Post Session: Quick Review

Indian equity benchmarks traded on a firm note throughout the day and ended the session with gains of around eight tenth of a percent, on value-buying by investors in recently beaten down stocks. A weak US inflation data dampened prospects of a rate hike this year, lifting sentiments across global markets. The benchmarks snapped five days losing streak with Nifty closing shy of 9800 mark, while Sensex posted biggest one day gain in a month. The markets will remain closed tomorrow on account of ‘Independence Day’. The equity benchmarks made a gap-up opening in early deals as traders went for bargain hunting taking support from Niti Aayog Vice Chairman Arvind Panagariya’s statement that resolution of bad loans in the banking system is on right track and will open the door to rapid credit expansion and growth. Terming the non-performing assets (NPAs) or bad loans problem as a legacy issue, he said that even after three years of the NDA government taking charge, it has not gone away. Some support also came with domestic brokerage report highlighting that the Indian economy is at the cusp of entering its strongest growth phase and a full blown bull market is yet to play out with the wide-based Nifty expected to touch 11,500 in 2018. The report noted that an economy enters the strongest phase of growth when stocks, bonds and commodities all rally together. The consumption and exports are boosting economic growth in the country.

Investors shrugged off report that wholesale inflation rose to 1.88% in July as prices of some commodities increased in the first month of Goods and Services Tax (GST) rollout. Inflation based on the wholesale price index (WPI) was 0.90% in June 2017 and 0.63% in July 2016. The government data released showed that prices of food articles went up by 2.15% in July on a yearly basis. In June, the prices had contracted by 3.47%. The PSU Banking stocks were under pressure on report that the banking regulator is examining whether auditors at these state-run lenders followed RBI guidelines on write-downs, provisioning and NPAs. The RBI has questioned scores of auditors at 27 PSBs on the process and logic they had used to compute and report write-downs at the lenders.

On the global front, Asian markets closed mostly in green, while Nikkei was down despite second-quarter Japan GDP surprising to the upside. Japan’s second quarter surged an unexpected 4.0% on year as investment in plant and equipment lifted sentiments for the sixth straight quarter of expansion. The European markets were trading in green after geopolitical tension had sent them to their worst weekly losses of the year. Industrial output in the 19 countries sharing the euro currency fell by more than expected in June, as the production of capital and durable goods fell following sharp increases in the previous month.

Back home, Reliance Communications (RCom) closed firm after National Company Law Tribunal (NCLT) admitted petition for the company’s wireless wing merger with Aircel. The NCLT has also admitted petition for 51 per cent stake sale in the company’s tower arm’s to Brookfield. State Bank of India (SBI) closed in red extending its previous session’s loss after reporting a lower-than-expected quarterly net profit to Rs 2,005.53 crore, down 20% from a year ago after setting aside more money to cover the risk of defaults on ballooning bad loans.

The BSE Sensex ended at 31449.03, up by 235.44 points or 0.75% after trading in a range of 31298.90 and 31526.40. There were 23 stocks advancing against 8 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 2.49%, while Small cap index was up by 2.51%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 5.95%, Metal up by 3.53%, Basic Materials up by 2.82%, Consumer Durables up by 2.53% and Power up by 2.50%, while IT down by 0.56% and TECK down by 0.40% were the few losing indices on BSE. (Provisional)

The top gainers on the Sensex were Cipla up by 4.66%, Sun Pharma up by 4.49%, Tata Steel up by 4.12%, Adani Ports & Special Economic Zone up by 3.15% and Hero MotoCorp up by 2.74%. (Provisional)

On the flip side, TCS down by 1.20%, SBI down by 1.19%, Bharti Airtel down by 1.17%, Kotak Mahindra Bank down by 0.96% and Infosys down by 0.86% were the top losers. (Provisional)

Meanwhile, after showing signs of easing since last four months, India’s inflation has surprisingly quickened in the month of July, due to rise in prices of Food Articles and Non-Food Articles. According to the data released by the Ministry of Commerce & Industry, the wholesale price index (WPI) inflation advanced to 1.88% in the month of July versus 0.90% in the month of June and 0.63% during the corresponding month of the previous year. Build up inflation rate in the financial year so far was 0.62% compared to a build up rate of 3.81% in the corresponding period of the previous year.

Component wise, primary articles index, having weight of 22.62%, witnessed an increment of 4.3% to 132.4 (provisional) from 126.9 (provisional) for the previous month. Among the primary articles, the index for ‘Food Articles’ group increased by 6.2% to 147.6 (provisional) from 139.0 (provisional) for the previous month, the index for ‘Non-Food Articles’ group surged by 0.6 percent to 118.5 (provisional) from 117.8 (provisional) for the previous month and the index for ‘Minerals’ group rose by 2.8 percent to 119.6 (provisional) from 116.3 (provisional) for the previous month, while the index for ‘Crude Petroleum & Natural Gas’ group declined by 7.8 percent to 64.0 (provisional) from 69.4 (provisional) for the previous month.

Fuel & Power index with weight of 13.15% declined by 1.4% to 88.4 (provisional) from 89.7 (provisional) for the previous month with fall in the index for ‘Mineral Oils’ group.

