptick in the big macro picture. The survey pointed that the Indian Inc is expecting to see growth by December in terms of sales and profitability even though fresh investments from the private sector continue to suffer due to under-utilization of capacities.

On the global front, Asian markets managed to close mostly in green on expectations that the US Fed won’t hike rates after second quarter US GDP data came in lower-than-expected. Japanese stocks recovered as the yen pulled back following its second-biggest gain this year and as investors digested the latest readings on regional manufacturing activity. The European markets traded mostly lower with banking shares reversing gains as investors reacted to European banking stress tests. The European Banking Authority’s (EBA) latest stress tests found that that Italy’s Banca Monte dei Paschi di Siena (BMPS), the world’s oldest bank, would have the greatest difficulty out of 51 of Europe’s top banks covering its toxic loans between now and 2018 in adverse economic conditions.

Back home, profit booking crept in local markets which dragged the benchmarks below the neutral line. The losses were however capped since manufacturing sector growth continued its uptrend and hit a four-month high in July, backed by stronger upturn in new business orders. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers' Index (PMI) rose to 51.8 in July from 51.7 in June. On the sectoral front, shares of auto companies showed mixed trends on reporting auto sales number for month of July. Maruti Suzuki India, country’s largest car maker, has registered a rise of 12.7% in its total car sales (Domestic + Export) for the month of July 2016 at 137,116 units, as against 121,712 units in July 2015. Mahindra & Mahindra (M&M) reported its auto sales numbers for the month of July 2016, which stood at 39,458 units as against 34,652 units during July 2015, representing a growth of 14%. Ashok Leyland has reported a fall of 5% in July 2016 sales to 10,492 units, as against 11,054 units sold in the same period of last year. Shares of banking sector were under pressure on reports that the steel industry has outstanding loans of around Rs three lakh crore in various banks, thus making the sector one of the largest contributors to non-performing assets (NPA) in the country. Steel Minister Birender Singh stated that efforts are on by banks and Reserve Bank of India to restructure the loans given to the steel industry so that the loans could be recovered.

The BSE Sensex is currently trading at 28041.98, down by 9.88 points or 0.04% after trading in a range of 27873.53 and 28284.85. There were 18 stocks advancing against 12 stocks declining on the index. (Provisional)

The broader indices were trading in green; the BSE Mid cap index was up by 0.45%, while Small cap index was up by 0.18%. (Provisional)

The gaining sectoral indices on the BSE were IT up by 1.68%, TECK up by 1.45%, Metal up by 1.29%, Auto up by 0.50% and Consumer Durables up by 0.32%, while Capital Goods down by 2.26%, Bankex down by 1.00%, FMCG down by 0.32%, PSU down by 0.19% and Realty down by 0.09% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were TCS up by 3.10%, Tata Steel up by 2.64%, Maruti Suzuki up by 2.58%, Wipro up by 2.49% and Bajaj Auto up by 1.63%. (Provisional)

On the flip side, ICICI Bank down by 4.83%, Larsen & Toubro down by 4.01%, Adani Ports & Special Economic Zone down by 1.62%, Lupin down by 0.91% and Reliance Industries down by 0.69% were the top losers. (Provisional)

Meanwhile, manufacturing sector growth continued its uptrend and hit a four-month high in July, backed by stronger upturn in new business orders. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers' Index (PMI) - a composite single-figure indicator of manufacturing performance - rose to 51.8 in July from 51.7 in June. The upward movement in the headline index came from stronger contributions from four of its five components, the exception being suppliers’ delivery times.

According to the survey, greater demand from both the domestic and external markets, total new business rose at the fastest pace since March supporting the PMI. The expansion in order books was led by consumer goods producers. Growth of new export orders climbed to a six-month high, with increases seen in the consumer and capital goods categories. Further, Indian manufacturers stepped up production, with July’s upturn being the most pronounced since March. 

As per the report, the July data highlighted ongoing pressure on the capacity of Indian manufacturers, as outstanding business rose for the second month in succession. Furthermore, the rate of backlog accumulation was the fastest in one-and-a-half years. Despite this, hiring trends remained relatively muted with, only 1% of surveyed companies took on additional workers in July, while almost all the remaining respondents signaled no change in payroll numbers.

On the price front, July saw input costs rise at the slowest pace in five months. Although charge inflation accelerated, the rate of increase was only slight and remained below its long-run average. Besides, supplier performance improved for the first time since February. Some respite came to firms with cost burdens rising at a modest and slower rate and the improving demand environment meant that businesses were able to raise their own charges in July.

The CNX Nifty is currently trading at 8647.15, up by 8.65 points or 0.10% after trading in a range of 8590.50 and 8711.30. There were 29 stocks advancing against 22 stocks declining on the index. (Provisional)

The top gainers on Nifty were HCL Tech up by 3.33%, TCS up by 3.20%, Tata Steel up by 2.80%, Hindalco up by 2.73% and Grasim Industries up by 2.46%. (Provisional)

On the flip side, ICICI Bank down by 4.96%, Larsen & Toubro down by 4.10%, BHEL down by 2.67%, Bank of Baroda down by 2.57% and Adani Ports & Special Economic Zone down by 1.68% were the top losers. (Provisional)

The European markets were trading mostly in red; UK’s FTSE 100 decreased 3.57 points or 0.05% to 6,720.86, France’s CAC decreased 20.31 points or 0.46% to 4,419.83, while Germany’s DAX increased 24.56 points or 0.24% to 10,362.06.

Asian equity markets ended mostly higher on Monday, as reduced bets on US interest-rate increase, steadier oil prices, a weaker yen and the latest European stress tests painted a broadly positive picture of the region's 51 largest banks, helping investors shrug off mixed data out of China. A Commerce Department report showed on Friday that US GDP climbed by 1.2 percent in the second quarter following a downwardly revised 0.8 percent increase in the first quarter. Economists had expected GDP to jump by 2.6 percent. Traders pared bets the Federal Reserve will increase interest rates this year despite Federal Reserve Bank of San Francisco President John Williams and Federal Reserve Bank of New York President William Dudley playing down the low reading on second-quarter US growth. This Friday's US jobs report will be more important to the Fed and markets to determine whether there will be at least one rate hike in 2016. Meanwhile, Japanese shares erased earlier losses to close a tad higher as the yen's rally paused, and on financials gains after the Bank of Japan refrained on Friday from charging more interest to institutions for parking their excess reserves at the central bank. Chinese shares bucked the trend and sold off, as a slew of reports painted a mixed picture of the world's second-largest economy. China’s official manufacturing purchasing managers index unexpectedly fell into contraction at 49.9 for July as against 50.0 in June. While, the Caixin manufacturing PMI rose for the first time in 17 months with a score of 50.6 in July, well above a reading of 48.7 expected and up from 48.6 the previous month.