Post Session: Quick Review

Trade for the day was characterized by immense volatility, whereby benchmark equity indices failed to hold the gains and ended in negative territory on Wednesday. Indian equity benchmarks had started the trade on cautious note gyrating around neutral line, after both the inflation gauges CPI and WPI showed uptrend due to rise in food inflation amid increased speculation that the US will raise interest rates. The sentiments later gained strength with the private report that strong consumption and public investments have kept India’s growth recovery on track this year. According to the report, the present recovery is not accompanied by current account and fiscal excesses or strong core inflationary impulses, unlike previous instances of high growth. Some support also came with raising expectation that food inflation is poised to moderate significantly when data for August is released next month as the wholesale price of pulses has eased 30%, while vegetable rates have dropped as much as 50% in some markets in the past four weeks because normal monsoon rainfall has raised prospects of a bumper harvest after two years of drought.  Prices of all farm commodities are likely to fall noticeably by October, when the new harvest reaches the market and the festive demand has been met. Investors took note of report that the tax department is hopeful of meeting the revenue collection target for FY 2016-17. Indirect tax collection rose by about 30.8% during April-June to Rs 199,970 crore, from Rs 1,52,740 crore collected in the year-ago period. However, profit booking in blue-chip counters in afternoon session tracking European markets erased all the gains and drifted the market in red.

On the global front, Asian shares ended mostly lower, as sentiment were hit from a lower finish on Wall Street which offset the positive impact of a rise in oil prices. European markets were trading in red with Spanish bonds boosted ahead of a meeting later that could pave the way for a new government in Madrid after eight months of limbo. The number of people claiming unemployment benefit in Britain unexpectedly fell in July despite the shock decision by voters to leave the European Union, suggesting little immediate impact from Brexit on the labor market.

Back home, the street continued their weak trade on account of selling in front line blue chip counters, tracking European counterparts. Steel companies were trading in fine fettle after Moody’s Investors Service said that Indian steel companies are expected to do better from now on as demand for steel will buck the global trend and is set to increase. Jaypee Group stocks Jaiprakash Associates, Jaiprakash Power Ventures and Jaypee Infratech were trading under pressure after Jaiprakash Associates stated that CBI carried out searches at its office in connection with alleged fraud in claiming insurance money from United India Insurance Corporation with regards to Dul Hasti hydroelectric power plant in Kishtwar.

The BSE Sensex ended at 28003.80, down by 60.81 points or 0.22% after trading in a range of 27960.14 and 28174.30. There were 14 stocks advancing against 16 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.62%, while Small cap index was up by 0.55%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 2.00%, Auto up by 0.88%, PSU up by 0.69%, Consumer Durables up by 0.14% and Bankex up by 0.11%, while IT down by 1.60%, TECK down by 1.30%, FMCG down by 0.29%, Oil & Gas down by 0.25% and Power down by 0.21% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Steel up by 3.11%, Coal India up by 2.96%, Bajaj Auto up by 2.06%, Hero MotoCorp up by 1.98% and Axis Bank up by 1.07%. (Provisional)

On the flip side, Adani Ports & Special Economic Zone down by 2.86%, TCS down by 2.41%, Power Grid Corporation down by 1.83%, Infosys down by 1.60% and Wipro down by 1.49% were the top losers. (Provisional)

Meanwhile, in order to promote out-bound shipments and manufactured products from export-oriented units (EoUs), software technology parks of India (STPIs) and electronic hardware technology parks (EHTPs), government has relaxed certain norms like doing away with mandatory warehousing requirement for EoUs and software and electronic hardware technology parks.

The Directorate General of Foreign Trade (DGFT) has also eased rules for the existing EHTP and STP units to avail tax exemptions in the case of conversion or merger of EoU and vice versa and added this in a notification, amending the foreign trade policy 2015-20. DGFT said an EoU which is into agriculture, aquaculture, horticulture and poultry may be permitted to remove specified goods in connection with its activities for use “outside the premises of the unit”, earlier, it was allowed only for outside the bonded area.

The EoU scheme, which was introduced in December 1980, had allowed manufacturing units in export processing zones to enjoy 100 per cent tax exemption on profits from overseas sale and duty-free import of raw material. The STPI scheme is a 100 percent export oriented scheme for the development and export of computer software, including export of professional services using communication links or physical media.

The CNX Nifty ended at 8622.60, down by 19.95 points or 0.23% after trading in a range of 8603.60 and 8667.10. There were 24 stocks advancing against 27 stocks declining on the index. (Provisional)

The top gainers on Nifty were Tata Steel up by 3.26%, Coal India up by 2.78%, Aurobindo Pharma up by 2.32%, Hero MotoCorp up by 2.01% and Tata Power up by 1.76%. (Provisional)

On the flip side, TCS down by 2.37%, Adani Ports & Special Economic Zone down by 2.14%, Tech Mahindra down by 1.79%, Power Grid Corporation down by 1.69% and Infosys down by 1.67% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 0.84 points or 0.01% to 6,893.08, Germany’s DAX decreased 71.66 points or 0.67% to 10,604.99 and France’s CAC decreased 18.63 points or 0.42% to 4,441.81.

Asian equity markets ended mostly lower on Wednesday, as oil prices retreated in Asian deals on doubts over potential OPEC action to support prices amid a supply glut. Chinese shares ended lower showing little reaction to the formal announcement of a long-awaited stock trading link between Shenzhen and Hong Kong. Chinese authorities on Tuesday approved the launch of the stock trading link between Hong Kong and Shenzhen, the tech-heavy bourse. But, the market reaction was calm as the approval had been expected. The Indonesian market was closed for Independence Day. While, Japanese stocks bounced after sliding the previous day, though the recovery was contained by a backdrop of cautious trading after hawkish comments from US Federal Reserve officials sent the yen to a seven-week high.