Post Session: Quick Review

The August series of Futures and Options contract settlement turned out to be pessimistic event for the Indian frontline indices. Indian equity benchmarks started the trade on optimistic note after Commerce and Industry Minister Nirmala Sitharaman pitched for as much as 200 basis points or 2%, interest rate cut by RBI to help the cash-starved MSME sector. Separately, in a big boost to infrastructure companies, NITI Aayog is preparing a Cabinet note for infra related ministries - road transport, urban development, petroleum - to ease arbitration norms and release stalled payments of infra companies. This comes amid reports that about Rs 1.65 lakh crore of banks’ Rs 3.65 lakh crore exposures to the construction sector is stressed. The rupee recovered against the US dollar in early trade at the Interbank Foreign Exchange on increased selling of the American currency by exporters and banks, provided some upside support. The foreign fund inflows and a higher opening in the domestic equity market also supported the domestic unit. However, selling crept in later part of the day over the private repot indication that India Inc is enduring its worst earnings drawdown of the last 20 years, burdened by weak growth, high interest costs with excessive private sector debt and over-capitalized balance sheets. Additional selling was witnessed on report that the level of stressed advances which include Non Performing Assets (NPAs) and restructured assets for the banking industry rose to 12 percent. For the public sector banks (PSBs), it has jumped to 15.4 percent as of June 2016. As a result the returns on assets for the public sector banks have turned negative and are in net losses during the quarter.

On the global front, Asian shares ended mixed, ahead of Federal Reserve Chairwoman Janet Yellen’s speech scheduled on August 26, 2016 which could provide hints about the timing of the next rate hike from the Fed. China’s central bank has urged banks to spread out the tenors of their loans, hinting at its displeasure with a recent trend of banks focusing on overnight lending. The People’s Bank of China reiterated to banking circles that its monetary policy bias to provide reasonable ample liquidity is unchanged as it nudged the financial system to align lending maturities and avoid a mismatch with short-term, particularly overnight funds. European stocks saw their biggest fall in three weeks and currency markets were noticeably subdued as investors took to sidelines.

Back home, the street continued their selling in front line counters tracking cues from weak European markets. Cement stocks like Sagar Cement, NCL Industries, Rain Industries and KCP were trading firm as cement prices have been hiked. The cement demand seems to be rising in the southern states where the cement has seen a hike in price by 12-15 percent. In Andhra Pradesh and Telangana, cement prices have risen by Rs 30-40 per bag in last two days.

The BSE Sensex ended at 27821.85, down by 238.09 points or 0.85% after trading in a range of 27803.24 and 28154.21. There were 6 stocks advancing against 24 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 0.41%, while Small cap index was down by 0.12%. (Provisional)

The top gaining sectoral indices on the BSE were Oil & Gas up by 0.24% and FMCG up by 0.21%,  while Metal down by 1.62%, TECK down by 1.33%, IT down by 1.33%, Realty down by 0.86% and Capital Goods down by 0.70% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were GAIL India up by 2.02%, ITC up by 1.06%, Dr. Reddy’s Lab up by 0.81%, Axis Bank up by 0.45% and Lupin up by 0.32%. (Provisional)

On the flip side, Wipro down by 2.93%, Adani Ports & Special Economic Zone down by 2.89%, HDFC down by 2.23%, SBI down by 2.22% and Tata Steel down by 2.16% were the top losers. (Provisional)

Meanwhile, the India Meteorological Department (IMD) has stuck to its initial forecast of above normal rainfall this season as the La Nina phenomena, which gives a boost to Southwest Monsoon and was expected to give a good rainfall in September, has been delayed. IMD has made a forecast of 106 percent of the Long Period Average (LPA) with the model error of plus or minus four per cent.

IMD stated that as far as India is considered the El Nino which was harmful to the Indian monsoon has faded and reached a neutral level. In the initial stages they were expecting La Nina to start, but it has been delayed now. However, they refused to make any amends to the forecast. The La Nina was to start by August-September, but the cooling of ocean surface temperature is taking a longer time for the phenomenon to occur. As per the initial forecast, September was to receive excess rains due to this phenomenon.

El Nino is the unusual warming of sea-surface Pacific waters off the South American coast. La Nina is the positive phase of the El Nino and is associated with cooler than average sea surface temperatures. As per the IMD parameter rainfall between 96-104 percent of LPA is considered as normal rainfall, between 104-110 percent is considered as above normal and above 110 percent of LPA is considered as excess.

The CNX Nifty ended at 8590.55, down by 59.75 points or 0.69% after trading in a range of 8583.65 and 8683.05. There were 15 stocks advancing against 36 stocks declining on the index. (Provisional)

The top gainers on Nifty were BHEL up by 3.11%, BPCL up by 2.38%, GAIL India up by 2.09%, HCL Tech up by 0.97% and ITC up by 0.94%. (Provisional)

On the flip side, Wipro down by 3.15%, Adani Ports & Special Economic Zone down by 2.89%, Idea Cellular down by 2.64%, Zee Entertainment down by 2.17% and Tech Mahindra down by 2.10% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 18.27 points or 0.27% to 6,817.51, Germany’s DAX decreased 83.79 points or 0.79% to 10,539.18 and France’s CAC decreased 27.37 points or 0.62% to 4,408.10.

Asian equity markets showed a mixed closing on Thursday, with Japanese stocks dropped as investors traded cautiously ahead of the US Federal Reserve's annual symposium in Jackson Hole, Wyoming, that starts later in the day. Federal Reserve Chair Janet Yellen will speak on Friday at the symposium and investors will keep a close eye on her remarks for clues about the outlook for US interest rates. Meanwhile, China stocks ended at their lowest in nearly two weeks as banks and property companies eased after the government imposed stricter rules on lending to head off growing risks in the financial system.