Post Session: Quick Review

Indian equity markets erased all of their losses in last leg of trade to end marginally in green. Indian equity benchmarks after making a cautious start slipped into red in the late morning session on account of selling in frontline blue chip counters ahead of a widely anticipated speech by the Fed chief at the central bank’s annual meeting in Jackson Hole scheduled on August 26. The sentiments remained under pressure after experts pointed out that it would be preferred if the new Goods and Service Tax (GST) regime is rolled out after adequate preparation, even if it is in the middle of the year. The government could be looking at rolling out the country’s biggest indirect tax reform from mid-2017, realizing that it may be an uphill task to have all the pieces for GST rollout in place by April 1, the start of the fiscal. The central GST and integrated GST laws may make it through Parliament only in the budget session, not leaving much time for preparation for the industry. Sentiments remained subdued after the private report indicated that achieving a 4% inflation target in the near term seems unlikely, largely due to spike in prices of food and non-food items and the August CPI numbers are expected to be in the range of 6.1-6.3 percent.  In an attempt to boost freight revenues, the Railway Board rationalized coal tariff by changing the distance slabs, which is likely to fuel inflation and dent margins of cement as well as power companies. Minor selling crept in on report that pledging of shares by promoters in companies listed on the National Stock Exchange hit a seven year high at the end of June. Investors failed to draw solace from economic think-tank NCAER’s business confidence index (BCI) report which registered a sequential increase of 2.2% in June quarter of 2016-17, mainly driven by improvement in perception about economic conditions and financial position of firms in the next six months.

On the global front, Asian shares ended modestly higher with volatility at a minimum on few macro catalysts, as investors seem reluctant to place large directional bets ahead of the Jackson Hole address by Fed chair Yellen late this week. Japan Aug prelim Manufacturing PMI rose to 49.6 from 49.3 but stayed in contraction for the 6th straight month. European stocks moved higher, with advances in the mining and financial sectors raising the prospect of a second day of gains for the market. A preliminary reading of Germany’s composite PMI showed a fall to a two-month low of 54.4 in August. The manufacturing PMI dropped to 53.6, missing expectations, while the services PMI slid to a 15-month low of 53.3.

Back home, the street gained strength on account of buying in frontline blue chip counters which helped markets in erasing losses to enter in green. Some support also came after credit rating agency India Ratings and Research (Ind-Ra) revised India’s economic growth forecast to 7.8 percent for the ongoing fiscal on better monsoon, but said the economy is just chugging along despite the euphoria emerging after the formation of Modi government at the Centre. Banking stocks displayed mixed response after RBI Deputy Governor S S Mundra said the pace of formation of new non-performing assets (NPAs) or bad loans has decelerated although some banks have posted losses for the first quarter of the current financial year due to higher provisioning. Mundra added that banks are adequately capitalized and the government has promised additional capital if they require.

The BSE Sensex ended at 27990.21, up by 4.67 points or 0.02% after trading in a range of 27854.43 and 28028.98. There were 15 stocks advancing against 15 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.28%, while Small cap index was down by 0.07%. (Provisional)

The few gaining sectoral indices on the BSE were IT up by 1.82%, TECK up by 1.78% and Bankex up by 0.11%, while Oil & Gas down by 1.48%, Power down by 1.11%, Capital Goods down by 1.10%, FMCG down by 0.82% and PSU down by 0.80% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Infosys up by 2.23%, TCS up by 1.83%, Bharti Airtel up by 1.10%, Asian Paints up by 0.98% and Adani Ports & Special Economic Zone up by 0.98%. (Provisional)

On the flip side, NTPC down by 2.42%, Bajaj Auto down by 1.36%, Larsen & Toubro down by 1.27%, ITC down by 1.00% and Hero MotoCorp down by 0.99% were the top losers. (Provisional)

Meanwhile, in order to speed up infrastructure development and investment to boost economic growth, government has reviewed the performance of key infrastructure sectors including renewable energy, aviation and railways. The Prime Minister has stated that the cumulative installed capacity of renewable energy crossed 44 GigaWatts (GW), targets have been met for various components and projects under Centre and state policies.

In the aviation sector, government reviewed progress in key policy areas such as safety and connectivity. It was noted that eight Indian airports are ranked among the top five globally in their respective categories and added that further steps will be taken to boost regional connectivity and improve customer satisfaction indices at airports. In the power sector, 3.5 crore LED bulbs have been distributed in current fiscal year. Indian Railways has achieved a target of daily passenger movement of 2.25 crore and around 240 unmanned crossings have been eliminated in the first quarter of the current fiscal year.

In the ports sector, there has been considerable progress in average vessel turnaround time. Besides, in the rural housing sector 6.94 lakh rural houses have been completed in the first quarter of the current fiscal year, as compared with a target of 6 lakh houses. And in the petroleum and natural gas sector, the government sought to know the steps being taken to ramp up ethanol blending of petrol and over 15 crore households were covered under Direct Benefit Transfer for LPG in FY16.

The CNX Nifty ended at 8639.30, up by 10.15 points or 0.12% after trading in a range of 8580.00 and 8642.15. There were 24 stocks advancing against 27 stocks declining on the index. (Provisional)

The top gainers on Nifty were Idea Cellular up by 7.94%, Bank of Baroda up by 2.62%, Infosys up by 2.41%, HCL Tech up by 2.24% and TCS up by 2.03%. (Provisional)

On the flip side, BHEL down by 4.73%, BPCL down by 3.60%, Tata Power down by 3.05%, NTPC down by 2.41% and Aurobindo Pharma down by 1.77% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 42.57 points or 0.62% to 6,871.11, Germany’s DAX increased 97.24 points or 0.93% to 10,591.59 and France’s CAC increased 31.59 points or 0.72% to 4,421.53.

Asian equity markets showed a mixed closing on Tuesday, as oil prices fell and the US dollar weakened ahead of a key meeting of US Federal Reserve officials and other central bankers later this week. Investors are looking for signals on whether the Fed sees enough economic momentum to support raising interest rates in September or the coming months. Any decisions made will likely impact the US dollar and dictate its strength against regional Asian currencies. Japanese shares fell for the first time in three days as the yen firmed up and the latest survey from Nikkei revealed that activity levels across Japan's manufacturing sector continued to decline in August. Meanwhile, China stocks ended higher as transportation and raw material shares were firm on the back of Beijing's plan to revive its struggling northeast rustbelt, offsetting falls in real estate stocks.