Post Session: Quick Review

Indian equity markets traded on a firm note throughout the day and ended the session with gain of seven tenth of a percent. The equity benchmarks made a gap-up opening and traded in fine fettle in early deals as hopes of a rate cut in the upcoming monetary policy review of the Reserve Bank of India (RBI), coupled with expectations of healthy quarterly results, kept investors’ sentiments buoyed. The Reserve Bank of India (RBI) will be reviewing its monetary policy on August 2, with most economists expecting a 25 bps rate cut on the back of falling retail inflation. Citing inflation at a five-year low and deceleration in the factory output, the industry chamber Associated Chambers of Commerce and Industry of India (ASSOCHAM) ahead of the meeting of the Monetary Policy Committee, has urged the Reserve Bank of India (RBI) Governor Urjit Patel to cut interest rates. After a long duration of consistency in the Repo rates, ASSOCHAM believes that the RBI could reduce the policy rate by 25 basis points (bps).

Traders took encouragement with Finance Minister Arun Jaitley’s statement, who underlining the government’s push on reforms has said that in the last three years, the prime minister has been forcing one or two important changes. India has to become a country where it is easy to do business and the businesses are done in the most ethical way. Separately, Prime Minister Narendra Modi highlighted the success of the Goods and Services Tax (GST) Bill and said it has transformed the economy. Terming the GST as pro-poor and an example of cooperative federalism, he said the government’s effort is to ensure there is no extra burden on the poor. Meanwhile, investors took note of India’s exports of engineering goods to China saw a whopping 123 percent growth at $629 million during April-June this fiscal, driven by an upsurge in shipments of non-ferrous metals. The country’s shipments to China stood at $282 million in the April-June quarter of the previous fiscal. Besides, global brokerage firm lowered its inflation forecast for 2017 to 3.1% from 3.6% earlier citing relatively benign outcomes of GST and monsoon. It, however, said headline inflation troughed in June and the trajectory is still that of a gradual rise in headline inflation.

On the global front, Asian markets closed mixed, as investors turned their attention to a raft of global economic data and earnings this week. Chinese shares rose after growth in China’s manufacturing sector cooled slightly in July as foreign demand for Chinese goods slackened, but a government-led infrastructure push kept construction humming and helped prop up the world’s second-largest economy. Investors remained wary after North Korea conducted another missile test late on Friday that it said proved its ability to strike the US mainland. The European markets were trading in green as Chinese manufacturing data boosted miners and investors focused on positive earnings news from Europe’s largest bank, HSBC.

Back home, there was buzz in the banking stocks and Nifty Bank closed above 25,000 mark for the first time, as sentiments was buoyed by the country’s biggest lender, State Bank of India (SBI), introducing a 2-tier savings bank interest rate. SBI cut interest rate on savings bank accounts to 3.5 per cent from 4 per cent on balance of Rs 1 crore and below.

The BSE Sensex ended at 32535.32, up by 225.44 points or 0.70% after trading in a range of 32324.45 and 32546.50. There were 21 stocks advancing against 10 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.38%, while Small cap index was up by 0.17%. (Provisional)

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.89%, PSU up by 1.70%, Metal up by 1.68%, Capital Goods up by 1.35% and Basic Materials up by 1.29%, while Healthcare down by 1.54% and FMCG down by 0.96% were the only losing indices on BSE. (Provisional)

The top gainers on the Sensex were SBI up by 4.38%, Power Grid up by 4.32%, Tata Steel up by 3.02%, ONGC up by 2.88% and Larsen & Toubro up by 2.68%. (Provisional)

On the flip side, Sun Pharma down by 3.59%, Dr. Reddy’s Lab down by 3.41%, Lupin down by 3.09%, ITC down by 1.97% and Cipla down by 0.94% were the top losers. (Provisional)

Meanwhile, Finance Minister Arun Jaitley emphasizing the value of the Insolvency and Bankruptcy Code (IBC) framework to the asset reconstruction companies (ARCs), has said that this framework along with the government’s thrust on resolution represent a unique opportunity for ARCs and private equity (PE) firms, as stressed assets in the banking system still have inherent economic value.

Finance Minister also said that these stressed assets are essentially productive assets and they can be turned around not only to create additional jobs but also to raise national output and added that to achieve this, there is need of timely interventions, transparent price discovery and right management.

While noting government’s efforts towards the cleaning stressed assets, Jaitley said that these efforts which include legislative and regulatory changes, have created an enabling and supportive operational environment for ARCs and for takeover of stressed assets by PE firms/special situation funds. Besides, he said that the increment in market players which indicates an increase interest in the sector also presented an opportunity for banks to offload stressed assets before fully provisioning for them.

The CNX Nifty ended at 10084.95, up by 70.45 points or 0.70% after trading in a range of 10016.95 and 10085.90. There were 34 stocks advancing against 17 stocks declining on the index. (Provisional)

The top gainers on Nifty were SBI up by 4.76%, Power Grid up by 4.33%, ONGC up by 2.85%, Bank of Baroda up by 2.79% and Larsen & Toubro up by 2.79%. (Provisional)

On the flip side, Sun Pharma down by 3.69%, Dr. Reddy’s Lab down by 3.53%, Lupin down by 3.09%, ITC down by 2.40% and Yes Bank down by 1.84% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 42.1 points or 0.57% to 7,410.47, Germany’s DAX increased 18.4 points or 0.15% to 12,181.10 and France’s CAC increased 4.39 points or 0.09% to 5,135.78.

Asian equity markets ended mixed on Monday as geopolitical tensions escalated, US political uncertainty deepened and China's manufacturing and service sector readings fell slightly in July. Activity in China's manufacturing sector continued to expand in July, albeit at a slower pace, the National Bureau of Statistics said with a PMI score of 51.4, down from 51.7 in June. The bureau's non-manufacturing index came in at 54.5 - down from 54.9 in the previous month. Investors remained wary after North Korea conducted a missile test late on Friday that it said proved its ability to strike the US mainland. The US responded by flying two bombers over the Korean peninsula on Sunday. Japanese shares ended at 6-1/2-week lows even as the yen came off from its early highs against its major rivals. Meanwhile, Chinese shares ended higher as investors piled into resource firms which forecast jumps in first-half earnings, reinforcing a rotation into blue chips that feature solid growth and fundamentals.