Post Session: Quick Review

Indian equity benchmarks traded on a firm note throughout the day and ended the session with gains of around half a percent. The equity benchmarks made a gap-up opening and traded in fine fettle in early deals as sentiments remained up-beat with industry body ASSOCHAM’s statement that biometric cards have facilitated disbursement of as much as Rs 83,184 crore to beneficiaries of Direct Benefit Transfer (DBT) schemes without the notorious leakages of the past. Traders also took some encouragement with Finance Minister Arun Jaitley’s statement that the Pradhan Mantri Jan Dhan Yojana and the related Jan Dhan- Aadhaar and Mobile number (JAM) trinity has the potential to link all Indians into one common financial, economic, and digital space. Some support also came after suggesting a host of reforms to drive India’s economic prosperity, the government’s premier policy think tank NITI Aayog said that the country has good prospects to enter into a high growth trajectory of over 8%, within the next two-three years. It also noted that the chances of the massive cut in the poverty rate in the upcoming decade are excellent. Meanwhile, a private poll enlightened that India’s economic growth likely accelerated to 6.6 percent in the quarter just ended, but analysts are sounding increasingly worried that confusion over a new goods and services tax will dampen activity in coming months.

Investors took note that the monsoon has dipped slightly below normal in recent days and its distribution has been uneven, but rainfall is again on the upswing with forecast of heavy showers in the main crop-producing regions in the days ahead. Good rainfall is forecast for most of these regions in the next two weeks. For the next six days, rainfall is likely to above normal over plains of northwest India and over central & east India. Separately, the government has notified the Banking Regulation (Amendment) Act under which it can authorize the RBI to issue directions to banks to initiate insolvency resolution process to recover bad loans. The banking sector is saddled with non-performing assets (NPAs) of over Rs 8 lakh crore, of which Rs 6 lakh crore is with PSBs. Separately, as per report the finance ministry is open to providing capital support for facilitating consolidation among state-owned banks, which are reeling under mounting bad loans.

On the global front, Asian markets closed mixed. China’s factories likely posted another solid month of growth in August, suggesting the world’s second-largest economy is still growing at a healthy clip despite rising financing costs and a cooling housing market. The official manufacturing Purchasing Managers’ Index (PMI) is expected to come in at 51.3 for August, down just a hair from July’s 51.4. The European markets were trading in red as the euro strengthened after ECB chief Mario Draghi did not express concern about a strong currency in a closely watched speech.

Back home, Infosys closed in green after the company had on Thursday named former CEO and Aadhaar-architect Nandan Nilekani as its new chairman. Adani group stocks Adani Enterprises, Adani Power, Adani Ports & Special Economic Zone and Adani Transmission too closed in green. Adani Group plans to start work on its $16.5 billion Carmichael coal project in Australia in October, buoyed by the dismissal of appeals filed against the project by Australian activists.

The BSE Sensex ended at 31735.87, up by 139.81 points or 0.44% after trading in a range of 31701.67 and 31809.70. 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 1.04%, while Small cap index was up by 1.07%. (Provisional)

The top gaining sectoral indices on the BSE were Consumer Durables up by 1.30%, IT up by 1.24%, FMCG up by 1.20%, TECK up by 1.10% and Power up by 1.06%, while there were no losers on BSE. (Provisional)

The top gainers on the Sensex were Infosys up by 2.96%, NTPC up by 2.42%, Hero MotoCorp up by 2.13%, Hindustan Unilever up by 1.87% and Adani Ports & Special Economic Zone up by 1.83%. (Provisional)

On the flip side, Dr. Reddy’s Lab down by 1.92%, Tata Motors down by 1.04%, Power Grid down by 1.00%, Tata Motors - DVR down by 0.68% and SBI down by 0.50% were the top losers. (Provisional)

Meanwhile, commenting on the government’s decision to merge public sector banks (PSBs) through an Alternative Mechanism (AM), global credit rating agency, Moody's Investor Services in its latest report has said that this move is credit positive, as it would provide scale efficiency and improve the quality of corporate governance. However, the report also said that such mergers would not improve PSBs’ weak capitalisation.

The rating agency further said that the consolidation may provide potential to the state-owned banks to grow their deposits level, creating competitive advantage compared to the private banks. As the poor corporate governance has been structural credit weakness at PSBs and managing the country’s all 21 PSBs has proven to be unwieldy for the government. In view of this, it noted that the consolidation would also address key issues like long-term strategies and human resources on which the government has been unable to pay sufficient attention.

The Union Cabinet had recently given in-principle approval for Public Sector Banks to amalgamate through an Alternative Mechanism.  As per the government’s notification, the decision would facilitate consolidation among the Nationalised Banks to create strong and competitive banks.

The CNX Nifty ended at 9911.05, up by 54.00 points or 0.55% after trading in a range of 9882.00 and 9925.75. There were 34 stocks advancing against 17 stocks declining on the index. (Provisional)

The top gainers on Nifty were Infosys up by 3.08%, Indian Oil up by 3.00%, NTPC up by 2.40%, Yes Bank up by 2.20% and Sun Pharma up by 2.07%. (Provisional)

On the flip side, Dr. Reddy’s Lab down by 1.82%, Power Grid down by 1.58%, Tata Motors down by 1.13%, Tata Motors - DVR down by 0.77% and Tata Steel down by 0.67% were the top losers. (Provisional)

The European markets were trading in red; Germany’s DAX decreased 71.57 points or 0.59% to 12,096.37 and France’s CAC decreased 20.33 points or 0.4% to 5,084.00. London Stock Exchange was closed on account of Summer Bank Holiday.

Asian equity markets ended mixed on Monday after the annual meeting of central bankers in Jackson Hole, Wyoming, offered little surprises, with both Fed Chair Janet Yellen and ECB President Mario Draghi sticking to the script of the conference rather than discussing the course of monetary policy. Both warned against dismantling tough post-crisis financial rules that the Trump administration blames for stifling US growth. Chinese shares hit 20-month highs after data showed Chinese industrial firms maintained a profit surge in July, though the pace of growth eased from the previous month. Investors’ sentiments was also helped by reports that China's securities regulator will continue to support the mixed ownership reform of State-owned enterprises. Meanwhile, Japanese shares ended a choppy session on a flat note as the yen edged up in otherwise quiet trade in the wake of a North Korean missile test on Saturday.