Post Session: Quick Review

Indian equity markets traded in a narrow range throughout the day and ended the session with a gain of around four tenth of a percent, as investors await the interest rate decision from Monetary Policy Committee due on Wednesday.  The equity benchmarks made a positive opening and traded slightly in green in early deals as amid the apprehensions that revenues may take a hit because of sluggish sales across the country in the first month of GST, there is a good news for the government, the collection of Integrated Goods and Services Tax (IGST) from imports crossed Rs 20,000 crore in July - the first month of the roll out of the new indirect tax regime, pointing towards a major jump in revenues. Total customs revenues in July 2017 stood at Rs 26,500 crore as against Rs 16,625 crore collected in July 2016. Separately, global rating agency Moody’s Investors Service, citing its poll results of some of the largest investors, intermediaries and issuers in Asia Pacific, stated that respondents are confident about India’s stable economic growth prospects. More than 60% of the respondents feel that India’s gross domestic product (GDP) growth will remain in the range of 6.5-7.5% over the next 12-18 months and GST will support the momentum for faster growth.

Some pessimism crept in, on reports that the growth in eight core sectors -- coal, crude oil, natural gas, refinery products, fertiliser, steel, cement and electricity, which comprise nearly 40.27 percent of the weight of items included in the Index of Industrial Production (IIP), slowed to 0.4 percent in June 2017 as compared to 3.6 percent in May and 6.92 percent in the corresponding month last year, on the back of sharp decline in output of coal, refinery products, fertiliser and cement. The performance in June is the lowest since the growth of 0.18 percent in November 2015. Besides, after hitting a 7-month high in the month of May, the share of Foreign Portfolio Investments (FPI) through participatory notes (P-notes) has decreased to Rs 1.65 lakh crore at the end of June, due to strict norms enforced by SEBI to tackle inflow of illicit funds. According to Securities and Exchange Board of India (SEBI) data, total value of P-Notes investments in Indian markets including equity, debt and derivatives, at June-end declined to Rs 165,241 crore, from Rs 180,718 crore at the end of May.

On the global front, Asian markets closed mostly in green, as investors prepared to assess a fresh round of corporate earnings reports and data releases on the global economy, starting with an upbeat Chinese factory numbers. Despite concerns about cooling growth in the world’s second-largest economy, China’s Caixin manufacturing PMI came in at a four-month high of 51.1 in July, up from June’s 50.4. European equities started August off on the right foot, moving higher after two straight months of declines thanks to a positive flow of earnings released on Monday.

Back home, the Nifty Auto index gained more than one and half percent after reporting steady sales data in July, the first month of GST rollout. India’s largest car maker Maruti Suzuki reported solid growth of 20.6 percent in July sales, which was far ahead of estimates. Eicher Motors said Royal Enfield sales grew by 21 percent to 64,459 units in July compared with 53,378 units sold in same month last year. Ashok Leyland’s total sales in July grew by 14 percent year-on-year to 11,981 units from 10,492 units, driven by broad based growth.

The BSE Sensex ended at 32624.80, up by 109.86 points or 0.34% after trading in a range of 32462.25 and 32632.02. There were 20 stocks advancing against 11 stocks declining on the index. (Provisional)

The broader indices ended mixed; the BSE Mid cap index was up by 0.47%, while Small cap index was down by 0.14%. (Provisional)

The top gaining sectoral indices on the BSE were Auto up by 1.68%, Metal up by 1.15%, Consumer Discretionary up by 0.96%, Basic Materials up by 0.32% and Oil & Gas up by 0.31%, while Consumer Durables down by 0.72%, Capital Goods down by 0.32%, Telecom down by 0.09%, IT down by 0.08% and PSU down by 0.04% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Maruti Suzuki up by 2.17%, Hero MotoCorp up by 2.05%, Hindustan Unilever up by 2.01%, Mahindra & Mahindra up by 2.00% and Wipro up by 1.90%. (Provisional)

On the flip side, ONGC down by 1.27%, Lupin down by 1.26%, SBI down by 1.07%, Axis Bank down by 0.73% and Asian Paints down by 0.73% were the top losers. (Provisional)

Meanwhile, in a clear indication that the introduction of the goods and services tax (GST) weighed heavily on the manufacturing sector, the manufacturing production in India contracted for the first time this year in the month of July since the downturn recorded in December last year post demonetization. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ Index (PMI)-a composite single-figure indicator of manufacturing performance- fell to 47.9 in July from June's 50.9. A below 50 figure reported for the month was at its lowest mark since February 2009, highlighting the first deterioration in business conditions in 2017 so far.

As per survey, along with sluggish manufacturing activity, the contractions were also reported in demand, employment and purchasing activity. The report further noted that the intermediate goods producers got affected the worst, while new export orders continued to rise in July. Besides, it said that lower sales triggered an overall accumulation in stocks of finished goods.

On the inflation front, the survey said that higher tax rates sparked greater cost burdens in July. However, the pace at which input costs rose was moderate and much weaker than its long-run average. It also mentioned that some companies lowered their selling prices in order to win new business amid competitive environment. Further, the 12-month outlook for output remained positive in July, with companies expecting more clarity regarding the GST to support growth.

The CNX Nifty ended at 10120.60, up by 43.50 points or 0.43% after trading in a range of 10065.75 and 10128.60. There were 35 stocks advancing against 16 stocks declining on the index. (Provisional)

The top gainers on Nifty were Eicher Motors up by 4.94%, Indiabulls Housing up by 4.80%, Tech Mahindra up by 4.09%, Bosch up by 2.88% and Hindalco up by 2.82%. (Provisional)

On the flip side, Bank of Baroda down by 1.48%, ONGC down by 1.39%, Lupin down by 1.26%, Ambuja Cement down by 1.06% and SBI down by 1.04% were the top losers. (Provisional)

The European markets were trading mostly in green; UK’s FTSE 100 increased 59.64 points or 0.81% to 7,431.64, Germany’s DAX increased 69.92 points or 0.58% to 12,188.17 and France’s CAC increased 33.34 points or 0.65% to 5,127.11.

Asian equity markets closed mostly higher on Tuesday as stable oil prices, improved corporate earnings in Japan and better-than-expected China Caixin manufacturing PMI data helped investors shrug off geopolitical tensions and policy uncertainty in the United States. Chinese shares ended higher after the latest survey from Caixin revealed the manufacturing sector in China picked up steam in July, with a manufacturing score of 51.1. Other regional manufacturing surveys painted a mixed picture, with activity in Japan, Australia and Taiwan expanding while manufacturing sectors in South Korea, Malaysia and Indonesia swung to contraction in July. Further, Japanese shares ended higher, buoyed by companies such as Nitto Denko and Mitsui Sumitomo Financial Group reporting strong earnings, though gains were tempered by a stronger yen.