Post Session: Quick Review

Indian equity benchmarks traded on a volatile note in a narrow range throughout the day and ended the session with modest gains. Equity markets will remain shut on Friday for Ganesh Chaturthi holiday. The equity benchmarks made a choppy start but managed to keep their head above water in early deals as traders took support after a private research enlightened that the implementation of the new Insolvency and Bankruptcy Code is expected to give a big push to credit growth as international experience shows that laws to resolves bad assets have helped boost credit growth. Some support also came after the government decided to set up an Alternative Mechanism to oversee the proposals for consolidation of state owned banks, in a bid to improve the health of Public Sector Banks (PSBs).The decision would facilitate consolidation among the Nationalised Banks to create strong and competitive banks. The move aims at meeting the credit needs of the growing Indian economy and building capacity in the PSB space to raise resources without dependence on the state exchequer.

Separately, India’s agricultural sector has potential to double the income of farmers and grow exports to $100 billion by 2022. According to Crop Care Federation of India (CCFI) president Rajju Shroff, now the country ranks second-largest food producer in the world, touching $367 billion in 2014. The upsides was, however, capped after the RBI data showed that India Inc’s overseas direct investment fell over 47 percent to $1.77 billion during July 2017. Indian companies had invested $3.35 billion in the same month of last year. Of the total investments in foreign ventures by Indian companies overseas, $900.66 million was in the form of issuance of guarantee, $513.81 million as loan and $353.55 million was part of equity investment.

On the global front, Asian markets closed mixed, ahead of a meeting of central bankers in the US state of Wyoming that could provide fresh cues on interest rates and unwinding stimulus plans. The European markets were trading in green as the previous session’s upbeat euro zone data continued to support. Euro zone consumer confidence rose slightly in August. The Commission said a flash estimate showed euro zone consumer morale rose by 0.2 points to -1.5. In the European Union as a whole, consumer sentiment was unchanged from the previous month at -2.3.

Back home, shares of liquor companies like United Spirits, United Breweries, Radico Khaitan, Pincon Spirit, Globus Spirits, Empee Distilleries, Som Distilleries & Breweries, GM Breweries, Tilaknagar Industries, Associated Alcohols & Breweries, Pioneer Distilleries, Ravi Kumar Distilleries and Khoday India closed in green with report suggesting that the Supreme Court on Wednesday clarified that the liquor ban on highways does not extend to municipal areas.

The BSE Sensex ended at 31619.82, up by 51.81 points or 0.16% after trading in a range of 31546.05 and 31678.19. There were 18 stocks advancing against 13 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.77%, while Small cap index was up by 0.37%. (Provisional)

The top gaining sectoral indices on the BSE were Healthcare up by 2.46%, IT up by 0.76%, TECK up by 0.62%, Capital Goods up by 0.53% and Metal up by 0.52%, while, Realty down by 0.85%, Energy down by 0.36%, FMCG down by 0.10%, Oil & Gas down by 0.10% and Consumer Durables down by 0.05% were the top losing indices on BSE. (Provisional)

The top gainers on the Sensex were Lupin up by 4.06%, Sun Pharma up by 3.04%, Dr. Reddy’s Lab up by 2.71%, Cipla up by 2.52% and Infosys up by 2.05%. (Provisional)

On the flip side, Adani Ports & Special Economic Zone down by 1.34%, Bajaj Auto down by 1.09%, Asian Paints down by 0.81%, Reliance Industries down by 0.65% and HDFC down by 0.53% were the top losers. (Provisional)

Meanwhile, raising concerns over calls of double digit Gross Domestic Product (GDP) growth rate, Reserve Bank of India (RBI) Deputy Governor Viral Acharya has said that the faster growth rate is always debt-driven and could crash down at some point with disastrous consequences. Acharya said that “I think, invariably, the episodes of 9 to 10 per cent growth are all laden with massive debt-based funding of some asset class”. He added that, “I get scared when an economy grows at 9 to 10 per cent because it is not that easy to generate sustainable growth of 9 to 10 per cent. You got to have generated tremendous improvement in your productivity in a short period to be able to deliver that kind of growth.”

Acharya further said that the RBI’s hard work with focus on inflation control and other measures to correct the balance sheets of companies and banks is paving the way for more sustainable growth for over next three to five year horizon down the road and he stressed over immediate clean up of balance sheets with an efficient manner to start growing fast in a sustainable way.

The RBI Deputy Governor also said that the country should not expect that private capex will suddenly and quickly come back after giving the large bad assets in the system, noting that it’s too much to expect. However, he hoped that the companies would start investing again.

The CNX Nifty ended at 9864.10, up by 11.60 points or 0.12% after trading in a range of 9848.85 and 9881.50. There were 27 stocks advancing against 24 stocks declining on the index. (Provisional)

The top gainers on Nifty were Aurobindo Pharma up by 4.99%, Lupin up by 3.99%, Cipla up by 2.93%, Sun Pharma up by 2.71% and Dr. Reddy’s Lab up by 2.42%. (Provisional)

On the flip side, HCL Tech down by 1.57%, Adani Ports & Special Economic Zone down by 1.35%, ACC down by 1.22%, Bajaj Auto down by 1.04% and Indiabulls Housing down by 1.04% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 28.85 points or 0.39% to 7,411.50, Germany’s DAX increased 43.95 points or 0.36% to 12,218.25 and France’s CAC increased 16.77 points or 0.33% to 5,132.16.

Asian equity markets ended mixed on Thursday after overnight slide in US and European peers. While strong regional earnings as well as higher oil and metal prices helped spur stock-specific buying, renewed geopolitical tensions and uncertainty over US political risks served to keep underlying sentiments somewhat cautious. Fitch Ratings said the US's sovereign rating would be in jeopardy if Congress can't get a deal done to raise the federal debt ceiling in a timely manner. Investors also kept a close eye on a central banking conference in Jackson Hole, Wyoming, beginning later in the day, where Fed Chair Janet Yellen and ECB President Mario Draghi are due to speak. Chinese shares fell the most in two weeks as investors booked profits after recent gains on optimism over state-owned enterprise restructuring. Meanwhile, Japanese shares hit a 3-1/2-month low as steelmakers succumbed to heavy selling after reports of price cuts and US President Donald Trump's comments on NAFTA and the debt ceiling prompted haven demand for the yen.