Post Session: Quick Review

Indian equity benchmarks traded on a firm note and ended the session with gains of around half a percent points. The market breath was in favor of advances with two stocks advancing against every declining stocks. The equity benchmarks traded jubilantly in early deals as traders took support after Finance Minister Arun Jaitley put private sector debtors on notice, saying they will have to pay their dues to banks or others will step in and take control of the businesses. The minister also defended demonetization, declaring that its impact was along expected lines and the economy will benefit from it in the medium and long term. Jaitley attributed the lower GDP numbers to pre-GST destocking of goods and expressed hope that the economy will grow at 7 percent, saying manufacturing has bottomed out. Separately, Chief Statistician of India T C A Anant said that the slowdown in GDP growth for the first quarter of 2017-18 to 5.7 percent was due to de-stocking by firms as caution ahead of the GST roll-out on July 1. The Chief Statistician said there was a likely revival from the second quarter onwards as subsequently stocks would be restored to normal levels as GST progressed. Some support also came with the report that India’s manufacturing activity rebounded in the month of August, after hitting its lowest level since February 2009 in the previous month, aided by rise in new orders and output across the country. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ Index (PMI)-a composite single-figure indicator of manufacturing performance- stood at 51.2 in August, as compared to 47.9 in July, signaling a renewed improvement in the health of the sector.

Investors shrugged off the weak Gross Domestic Product (GDP) numbers which came at a dismal 5.70 percent against 7.90 percent in the same quarter last year and a 13 quarter lowest level. According to data released by the government, quarterly GVA at basic prices for Q1FY18 from manufacturing sector grew by 1.2 per cent as compared to the growth of 10.7 per cent in Q1FY17. Moreover, industrial growth came in at around 1.60 per cent in Q1FY18 against 7.40 per cent in Q1FY17. The contraction was mainly seen in output of crude oil, refinery products, fertiliser and cement. From the RBI’s perspective, the GDP data is disappointing, but the current slowdown is largely due to GST, which should be seen as transitory. The turnaround in private services suggests that the growth cycle will head higher once the GST effects fade.

On the global front, Asian markets closed mostly in green, with regional manufacturing figures aiding sentiments. South Korea’s annual inflation surged in August to its highest in more than five years as heavy rain and a summer heat-wave pushed up the price of fresh foods. Japan was seen likely to post a 37th consecutive monthly current account surplus in July, a poll found, reflecting an expected rise in income from overseas investments. The European markets were trading mostly in green. Euro zone manufacturing activity accelerated in August, clocking the fastest rise in export orders since February 2011 despite a strengthening currency. Along with evidence of slowly-rising pricing power for businesses, the data may bolster confidence in the European Central Bank to make - and go ahead with - plans to reel back its massive asset purchases program later this year.

Back home, Bharti Airtel and Idea Cellular closed in red as the operators may be disappointed with the refusal to ease spectrum cap rules by a government panel, which believes extending the fee-payment tenure for auctioned airwaves and lowering interest rates payable on dues are enough.

The BSE Sensex ended at 31874.54, up by 144.05 points or 0.45% after trading in a range of 31707.27 and 31944.10. There were 22 stocks advancing against 9 stocks declining on the index. (Provisional)

The broader indices ended in green; the BSE Mid cap index was up by 0.93%, while Small cap index was up by 0.79%. (Provisional)

The top gaining sectoral indices on the BSE were Realty up by 2.37%, Auto up by 1.93%, Metal up by 1.88%, Healthcare up by 1.72% and Consumer Disc up by 1.38%, while Telecom down by 0.31%, Consumer Durables down by 0.30%, IT down by 0.16%, TECK down by 0.07% and Utilities down by 0.03% were the losing indices on BSE. (Provisional)

The top gainers on the Sensex were Dr. Reddy’s Lab up by 9.48%, Bajaj Auto up by 3.90%, Asian Paints up by 3.84%, Tata Motors up by 3.82% and Tata Motors - DVR up by 2.53%. (Provisional)

On the flip side, Bharti Airtel down by 1.32%, TCS down by 1.23%, Power Grid down by 0.87%, HDFC down by 0.79% and Cipla down by 0.63% were the top losers. (Provisional)

Meanwhile, after hitting its lowest level since February 2009 in the previous month, India’s manufacturing activity rebounded in the month of August, aided by rise in new orders and output across the country. The seasonally adjusted Nikkei India Manufacturing Purchasing Managers’ Index (PMI)-a composite single-figure indicator of manufacturing performance- stood at 51.2 in August, as compared to 47.9 in July, signaling a renewed improvement in the health of the sector.

As per survey data, new work witnessed rise due to a better understanding of the new taxation system, alongside greater promotional activities and a pick-up in demand. Though the growth in factory orders remained moderate, it was the quickest since May. Besides, new export business also rose but at the slowest pace in the current three-month period of growth. There was broad-based recovery, with factory orders and production up in each of the three monitored sub-sectors. Companies responded to the improvement in operating conditions by creating jobs and purchasing additional raw materials and semi-finished items.

On the inflation front, the report said that output prices rose in August as companies attempted to pass through to their clients ongoing increases in cost burdens. However, input cost inflation softened to a one-year low as the introduction of the Goods and Services Tax (GST) reportedly led to higher prices for some materials and cheaper rates charged for other items. The report also noted that manufacturers hired extra staff at the fastest pace since March 2013 in order to cope with higher workloads.

The CNX Nifty ended at 9971.90, up by 54.00 points or 0.54% after trading in a range of 9909.85 and 9983.45. There were 39 stocks advancing against 12 stocks declining on the index. (Provisional)

The top gainers on Nifty were Dr. Reddy’s Lab up by 9.46%, Aurobindo Pharma up by 4.42%, Tata Motors up by 4.14%, Asian Paints up by 3.98% and Bajaj Auto up by 3.64%. (Provisional)

On the flip side, Indian Oil down by 1.48%, TCS down by 1.43%, Power Grid down by 1.37%, Bharti Airtel down by 1.10% and Tech Mahindra down by 1.04% were the top losers. (Provisional)

The European markets were trading in green; UK’s FTSE 100 increased 14.88 points or 0.2% to 7,445.50, Germany’s DAX increased 77.13 points or 0.64% to 12,132.97 and France’s CAC increased 42.93 points or 0.84% to 5,128.52.

Asian equity markets ended mostly higher on Friday in response to US President Donald Trump's speech on tax reform and positive regional manufacturing data. Subdued US inflation figures also added to bets that the Federal Reserve will hold off from increasing interest rates again this year. The focus remained on the all-important US jobs report due tonight, with economists expecting the report to show an increase of about 180,000 jobs in August. Chinese shares rose modestly to cap their third week of gains after a private survey showed Chinese manufacturing activity expanded at the fastest pace in six months in August, buoyed by a surge in export orders and higher prices. Further, Japanese shares ended higher as the dollar held steady against the yen and the latest survey from Nikkei showed activity in Japan's manufacturing sector continued to expand in August and at a faster rate. Meanwhile, Capital spending figures for the second quarter missed forecasts and a gauge of consumer sentiment weakened more-than-expected in August, taking some shine off the manufacturing data. Markets in Malaysia, Singapore and Indonesia were closed for Eid-ul-Adha.