Benchmarks end a volatile session with modest gain ahead of F&O expiry

Wednesday’s session was characterized by extreme volatility as the frontline indices went through a rollercoaster ride amid lack of direction ahead of August F&O expiry and signals on key policy rates from US Federal Reserve Chair Janet Yellen at a meeting scheduled this week. However, investors’ morale remained upbeat on account of study progress of Goods and Services Tax (GST), which will be implemented from April 1, 2017.  The Gujarat Assembly passed the GST Constitution Amendment Bill on August 23 and became the sixth state to do so after Assam, Bihar, Jharkhand, Himachal Pradesh and Chhattisgarh, while the Odisha cabinet decided to place the constitutional amendment bill on GST before the state assembly for ratification. Passed by Parliament recently, the bill needs to be ratified by at least 15 state legislatures before the President can notify the GST Council which will decide the new tax rate and other issues. Some support also came with rating agency Ind-Ra revising India's economic growth forecast to 7.8 percent for the ongoing fiscal on better monsoon. It has said the positive impact of monsoon on agriculture will support the overall GDP growth with its backward and forward linkages.  However, markets participants remained cautious after FIIs had turned net sellers in the last two days in both equities and derivatives for the first time this month.

Meanwhile, mild selling witnessed in selected sugar counters on the report that sugar production in Maharashtra, which contributes a third of the country's sugar production, is likely to drop to 5.5 MT, the lowest in the past five years, due to drought and crop diversification across Marathwada and western parts of the state. As many investors avoiding to build heavy positions ahead of the expiry of the derivative contracts on Thursday, several stock specific actions popup during the session like Engineers India has rallied after the company reported 50% year on year jump in net profit at Rs 80 crore for the quarter ended June 30, 2016. Aurobindo Pharma has surged after the company reported 24% year on year rise in consolidated net profit at Rs 585 crore for the quarter ended June 30, 2016, on the back of higher sales income. On the other hand, Welspun India has declined after a report that US-based retailer, Wal-Mart, which said it would review the supply chain and cotton certification records of the company and take suitable action - if any quality issues are found in Welspun's supplies.

On the global front, Asian markets ended mostly in red on Wednesday as strong US housing data overnight increased the chances of an interest rate increase in coming months, prompting some investors to take profits, while oil prices slipped after a surprise jump in US inventories. Chinese stocks dropped as fresh liquidity injection from China's central bank through reverse purchase agreements dashed hopes for policy easing. However, Japanese shares rose as the yen traded relatively weaker against the dollar and investors shrugged off North Korea's submarine missile launch. Meanwhile, European stocks were marginally higher on Wednesday after a choppy start to the day, which saw sliding oil prices hammer commodities companies and German equities ricochet between losses and gains as fresh data showed that economic growth had slowed in the country.

Back home, the benchmark got off to an optimistic opening, shrugging the somber sentiments prevailing in Asian markets ahead of Federal Reserve chair Janet Yellen's speech later in the week. Thereafter, the broader markets failed to show any kind of fervor as they oscillated around the neutral line for most part of morning trades and drifted deeper into the red terrain in noon session. The key gauges made some attempts to claw back into the green zone in early afternoon trades but profit booking at higher levels dragged the key indices to the lowest point in the session. However, late short covering in blue-chip stocks and supportive leads from European markets ensured that local bourses go home with some gains. Finally the NSE’s 50-share broadly followed index Nifty, got buttressed by around quarter a percent to settle around the crucial 8,650 support level, while Bombay Stock Exchange’s sensitive Index-Sensex accumulated over fifty points and closed above the psychological 28,050 mark. Moreover, broader markets showed some resilience by outclassing their larger peers by a big margin as traders carried forward their value hunting in beaten down shares from the midcap and small cap space. On the BSE sectoral space, the Oil & Gas counter remained the top gainer in the space with around one and half percent gains followed by PSU and Power pockets which surged by over half a percent. On the flipside, Metal counter languished at the bottom of the table with cut of around quarter percent, while the Capital Goods sector too settled with moderate cut.

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 69.73 points or 0.25% to 28059.94, while the CNX Nifty rose by 17.70 points or 0.21% to 8,650.30.

The BSE Sensex touched a high and a low 28108.39 and 27959.87, respectively. The broader indices made a positive closing; the BSE Mid cap index ended up by 0.61%, while Small cap index was up by 0.65%.

The top gaining sectoral indices on the BSE were Oil & Gas up by 1.49%, PSU up by 0.71%, Power up by 0.69%, IT up by 0.43% and TECK up by 0.38%, while Metal down by 0.22% and Capital Goods down by 0.01% were the few losing indices on BSE.

The top gainers on the Sensex were Maruti Suzuki up by 2.40%, Cipla up by 1.97%, Infosys up by 1.76%, NTPC up by 1.54% and Reliance Industries up by 1.07%. On the flip side, Lupin down by 2.16%, Tata Steel down by 1.38%, TCS down by 1.20%, Tata Motors down by 1.10% and Adani Ports &Special down by 0.81% were the top losers.

Meanwhile, in order to facilitate ease of doing business and to make India the next hub for international commercial arbitration, Government think-tank will arrange for a three day global conference that would be held from October 21-23, 2016. This session will provide a blueprint for the steps that are critical in strengthening arbitration and its enforcement in India and across the globe.

NITI Aayog said that this international conference aims to provide a platform to the Indian legal and policy making community to engage with the broader international commercial arbitration community, especially the top-tier international arbitral institutions and all relevant stakeholders. Aayog said it will help frame effective policy necessary to augment institutional capacity for promoting international commercial arbitrations in India.

In recent times, India has undertaken major structural reforms to facilitate ease of doing business. These include a robust bankruptcy framework, a new digital payments regulatory regime and vast reforms in the corporate law statute. To complement these reforms and further deepen India’s engagement with international commerce, the Indian Government has recently unveiled various policy measures to facilitate commercial dispute resolution especially through arbitration.

International commercial arbitration is an alternative method of resolving disputes arising out of commercial transactions between private parties across national borders that allow the parties to avoid litigation in national courts.

The CNX Nifty traded in a range of 8,661.05 and 8,620.90. There were 24 stocks advancing against 27 decliners on the index.

The top gainers on Nifty were Aurobindo Pharma up by 6.91%, Tata Power up by 2.47%, Maruti Suzuki up by 2.22%, Cipla up by 2.02% and Zee Entertainment Enterprises up by 1.59%. On the flip side, Idea Cellular down by 3.97%, Lupin down by 2.31%, Ambuja Cement down by 1.81%, Tata Motors - DVR down by 1.65% and Tata Steel down by 1.51% were the top losers.

The European markets were trading mostly in green; Germany’s DAX increased 36.73 points or 0.35% to 10,629.61, France’s CAC increased 22.28 points or 0.5% to 4,443.73, while UK’s FTSE 100 decreased 13.38 points or 0.19% to 6,855.13.

Asian equity markets ended mostly lower on Wednesday as traders trod water ahead of a key speech by Federal Reserve boss Janet Yellen this week, while oil suffered fresh losses on persistent glut worries. With speculation growing that US interest rates could rise by the end of the year, Yellen's comments at a global central bankers meeting in Jackson Hole Friday will be scoured for forward guidance on US central bank policy. Chinese shares dropped as fresh liquidity injection from China's central bank through reverse purchase agreements dashed hopes for policy easing. However, Japanese shares rose as the yen traded relatively weaker against the dollar and investors shrugged off North Korea's submarine missile launch. Japan's Prime Minister, Shinzo Abe, said the latest missile launch was ‘unforgivable’ and posed a grave threat to Japan's security.