Post Session: Quick Review

Today’s session turned out to be a disastrous day of trade for Indian equity markets. The frontline gauges ended the session with losses of around one and half percent. The benchmarks made a gap-down opening in early deals amid the global turmoil after a prominent US policy maker hinted at a rate hike by the US Fed in the near future. Boston Fed President Eric Rosengren, known to be a dovish policymaker, stated that the US central bank faced increasing risk if it waited too long to raise interest rates. The North Korean nuke tests and fears that UN sanctions may fail to restrict the country from any further tests that had already dampened sentiments in Asia. Some selling crept in the domestic market after Indian rupee continued its losing streak and was trading down against US dollar on increased demand of the American currency among importers and bankers. The India Meteorological Department (IMD) stated that monsoon weakened in most parts of the country this month, taking the season’s total rainfall to 5% below normal. Agriculture experts said that there are some concerns about crops in parts of the country even as the overall farm situation remains positive after strong rainfall in July and August. Investors also turned cautious ahead of macroeconomic data - IIP for July and inflation data for August - scheduled to be released later in the day. The street failed to draw some comfort on reports that net indirect tax collections in the April-August period grew 27.5 percent to Rs 3.36 lakh crore on the back of surge in excise collections. The collection till August 2016 showed that 43.2 percent of the annual budget target of indirect taxes, which includes Central Excise, Service Tax and Customs, has been achieved. 

On the global front, Asian markets ended lower; as investors shrugged off solid manufacturing orders in Japan and focused on chances that the Fed may raise rates this month. Strong comments from China’s top state planner that the economy needed more support was most likely aimed at persuading the central bank to take bolder policy action. European stocks and bonds fell in a volatile market hit by growing concerns that global central banks’ commitment to the post-crisis orthodoxy of super-low interest rates and asset purchase programs may be waning.

Back home, banking stocks traded under pressure after ratings agency Fitch said that the progressive increase in minimum capital requirements under Basel III is likely to put nearly half of Indian banks in danger of breaching capital triggers. Fitch estimates that Indian banks will require around $90 billion in new capital by FYE19 to meet Basel III standards. Hectic selling was witnessed in telecom stocks on reports that telecom regulator TRAI has decided to reject the demand of incumbent mobile operators such as Bharti Airtel, Vodafone and Idea Cellular for an increase in the fee that they charge from Reliance Jio to terminate its calls on their networks.

The BSE Sensex ended at 28353.54, down by 443.71 points or 1.54% after trading in a range of 28251.31 and 28481.11. There were 3 stocks advancing against 27 stocks declining on the index. (Provisional)

The broader indices ended in red; the BSE Mid cap index was down by 2.95%, while Small cap index was down by 2.35%. (Provisional)

The top gaining sectoral indices on the BSE were IT up by 0.87% and TECK up by 0.26% while, Realty down by 5.23%, Metal down by 4.34%, Capital Goods down by 3.25%, Power down by 3.14% and PSU down by 2.95% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Infosys up by 1.74%, Reliance Industries up by 0.27% and Wipro up by 0.17%. (Provisional)

On the flip side, Tata Steel down by 5.51%, Adani Ports & Special Economic zone down by 4.44%, SBI down by 3.86%, Larsen & Toubro down by 3.51% and NTPC down by 3.43% were the top losers. (Provisional)

Meanwhile, according to the latest report from the Reserve Bank of India (RBI), the country’s forex reserves increased by $989.5 million to an all-time high of $367.76 billion during the week ended September 2, 2016. 

Valuation of foreign currency assets increased by $952.2 million in the week and stood at $342.23 billion. Gold reserves rose $58.1 million to $21.64 billion at the end of the reporting week. 

SDRs’ (Special Drawing Rights) valuations decreased by $8.0 million and stood at $1488.6 billion in the week. This valuation is inclusive of SDR 3,082.5 million (equivalent to $4,883 million) allocated under general allocation and SDR 214.6 million (equivalent to $340 million) allocated under special allocation by International

Monetary Fund (IMF) done on August 28, 2009 and September 9, 2009, respectively.

The country’s reserve position in the IMF during the week ended September 2, 2016 decreased by $12.8 billion and stood at $2397.2 billion. Reserve position in the IMF, i.e., Reserve Tranche Position (RTP) which was shown as a memo item from May 23, 2003 to March 26, 2004 has been included in the reserves from the week ended April 2, 2004 in keeping with the international best practice.

The CNX Nifty ended at 8715.30, down by 151.40 points or 1.71% after trading in a range of 8699.40 and 8746.95. There were 5 stocks advancing against 46 stocks declining on the index. (Provisional)

The top gainers on Nifty were Infosys up by 1.88%, Tech Mahindra up by 1.27%, Wipro up by 0.28%, Reliance Industries up by 0.23% and TCS up by 0.22%. (Provisional)

On the flip side, Hindalco down by 8.81%, Yes Bank down by 6.05%, Tata Steel down by 5.74%, Bank of Baroda down by 5.73% and Ambuja Cement down by 4.64% were the top losers. (Provisional)

The European markets were trading in red; UK’s FTSE 100 decreased 104.68 points or 1.54% to 6,672.27, Germany’s DAX decreased 205.37 points or 1.94% to 10,368.07 and France’s CAC decreased 87.6 points or 1.95% to 4,403.80.

Asian equity markets ended in deep red on Monday as hawkish comments from several Federal Reserve officials, a sell-off in bond and oil markets, and renewed concerns about North Korea's nuclear test spooked investor sentiments. The probability for a September rate hike increased somewhat after Fed officials Eric Rosengren, Daniel Tarullo and Robert Kaplan signaled openness to a rate hike in 2016 to prevent the economy from overheating. North Korea is ready to carry out another nuclear test at any time, South Korea's defense ministry was quoted as saying today, a day after North Korea said it would take multi-step measures to strengthen its nuclear strike forces in response to the hostile US policy. Chinese shares dropped on worries that central banks may be running out of ammunition to support economic growth. Further, Japanese shares fell as increased risk aversion revived demand for the yen and media reports suggested that the Bank of Japan is studying several options to steepen the bond yield curve to encourage short and medium-term corporate lending. Markets in Malaysia, Singapore and Indonesia were closed in observance of Eid-ul-Adha.