Fatigued markets settle with paltry gain

After trading on a feeble note for most part of the session, Indian benchmark indices managed to negotiate a close in the green terrain, breaking the two session downtrend, as market participants showed renewed buying interests in information technology and Banking counters. Investors remained highly apprehensive in early part of trade amid weak Asian cues and fading hopes of rate cut after nomination of Urjit Patel as news RBI Governor, who is known for his hawkish view on inflation.   Sentiment also remained edgy ahead of the expiry of the derivative contracts on Thursday and ahead of a widely anticipated speech by the Fed chief at the central bank’s annual meeting in Jackson Hole scheduled on August 26. However, there appeared some tentative recovery in investors’ sentiments in afternoon trades as the key indices tracked European equity markets which swiftly recuperated and surged after data that pointed to a gradual improvement in the region's economy. The Euro area composite output index combining both manufacturing and service sectors rose unexpectedly to a seven-month high of 53.3 in August from 53.2 in July. On the domestic front, sentiments got some support with President Pranab Mukherjee’s statement that Indian economy has revived and is poised to achieve a growth rate of 7.5 per cent in the next two years. Also, the NCAER's business confidence index (BCI) registered a sequential increase of 2.2 per cent 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 markets ended the session on mixed note 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. Chinese stocks gained traction 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, while Japanese stocks declined 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, European equities edged higher in early trade as flash PMI data indicated the euro area remained on a steady growth path in the third quarter, with no signs of the recovery being derailed by Brexit uncertainty.

Back home, the local benchmarks commenced the session on a cautious note tracking global cues with the Asian markets exhibiting mixed trend ahead of a widely anticipated speech by the Fed chief at the central bank’s annual meeting in Jackson Hole scheduled on Friday. The frontline indices see-sawed around the neutral line in a very tight band throughout the morning session as investors remained a bit cautious, however sharp selling in the last hour of the session dragged the indices to the lowest point of the day.  Thereafter started the road to recovery for the bourses which kept slowly but steadily moving towards the neutral line. During the final hour of the trade, the key gauges managed to gain some more traction and bounced into the positive terrain by the end of trade. Finally, the NSE’s 50-share broadly followed index Nifty, added single digit gains to settle above the crucial 8,600 support level, while Bombay Stock Exchange’s Sensitive Index or Sensex gained around five points and ended below the psychological 28,000 mark. On the BSE sectoral space, the Oil & Gas, Power and Capital Goods pockets remained among top laggards in the space as they got lacerated by around a percent, while sectors like Metal and Power too got pounded heavily in the session. However, defensive sectors like information technology (IT) and Banking pocket managed to go home with moderate gains.  The market breadth remained pessimistic, as there were 1262 shares on the gaining side against 1344 shares on the losing side, while 200 shares remained unchanged.

Finally, the BSE Sensex gained 4.67 points or 0.02% to 27990.21, while the CNX Nifty rose by 3.45 points or 0.04% to 8,632.60.

The BSE Sensex touched a high and a low 28028.98 and 27854.43, respectively. The broader indices made a negative closing; the BSE Mid cap index ended down by 0.28%, while Small cap index was down by 0.07%.

The top 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.

The top gainers on the Sensex were Infosys up by 2.35%, TCS up by 2.03%, Asian Paints up by 0.99%, Bharti Airtel up by 0.96% and Wipro up by 0.82%. On the flip side, NTPC down by 2.90%, Bajaj Auto down by 1.36%, Larsen & Toubro down by 1.11%, ITC down by 1.08% and Sun Pharma down by 0.97% were the top losers.

Meanwhile, India’s oldest and largest independent think tank, National Council of Applied Economic Research’s (NCAER’s) Business Confidence Index (BCI) 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.

The NCAER in its 97th round of Business Expectations Survey (BES) has said that the increase in BCI was helped by improvement in sentiment in two out of its four components. BES tracks the business sentiment of over 500 Indian companies to compute the composite BCI.  The think-tank said that BCI is developed on the basis of responses to four questions, of these two are devoted to macro factors and the other two to micro. It said sentiment about the component like present investment climate is positive and remained largely unchanged. However, perception on the metrics as capacity utilization is close to or above optimal level showed a decline.

NCAER stated that firms were more optimistic about future economic conditions than about the present economic situation. Further it stated that all enterprise groups barring those with an annual turnover of less than Rs 1 crore declined by 9.1% show an increase or no change in BCI between April and July 2016. Firms with annual turnover of Rs 1-10 crore, Rs 100-500 crore and more than Rs 500 crore registered a significant rise in BCI whereas firms with an annual turnover of Rs 10-100 crore showed no change between the two rounds. The maximum growth of 8.1% was witnessed in the case of firms with an annual turnover of Rs 100-500 crore.

The CNX Nifty traded in a range of 8,642.15 and 8,580.00. There were 24 stocks advancing against 27 decliners on the index.

The top gainers on Nifty were Idea Cellular up by 7.94%, Bank of Baroda up by 2.59%, Infosys up by 2.41%, HCL Tech up by 2.17% and TCS up by 2.03%. On the flip side, BHEL down by 4.73%, BPCL down by 3.60%, Tata Power down by 3.05%, NTPC down by 2.54% and Aurobindo Pharma down by 1.62% were the top losers.

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.