Post Session: Quick Review

Indian equity benchmarks traded on lackluster note in a narrow range and ended in green, post RBI interest rate decision. The benchmarks made a positive start in early deals after World Bank stated that India’s GDP growth will remain strong at 7.6 per cent in 2016 and 7.7 per cent in 2017. In its latest report on South Asia Economic Focus, the bank enlightened that the growth will be supported by expectations of a rebound in agriculture, civil service pay reforms supporting consumption, increasingly positive contributions from exports and a recovery of private investment in the medium term. Some additional support came with global ratings agency, CRISIL predicting a strong boost to India’s domestic consumption in 2016-17 led by implementation of 7th pay panel’s recommendations, with reforms like the Goods and Services Tax (GST) to benefit the uptick. Also, the Union Minister for Commerce and Industry Nirmala Sitharaman has said that the ‘One Nation One Tax’ regime through the GST system would come into effect on April 1, 2017, leading to a unified domestic market. Meanwhile, the monetary policy committee (MPC) decided to cut policy rate by 25 basis points in its debut policy review. The repo rate which was earlier at 6.50 per cent will now go down to 6.25 per cent. All the six members of MPC were in favour of the rate cut and the RBI said that the decision of the MPC is consistent with an accommodative stance of monetary policy in consonance with the objective of achieving consumer price index (CPI) inflation at 5 per cent by Q4 of 2016-17. The Committee expects that the strong improvement in sowing, along with supply management measures, will improve the food inflation outlook.

On the global front, Asian markets ended in green, with Japan’s Nikkei share average rose after the yen weakened against the dollar on data suggesting the US manufacturing sector grew more than expected in September. A flurry of data from China in coming weeks is expected to point to modest improvement in the economy in the third quarter, as a government infrastructure spree and a housing boom boosts demand from steel and glass to furniture and appliances. European stocks opened higher but gains were expected to remain limited as markets returned their focus to Deutsche Bank and as concerns over a potential hard Brexit continued to weigh.

Back home, hectic buying activity was witnessed in most of aluminium related stocks on reports that government may hike import duty on the commodity or opt for minimum import price (MIP) to curb aluminium import. The decision on import duty hike or MIP on aluminium will be taken within a fortnight. Rate sensitive stocks from Banking and Realty sector were trading firm after the Reserve Bank of India reduced the key policy repo rate by 25 basis points to 6.25% following conclusion of the latest monetary policy meeting.

The BSE Sensex ended at 28339.50, up by 96.21 points or 0.34% after trading in a range of 28242.25 and 28404.70. There were 19 stocks advancing against 11 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.59%, while Small cap index was up by 0.69%. (Provisional)

The top gaining sectoral indices on the BSE were Oil & Gas up by 2.18%, PSU up by 1.44%, Realty up by 1.00%, Metal up by 0.93% and IT up by 0.71%, while Capital Goods down by 0.36% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were ONGC up by 4.92%, GAIL India up by 4.64%, SBI up by 2.17%, Tata Steel up by 2.00% and Tata Motors up by 1.79%. (Provisional)

On the flip side, Coal India down by 2.06%, Mahindra & Mahindra down by 1.98%, Larsen & Toubro down by 1.35%, Hindustan Unilever down by 0.84% and Asian Paints down by 0.72% were the top losers. (Provisional)

Meanwhile, the World Bank in its latest report on ‘South Asia Economic Focus’ has said that in India, Gross Domestic Product (GDP) growth will remain strong at 7.6 per cent in 2016 and 7.7 per cent in 2017, supported by expectations of a rebound in agriculture, civil service pay reforms supporting consumption, increasingly positive contributions from exports and a recovery of private investment in the medium term.

Further, it said that India’s economic growth remained robust, which, as in the past, is expected to support continued poverty reduction. This year is expected to see some convergence in rural and urban economies, supported by stimulating policies, such as passage of Goods and Services Tax (GST) and civil pay revisions, along with good monsoons.

However, the biannual report said that India faces the challenge of further accelerating the responsiveness of poverty reduction to growth, enforcing inclusion of presently excluded groups (such as women and scheduled tribes), and extending gains to a broader range of human development outcomes related to health, nutrition, education and gender, where the country continues to rank poorly. Further, private investment also faces several domestic impediments in the form of corporate debt overhang, stress in the financial sector, and regulatory and policy challenges. It said that if these bottlenecks are not alleviated, subdued private investment would create downside pressures on India’s potential growth.

The report also said that South Asia remains a global growth hotspot and has proven resilient to external headwinds such as China’s slowdown, uncertainty around stimulus policy in advanced economies, and slowing remittances. Though, the report after a reality check on the state of private investment in South Asia, pointed that the region has fallen short of expectations. Mobilizing domestic savings remains key at the aggregate level.

The CNX Nifty ended at 8771.35, up by 33.25 points or 0.38% after trading in a range of 8736.10 and 8783.65. There were 35 stocks advancing against 16 stocks declining on the index. (Provisional)

The top gainers on Nifty were ONGC up by 4.69%, GAIL India up by 4.38%, Tata Steel up by 2.31%, SBI up by 2.23% and Tata Motors up by 2.07%. (Provisional)
On the flip side, Zee Entertainment down by 2.43%, Coal India down by 2.10%, Mahindra & Mahindra down by 1.86%, Ambuja Cement down by 1.26% and Larsen & Toubro down by 1.14% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 107.29 points or 1.54% to 7,090.81, Germany’s DAX increased 64.51 points or 0.61% to 10,575.53 and France’s CAC increased 39.41 points or 0.88% to 4,492.97.

The Asian markets ended in green on Tuesday after oil futures surged to a multi-week high overnight and as the yen weakened against the dollar on data suggesting the US manufacturing sector grew better than expected in September. Japanese shares ended higher on weaker yen and a measure of Japan consumer confidence topped forecasts. Reports showed Consumer confidence in Japan rose to 43.0 in September of 2016 from 42.0 in August and beating market expectations of 41.8. Further, Hong Kong stocks posted modest gains, led by consumer staples and a rally in developer China Evergrande, but gains were capped by concerns that more cities in China may take steps to cool surging property prices. The Chinese markets remained shut all week and will re-open on Monday.