Manufactured Products constituting the major portion of the index with weight of 64.23% rose by 0.2 percent to 112.7 (provisional) from 112.5 (provisional) for the previous month. The index for ‘Manufacture of Food Products’ group rose by 0.2 percent to 126.9 (provisional) from 126.7 (provisional) for the previous month, the index for ‘Manufacture of Wearing Apparel’ group increased by 2.1 percent to 136.0 (provisional) from 133.2 (provisional) for the previous month, the index for ‘Manufacture of Wood and of Products of Wood and Cork’ group rose by 0.9 percent to 131.7 (provisional) from 130.5 (provisional) for the previous month, the index for ‘Manufacture of Paper and Paper Products’ group rose by 1.6 percent to 117.5 (provisional) from 115.7 (provisional) for the previous month, the index for ‘Printing and Reproduction of Recorded Media’ group rose by 0.8 percent to 143.6 (provisional) from 142.4 (provisional) for the previous month and the index for ‘Manufacture of Other Non-Metallic Mineral Products’ group rose by 0.4 percent to 112.8 (provisional) from 112.3 (provisional) for the previous month.

The index for ‘Manufacture of Basic Metals’ group rose by 0.3 percent to 97.0 (provisional) from 96.7 (provisional) for the previous month, the index for ‘Manufacture of Computer, Electronic and Optical Products’ group rose by 0.7 percent to 109.3 (provisional) from 108.5 (provisional) for the previous month, the index for ‘Manufacture of Electrical Equipment’ group rose by 0.1 percent to 108.4 (provisional) from 108.3 (provisional) for the previous month, the index for ‘Manufacture of Machinery and Equipment’ group rose by 0.3 percent to 108.1 (provisional) from 107.8 (provisional) for the previous month, the index for ‘Manufacture of Other Transport Equipment’ group rose by 1.2 percent to 111.0 (provisional) from 109.7 (provisional) for the previous month, the index for ‘Manufacture of Furniture’ group rose by 1.4 percent to 117.8 (provisional) from 116.2 (provisional) for the previous month and the index for ‘Other Manufacturing’ group rose by 5.1 percent to 115.9 (provisional) from 110.3 (provisional) for the previous month.

On the other hand, the index for ‘Manufacture of Tobacco Products’ group declined by 0.5 percent to 143.6 (provisional) from 144.3 (provisional) for the previous month, the index for ‘Manufacture of Textiles’ group declined by 0.3 percent to 113.4 (provisional) from 113.7 (provisional) for the previous month, the index for ‘Manufacture of Leather and Related Products’ group declined by 0.3 percent to 119.5 (provisional) from 119.9 (provisional) for the previous month and the index for ‘Manufacture of Chemicals and Chemical Products’ group declined by 0.3 percent to 111.3 (provisional) from 111.6 (provisional) for the previous month.

The index for ‘Manufacture of Pharmaceuticals, Medicinal Chemical and Botanical Products’ group declined by 0.2 percent to 120.0 (provisional) from 120.2 (provisional) for the previous month, the index for ‘Manufacture of Rubber and Plastics Products’ group declined by 0.6 percent to 107.9 (provisional) from 108.5 (provisional) for the previous month, the index for ‘Manufacture of Fabricated Metal Products, Except Machinery and Equipment’ group declined by 0.2 percent to 107.8 (provisional) from 108.0 (provisional) for the previous month and the index for ‘Manufacture of Motor Vehicles, Trailers and Semi-Trailers’ group declined by 0.4 percent to 111.1 (provisional) from 111.6 (provisional) for the previous month.

The CNX Nifty ended at 9790.85, up by 80.05 points or 0.82% after trading in a range of 9752.10 and 9818.30. There were 36 stocks advancing against 15 stocks declining on the index. (Provisional)

The top gainers on Nifty were Cipla up by 5.19%, Sun Pharma up by 4.70%, Tata Steel up by 4.56%, Tata Power up by 4.18% and Hindalco up by 4.03%. (Provisional)

On the flip side, Bosch down by 1.89%, Bharti Airtel down by 1.22%, HCL Tech down by 1.18%, BPCL down by 1.14% and TCS down by 1.12% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 42.32 points or 0.58% to 7,352.28, Germany’s DAX increased 134.64 points or 1.12% to 12,148.70 and France’s CAC increased 45.08 points or 0.89% to 5,106.00.

Asian equity markets closed mostly higher on Monday, although Japanese shares fell sharply to hit a 3-1/2-month low following a holiday weekend and as tension between the United States and North Korea prompted investors to shed riskier assets. Concerns over a rising yen too kept Japanese shares under selling pressure. While upbeat Japanese GDP data, deteriorating Fed rate expectations and easing geopolitical concerns helped spur some bargain hunting after last week's steep losses, lower oil prices and disappointing Chinese data kept a lid on overall gains in the region. China's industrial production growth eased at a faster-than-expected pace in July, official data from the National Bureau of Statistics showed. Industrial production climbed 6.4 percent year-over-year in July, slower than the 7.6 percent spike in June. Economists had expected the growth to moderate to 7.1 percent. Retail sales advanced 10.4 percent annually in July, following an 11.0 percent surge in the prior month. The expected rate of growth for the month was 10.8 percent. Fixed asset investment grew at a slightly slower pace of 8.3 percent in July from a year ago, after an 8.6 percent hike in June.