Post Session: Quick Review

Indian equity benchmarks managed to end the Wednesday's trade with decent gains, though traders remained cautious ahead of September derivatives contracts which will expire tomorrow. The benchmarks made a cautious start and traded slightly in green in early deals taking some encouragement from Finance Minister Arun Jaitley's statement that the government is confident of meeting the April 2017 target to implement the Goods and Services Tax as state finance ministers cooperate to make the single tax reform a reality soon. Pointing that states have realized the importance of competitiveness and attracting investments, Finance Minister said that getting the GST through was ‘troublesome’ as it involved completely changing the powers of the Union and the states. Also, as per latest edition of the Global Competitiveness Index of World Economic Forum (WEF) India has become the second most competitive BRICS economy and will grow faster than China this year. The report showed India’s competitiveness improved the fastest in 2015-16, jumping 16 places to rank 39th among 138 countries on the index. The Indian rupee strengthened for the fifth consecutive session against the US dollar in morning trade. Traders were keeping an eye on OPEC meet expecting it to take a neutral stance.  The stable oil prices for the rest of the financial year will be good news because it will make sure that both inflation as well as fiscal deficit remains in order.

On the global front, Asian equity markets ended mostly lower, as Japanese yen fluctuated and oil prices turned flat after steep losses overnight on doubts over potential OPEC deal. China’s retail sales are likely to grow 10.3 percent in 2016, the official People’s Daily overseas edition reported, citing the China General Chamber of Commerce. Growth in consumption is stabilizing due to positive signs in the economy including a recovery in power consumption and increasing exports. European shares rose slightly, lifted by gains among commodity stocks, while Deutsche Bank rose from all-time lows hit in the previous session after its CEO said there was no need of a cash call.

Back home, the oil marketing companies ONGC, HPCL and BPCL displayed traction on sharp plunge in crude oil prices. Oil futures tumbled to settle down after both Iran and Saudi Arabia played down expectations for a deal to freeze or cut oil production at the closely watched informal OPEC meeting on Wednesday.

The BSE Sensex ended at 28292.81, up by 69.11 points or 0.24% after trading in a range of 28198.30 and 28378.56. There were 18 stocks advancing against 12 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.91%, while Small cap index was up by 1.04%. (Provisional)

The top gaining sectoral indices on the BSE were Metal up by 1.92%, Realty up by 1.42%, Auto up by 1.24%, PSU up by 1.11% and Capital Goods up by 1.02%, while IT down by 0.26% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Tata Steel up by 3.37%, Bharti Airtel up by 2.42%, SBI up by 2.03%, Adani Ports & Special Economic Zone up by 2.00% and Tata Motors up by 1.67%. (Provisional)

On the flip side, Reliance Industries down by 1.94%, Coal India down by 0.95%, Hindustan Unilever down by 0.88%, Sun Pharma down by 0.58% and Wipro down by 0.47% were the top losers. (Provisional)

Meanwhile, in order to regulate algorithmic or 'algo' trading in the commodity market, the market regulator Securities and Exchange Board of India (SEBI) has issued detailed guidelines for regulation of 'algo' trading. Under the new norms, commodity exchanges will be able to process 20 orders per second from a user, irrespective of the order size. In case the order-to-trade ratio of a member reaches 500 during a trading day, the member will not be allowed to place any order for the first 15 minutes on the next trading day as a cooling off action.

The guidelines also states that stock exchanges will have to ensure that immediate or cancel orders are not placed through the algo trade route. It added that only a portion of orders placed through trading terminals are executed due to non-fulfilment of certain conditions or cancellation by clients. Based on the daily order-to-trade ratio of the client, an additional charge ranging from 1-5 paise will be imposed on all algo orders.

For the purpose of calculation of daily order-to-order ratio, all algorithmic orders, i.e. order entry, order modifications and order cancellation shall be considered. Sebi said that the exchanges would have to continuously study the performance of its systems and, if necessary, undertake system upgrade, including periodic upgrade of its surveillance system, in order to keep pace with the speed of trade and volume of data that may arise through algo trading. The regulator asked commodities exchanges to submit a monthly report on algo trading, including its percentage in total trade and the number of members of using such trading.

The regulator proposed that, the capacity of trading system of the Exchange should be at least four times the peak order load encountered and the Exchange system should be upgraded on a regular basis. Maintaining efficiency for market participants, Sebi has not permitted stock exchange to host algorithmic trading via CTCL terminals. The regulator said that Co-Location, Co-Hosting or any other facility or arrangement which puts some members in disadvantageous position vis-à-vis other members shall not be allowed. It said that there will be some economic disincentives for algo trades based on the order-to-order ratio.

Algorithmic trading, mostly used by large institutional investors, refers to orders generated at a super-fast speed by use of advanced mathematical models that involve automated execution of trade.

The CNX Nifty ended at 8745.15, up by 38.75 points or 0.45% after trading in a range of 8703.15 and 8767.05. There were 39 stocks advancing against 12 stocks declining on the index. (Provisional)

The top gainers on Nifty were Eicher Motors up by 5.55%, Hindalco up by 4.80%, Idea Cellular up by 3.90%, Tata Steel up by 3.60% and Zee Entertainment up by 3.49%. (Provisional)

On the flip side, Reliance Industries down by 1.95%, Tech Mahindra down by 1.60%, Coal India down by 1.28%, Hindustan Unilever down by 0.99% and Sun Pharma down by 0.62% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 45.25 points or 0.66% to 6,852.92, Germany’s DAX increased 88.24 points or 0.85% to 10,449.72 and France’s CAC increased 33.16 points or 0.75% to 4,431.84.

Asian equity markets ended mostly lower on Wednesday as the Japanese yen fluctuated and oil prices turned flat after steep losses overnight on doubts over potential OPEC deal. Japan's Nikkei share average fell, pressured by the yen's recent strength as well as ex-dividend share price adjustments. Meanwhile, Chinese stocks weakened despite strength in property shares, with thin trading indicating investors' reluctance to participate days ahead of the week-long National Day holiday that starts on October 1. Though, Hong Kong shares were little changed as sentiment cooled following the previous day's robust gain that partly stemmed from perceptions that Democrat Hillary Clinton put in the stronger performance in the first US presidential debate. The Taiwan financial markets remains closed due to typhoon.